AB 831

Bill Subjects

Abstract

Existing law, generally, imposes a minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or doing business in this state, and an annual tax in an amount equal to the minimum franchise tax on every limited partnership, limited liability partnership, and limited liability company registered, qualified to transact business, or doing business in this state, as specified. Existing law requires every limited liability company subject to the annual tax to pay annually to this state a fee equal to specified amounts based upon total income from all sources reportable to this state. Existing law also requires limited liability companies classified as partnerships for California tax purposes to file certain information returns. This bill would exempt a single member limited liability company, as defined, or a federal, state, or local governmental entity from that annual tax, that annual fee, and that information return. The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from state income taxes imposed by that law. Existing law allows organizations that have obtained a ruling or determination from the Internal Revenue Code that it is exempt from federal income taxes as an organization described in Section 501(c) (3) of the Internal Revenue Code to obtain exemption from state income taxes by submitting to the Franchise Tax Board a copy of the notification issued by the Internal Revenue Service approving the organization's tax-exempt status, as specified. Existing law requires the board to issue an acknowledgment of an organization's exemption from state income taxes, as provided. This bill would prohibit an organization formed as a California corporation or qualified to do business in California that, as of the date of receipt by the Franchise Tax Board of that notification, is listed by the Secretary of State or Franchise Tax Board as "suspended" or "forfeited" from establishing its exemption from state income taxes and would provide that the organization would not receive an acknowledgement from the board of the organization's exemption until that corporation is listed by the Secretary of State and the board as an "active" corporation.