SB 934 – Eliminates $25 Filing Fee For Nonprofit Organizations, Including Private Schools and Colleges, Seeking A Tax-Exemption From The Franchise Tax Board

CATEGORY: Private Education Matters
CLIENT TYPE: Private Education
DATE: Oct 27, 2020

To obtain a federal income tax exemption, nonprofit organizations, including private schools and colleges, must file an application under Internal Revenue Code section 501(c)(3) with the Internal Revenue Service. They must also obtain a corresponding state income tax-exemption under corresponding state law by filing an application with the California Franchise Tax Board (FTB).

Under current state law, there is a $25 filing fee that an organization must pay when it submits a long-form application (Form 3500) for a state income tax exemption. The organization also must pay this filing fee when it re-applies for a state exemption, after having the state exemption automatically revoked for failing to file state informational tax returns three years in a row.

SB 934 eliminates the $25 filing fee for Form 3500 on January 1, 2021. Accordingly, private schools and colleges seeking a state income tax exemption will no longer have to pay a filing fee of $25 for using Form 3500 to apply for a state income tax exemption.

(SB 934 amends section 50650.5 of the Health and Safety Code, sections 23701, 23701r, 23772, and 23778 of the Revenue and Tax Code, and 5168 of the Vehicle Code.)