California FTB Form 1068

STATE OF CALIFORNIA FRANCHISE TAX BOARD Reporting Requirements If we granted tax-exempt status to your organization, you may be required to file one or more of the following returns on behalf of the organization . Form 199 109 100 Title Exempt Organization Annual Information Return Exempt Organization Business Income Tax Return Corporation Franchise or Income Tax Return Applicable Sections R&TC 23772 and 23774 R&TC 23771 and 18506 R&TC 23701r and 23701t FTB Publication 1068 Exempt Organizations – Requirements for Filing Returns and Paying Filing Fees References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2005, and to the California Revenue and Taxation Code (R&TC) . See “Where To Get Forms and Publications” in this publication for guidance in obtaining the appropriate forms . Form 199 Exempt Organization Annual Information Return R&TC Section 23772 sets forth the requirements as to which organizations should file Form 199 . Some organizations must file every year, yet other organizations are not required to file at all . However, most organizations must file if their gross receipts normally exceed $25,000 . • The following organizations must file Form 199 every year: • Private foundations . • Nonexempt charitable trusts described in IRC Section 4947(a)(1) . • The following organizations do not file Form 199 at all: • Churches, interchurch organizations of local association units of a church, conventions or associations of churches, or integrated auxiliaries of churches . • Religious orders (such as Franciscan Friars or Sisters of Charity) . • Organizations formed to carry out a function of a state, or public body that is carrying out that function and is controlled by the state or public body . • Political organizations . • Pension trusts . • Coverdell Education Savings Accounts (ESAs), formerly called education IRAs . • Qualified state tuition programs . • The filing requirement for all other organizations is based on the normal amount of gross receipts . If gross receipts are normally • $25,000 or less, you do not have a requirement to file Form 199 . • Greater than $25,000, you are required to file Form 199 . Contents Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . Form 199 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form 109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Extension of Time to File . . . . . . . . . . . . . . . . . . . . . . . . Consequences of Not Filing Required Returns or Not Paying An Amount Due . . . . . . . . . . . . . . . . . . Other Penalties and Interest . . . . . . . . . . . . . . . . . . . . . . Where to File Forms 199, 109, and 100 . . . . . . . . . . . . . Miscellaneous Forms Required . . . . . . . . . . . . . . . . . . . Where to Get Forms and Publications . . . . . . . . . . . . . . Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistance: Other Governmental Agencies . . . . . . . . . . 1 1 2 3 3 3 4 4 5 5 6 6 Use this table to decide if you must file Form 199 . If your organization has existed: One year or less Two years Three years or more File Form 199 if the gross receipts/pledges exceed: $37,500 $30,000 average for both years $25,000 average for the current year and the immediately preceding two years . Form 109 Exempt Organization Business Income Tax Return Generally, exempt organizations must file Form 109 when they have income in excess of $1,000 from a trade or business that is unrelated to its exempt purposes – even if the profits are used for exempt purposes . California and federal laws are generally the same with regard to unrelated business income . Exceptions: The following organizations are not required to file Form 109: • Organizations formed to carry out a function of the state that: • Are carrying out that function; and • Are controlled by the state . • Political organizations exempt under R&TC Section 23701r . See “Form 100” in this publication for reporting requirements by these organizations . • Homeowners’ associations exempt under R&TC Section 23701t . See “Form 100” in this publication for reporting requirements by these organizations . Due Date You must file Form 199 on or before the 15th day of the fifth month after the close of your organization’s taxable year . If its taxable year ends on December 31, the due date is May 15 . If the due date falls on a Saturday, Sunday, or legal holiday, file by the next regular workday . Filing Fee If you must file Form 199, you must also pay a fee with the return . The amount depends upon when you file, and when you make the payment . (R&TC Section 23772) • The fee is $10 if: • You file and pay by the original due date, or • You file and pay after the original, but on or before the extended due date . • The fee is $25 if: • You file by the original due date but pay after that date, or • You file and pay after the extended due date . Exceptions: The filing fee does not apply to the following organizations exempt under R&TC Section 23701d: • An exclusively religious organization . • An organization that is controlled by a religious organization . • A school . • A public charity . Due Date The due date for Form 109 depends upon how the organization was created . • An incorporated organization, unincorporated association, or trust (other than a pension trust) must file on or before the 15th day of the fifth month after the close of its taxable year . If the taxable year ends on December 31, the return is due on May 15 . • A pension trust must file on or before the 15th day of the fourth month after the close of its taxable year . If the taxable year ends on December 31, the return is due on April 15 . If the due date falls on a Saturday, Sunday, or legal holiday, file by the next regular workday . Delinquent Form 199 Penalty We impose a penalty if you do not file your organization’s Form 199 by the extended due date regardless of whether you pay the fee . The penalty is $5 per month or part of a month the Form 199 is late . The maximum penalty is $40 . We impose the penalty from the original due date of the return . (R&TC Section 23772) Note: If your organization is a private foundation and you have not filed a timely Form 199, we may request you file the return within a specific time frame . If you do not file the return, we may impose on you (as the individual responsible for filing) a penalty of $5 for each month (or part of month) that you do not file . The maximum penalty is $25 and is in addition to the penalty for filing Form 199 late . (R&TC Section 23772) Tax Rates The rate at which tax is computed depends upon how the organization was created . • An incorporated organization or unincorporated association computes its tax using the general corporation tax rate . • A trust computes its tax using the trust rate . That rate is the same as the rate used by single individuals on their personal income tax returns . If the trust’s taxable year is a fiscal year, use the rate for the calendar year in which the fiscal year began . (Example: If the fiscal year began July 1, 2005, use the rate for 2005 .) “Gross Receipts” Defined For purposes of Form 199, “gross receipts” is defined as the gross amount received by an organization during its taxable year from all sources – without reduction for any costs or expenses (including costs of goods sold, costs of operations, or expenses of earning, raising, or collecting such amounts) . Page  FTB Pub . 1068 (REV . 06-2006) Penalties • Post-Amnesty Penalty: We impose a penalty when your organization owes new or additional tax on a tax year that qualified for tax amnesty . The penalty is equal to 50 percent of the interest that accrued on the tax assessment from the original due date of tax to March 31, 2005 . You cannot protest this penalty . You can file a claim for refund of this penalty only on • • • • the grounds that the amount of the penalty was not properly computed by the Franchise Tax Board . (R&TC Section (19777 .5(a)(2) ) Delinquent Penalty: If you do not file your organization’s tax return by the extended due date, we impose a penalty of 5 percent of the tax due, after applying any payments and credits made on or before the original return due date, for each month or part of a month the return is late . The maximum penalty is 25 percent . We impose the penalty from the original due date of the return . (R&TC Section 19131) Demand to File Penalty: If we send you a demand to file your organization’s tax return and you do not file it, we impose a penalty of 25 percent of the tax liability before applying any payments or credits . Therefore, your organization may owe penalties and interest even if its tax return shows that a refund is due. This penalty is in addition to the 25 percent delinquent penalty . (R&TC Section 19133) Underpayment and Monthly Penalty: We impose a penalty if you do not pay the total amount due shown on your organization’s return by the original due date . The penalty is 5 percent on the unpaid tax, plus 0 .5 percent on the unpaid tax for each month or part of a month it remains unpaid . The maximum penalty is 25 percent of the unpaid tax . (R&TC Section 19132) Underpayment of Estimated Tax Penalty: We impose a penalty if your organization does not pay, pays late, or underpays an estimated tax installment . We calculate the penalty on the unpaid amount from the due date of the estimated tax installment to the date we receive your payment or to the due date of the return, whichever is earlier . (R&TC Section 19142-19161) organizations are not subject to the penalty for underpayment of estimated tax . Political Organizations Taxable income includes all amounts received during the taxable year other than: • Contributions of money or other property . • Membership fees, dues, or assessments . • Proceeds from political fundraising or entertainment events . • Proceeds from the sale of certain political campaign materials . Political organizations are not required to make estimated tax payments . Therefore, they are not subject to the penalty for underpayment of estimated tax . They are subject to all other penalties . For more information about political organizations, see Exempt Organizations – Guide for Political Organizations (FTB Publication 1075) . Homeowners’ Associations Taxable income: • Does not include membership fees, dues, or assessments . • Does include (but is not limited to) all income received during the taxable year from: • Interest . • Rents . • Sale of assets . • Dividends . • Royalties • Nonmembers . For more information about homeowners’ associations, see Guidelines For Homeowners’ Associations (FTB Publication 1028) . Form 100 Corporation Franchise or Income Tax Return If your organization is a political organization exempt under R&TC Section 23701r, or a homeowners’ association exempt under R&TC Section 23701t, and it has taxable income in excess of $100, you must file Form 100 on behalf of your organization . Extension of Time to File We will automatically grant a seven-month extension of time to file any return if your organization is not suspended on the original due date and you file your organization’s return on or before the extended due date . The extension is only for filing the return . It is not an extension of time to pay any taxes that may be due . Due Date You must file Form 100 on or before the 15th day of the third month after the close of your organization’s taxable year . If its taxable year ends on December 31, the due date is March 15 . If the due date falls on a Saturday, Sunday, or legal holiday, file by the next regular workday . Consequences of Not Filing Required Returns or Not Paying An Amount Due Incorporated Organizations: Suspension We will suspend the corporate rights, powers, and privileges of any organization that fails to file a return or fails to pay an amount due . Once the corporation is suspended, it no longer has the protection of its corporate shield . That means, among other things, that: • Its name is available to any other entity that wants to incorporate and use it . • It cannot defend itself or file suit in court . • The other party to the contract may void its contracts . FTB Pub . 1068 (REV . 06-2006) Page  Tax Rate Use the general corporate tax rate to compute the tax . Exempt organizations are not subject to the minimum tax . Penalties The same penalties apply to Form 100 as are described for Form 109 in this publication . However, political • We may revoke its exemption if it fails to revive to good standing . Then the organization is subject to the franchise tax provisions – including the requirement to pay at least the minimum tax each year . Note: If the organization incorporated somewhere other than California, and qualified to do business in California through the California Secretary of State (SOS), rather than being suspended, the organization’s status is “forfeited .” The consequences of forfeiture are basically the same as they are for a suspended corporation . • SOS Penalty: See “Incorporated Organizations” under the topic “Miscellaneous Forms Required” in this publication . • Interest accrues on unpaid taxes from the original due date of the return until the date we receive payment . We also charge interest on penalties . (R&TC Section 19101) Other Forms of Organizations: Revocation We will revoke the exemption of unincorporated associations, and certain trusts that fail to file a return or pay an amount due . Where to File Forms 199, 109, and 100 • If you are sending us a payment along with a return for your organization, mail them to: FRANCHISE TAX BOARD PO BOX 942857 SACRAMENTO CA 94257-0701 • If you are sending us a return without a payment, mail it to: FRANCHISE TAX BOARD PO BOX 942857 SACRAMENTO CA 94257-0700 Note: If you are sending us more than one return at the same time, please use separate envelopes . If you are also sending a payment, attach the payment to the appropriate return before placing the returns in separate envelopes . Remedies The primary requirements for the organization to be reinstated to good standing are: • File the missing return or pay the amount due that caused the suspension or revocation . • File any other returns that are due but not yet filed . • Pay any additional amount due . • If your organization is suspended, you must file a Form 3557BC, Application for Certificate of Revivor . • If we revoked your organization’s exemption, you must file a new Form 3500, Exempt Application, pay the application fee, and submit the documentation required in support of the application . For specific requirements, you may call or write us . See “Assistance” in this publication for our phone numbers and address . Other Penalties and Interest • Dishonored Payment Penalty: We impose a penalty if your organization’s financial institution does not honor a payment you make to us by check, money order, or electronic funds transfer . For a payment of $750 or more, the penalty is 2 percent of the payment amount . For a payment less the $750, the penalty is $15 or the payment amount; whichever is less . (R&TC Section 19134) • Electronic Funds Transfer Requirement: Once an organization remits an estimated tax or extension payment in excess of $20,000 or has a total tax liability in excess of $80,000, in any taxable year beginning on or after January 1, 1995, it must make all future payments, regardless of the taxable year or amount, through an electronic funds transfer . Payments made by other means, will result in a penalty of 10 percent of the amount paid . For more information regarding this requirement, see our Electronic Funds Transfer Information Guide (FTB Pub . 3817) . Page  FTB Pub . 1068 (REV . 06-2006) Miscellaneous Forms Required Incorporated Organizations SOS requires corporations to file an information statement that is officially called, “Statement of Information .” The form you file depends on the type of corporation and whether or not the corporation incorporated in California . The “Statement of Information” is due: • Biennial for domestic Nonprofit Corporations . • Annually for Stock & Foreign Corporations . If you do not file the statement, the SOS will notify us of your failure and: • We will impose a penalty on your corporation and cannot cancel it unless the SOS instructs us to do so . The amount of the penalty depends upon how the organization incorporated . (R&TC Section 19141) Where Incorporate Type of Corporation Nonprofit Homeowners Association Should File Statement by Domestic Nonprofit Corporation Statement by Domestic Nonprofit Corporation Statement by Domestic Stock Corporation Statement by Foreign Corporation Penalty for Not Filing Statement by Common Interest Development Association biennially (every two years) . Failure to file this statement may result in the assessment of $50 .00 . (R&TC Section 19141) Public Benefit Organizations If your organization was created for public benefit purposes, you must register with, and report to, the Registry of Charitable Trusts in the office of the California Attorney General . If you fail to register or file a report, the Registry of Charitable Trusts will notify us to disallow the organization’s exemption for that specific taxable year and to assess the minimum tax on your organization . We cannot reinstate your organization’s exemption or cancel the tax unless the Registry of Charitable Trusts instructs us to do so . (R&TC Section 23703) For more information, contact: REGISTRY OF CHARITABLE TRUSTS PO BOX 903447 SACRAMENTO CA 94203-4470 TELEPHONE: (916) 323-5617 (not toll-free) California $50 Where to Get Forms and Publications By Internet You can download, view and print forms and publications . Go to our Website at: www.ftb.ca.gov . California Nonprofit $50 California Stock $250 By Phone To order current year forms, call (800) 338-0505 . Select “Business Entity Information” and enter the code for the form you want when prompted . (For prior year forms, call (800) 852-5711 .) Allow two weeks to receive your order . Code 817 818 814 815 802 800 820 Form Form 100, California Corporation Franchise or IncomeTax Return Form 100-ES, Corporation Estimated Tax Form 109, Exempt Organization Business Income Tax Return Form 199, Exempt Organization Annual Information Return FTB 3500, Exemption Application Pub . 1028, Guidelines for Homeowners’ Associations Pub . 1068, Exempt Organizations Requirements for Filing Returns and Paying Filing Fees Outside California Any $250 • If you continue to fail to file the statement, the SOS will suspend or forfeit your organization’s corporate rights, powers, and privileges . For more information, contact: CALIFORNIA SECRETARY OF STATE STATEMENT OF INFORMATION UNIT PO BOX 944230 SACRAMENTO CA 94244-2300 Common Interest Development Association: The Secretary of State Common Interest Development penalty applies to incorporated or unincorporated common interest development associations . Common Interest Development Association is an incorporated or unincorporated association that manages a: • Common apartment project . • Condominium project . • Planned development . • Stock cooperative . For more information regarding common interest development associations see California Civil Code Sections 1350 to 1378 . Beginning January 1, 2006, a penalty is imposed by the SOS for failure to file the By Mail Write to: TAX FORMS REQUEST UNIT FRANCHISE TAX BOARD PO BOX 307 RANCHO CORDOVA CA 95741-0307 FTB Pub . 1068 (REV . 06-2006) Page  Assistance Telephone and Internet Assistance From within the United States, call . . . . . . . . . . . . . . . . . . . . . . . (800) 852-5711 From outside the United States, call . . . . . . . . . . . . . . . . . . . . . . (916) 845-6500 (not toll-free) Website at: www.ftb.ca.gov Assistance: Other Governmental Agencies If you have questions about issues that are not income tax related, use this table to decide whom to contact . For questions about. . . Federal employer identification number (commonly referred to as “EIN” or “FEIN”) Federal tax-exemption Sales or Use tax Employment tax Property tax Bingo Issues Raffle Issues Contact. . . IRS or use federal form SS-4, Application for Employer Identification Number IRS toll-free at (877) 829-5500 Board of Equalization Employment Development Dept . Your local assessor’s office Your local law-enforcement agency Registry of Charitable Trusts at (916) 445-2021 (not toll-free) Assistance for persons with disabilities: We comply with the Americans with Disabilities Act . Persons with hearing or speech impairments please call TTY/TDD (800) 822-6268 . Letters You may write to us if you want a written reply regarding a notice we sent you . If you write to us, be sure your letter includes the California organization number, or FEIN, your daytime telephone number, and a copy of the notice . Send your letter to: EXEMPT ORGANIZATION UNIT FRANCHISE TAX BOARD PO BOX 1286 RANCHO CORDOVA CA 95741-1286 We will respond to your letter within six weeks . In some cases, we may need to call you for additional information . Do not attach correspondence to your return unless it relates to an item on the return . Your Rights as a Taxpayer One of our goals at the FTB is to make certain we protect your rights . We want you to have the highest confidence in the integrity, efficiency, and fairness of our state tax system . The California Taxpayers’ Bill of Rights (FTB Pub . 4058) includes information on your rights as a state taxpayer and how to request written tax advice from the Franchise Tax Board . You can order the Califonria Taxpayers’ Bill of Rights by: Telephone: (800) 338-0505 (Select Personal Income Tax Forms) Mail: FRANCHISE TAX BOARD PO BOX 942840 SACRAMENTO CA 94240-0040 . Website: www.ftb.ca.gov Page  FTB Pub . 1068 (REV . 06-2006)