Form Your Nonprofit Properly. Keep It in Good Standing.
We organize California nonprofit public benefit corporations, apply for federal and state tax exemption, and handle the annual filings that tax-exempt organizations owe to the IRS, the Franchise Tax Board, the Attorney General and the Secretary of State.
Formation and Exemption
Articles of Incorporation
Articles for a nonprofit public benefit corporation are filed with the Secretary of State on Form ARTS-PB-501(c)(3), with a $30 filing fee. A Statement of Information (Form SI-100) follows within 90 days and every two years after that ($20).
Bylaws and organizational actions
Bylaws, initial board resolutions and the records the organization will need to support its exemption applications and later annual filings.
Federal exemption
Form 1023 carries a $600 IRS user fee. Form 1023-EZ ($275) is limited to smaller organizations whose annual gross receipts have not exceeded, and are not projected to exceed, $50,000 and whose total assets do not exceed $250,000, among other requirements.
The 27-month rule
If Form 1023 is filed within 27 months after the end of the month in which the organization was formed and the IRS approves it, exemption generally is effective from the date of formation.
California exemption
Organizations with an IRS determination letter generally apply to the Franchise Tax Board on Form 3500A; others file Form 3500. Neither form carries an FTB filing fee.
Attorney General registration
Charities register with the Attorney General’s Registry of Charities and Fundraisers on Form CT-1 within 30 days after first receiving charitable assets. The registration fee is $50.
Annual Filings
IRS Form 990 Series
Form 990-N for organizations with gross receipts normally of $50,000 or less, Form 990-EZ or Form 990 for gross receipts under $200,000 and total assets under $500,000, and Form 990 otherwise. Returns are due on the 15th day of the 5th month after year end; Form 8868 extends the deadline by six months.
Automatic Revocation
An organization that does not file for three consecutive years automatically loses its federal tax exemption (IRC §6033(j)) and must apply to have it reinstated.
California Forms 199 and 199N
Exempt organizations file FTB Form 199, or the Form 199N e-Postcard if gross receipts are normally $50,000 or less, by the 15th day of the 5th month after year end.
Attorney General Renewal
Registered charities file Form RRF-1 four months and fifteen days after year end, with a fee based on total revenue, together with their IRS return. Charities with total revenue of $2 million or more generally must obtain an independent audit.
Statement of Information
Nonprofit corporations file Form SI-100 every two years. A missed filing can result in a $50 penalty and, after repeated failures, suspension.
Governance and Self-Dealing
California law regulates transactions in which a director of a nonprofit public benefit corporation has a material financial interest. To fall within the statutory safe harbor, such a transaction generally must be approved in advance by a majority of the directors then in office, without counting the interested director’s vote, after the board determines in good faith that the transaction is fair and reasonable to the corporation and that a more advantageous arrangement could not have been obtained with reasonable effort (Corporations Code §5233).
We help boards document these decisions and keep the records that make annual filings and audits easier to complete.
When Filings Have Lapsed
A charity that is delinquent with the Attorney General may not operate or solicit donations in California, late renewals accrue fees of $25 for each month or part of a month, and the Attorney General notifies the Franchise Tax Board, which may revoke the organization’s California exemption. At the federal level, an automatically revoked organization must apply for reinstatement, even if it was not originally required to apply for exemption.
We bring delinquent organizations current with each agency and pursue reinstatement where it is needed.
Planning a Nonprofit or Behind on Filings?
Contact Advantage Tax Law for a confidential consultation about formation, exemption or annual compliance.