AB 557 — Nonprofit corporations: abatement: dissolution: surrender.

Summary

The Nonprofit Corporation Law, among other things, generally regulates the organization and operation of nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations. (1) Existing law authorizes the corporate powers, rights, and privileges of a domestic taxpayer to be suspended, and the exercise of the corporate powers, rights, and privileges of a foreign taxpayer in this state to be forfeited, if certain tax liabilities are not paid or a taxpayer fails to file a tax return. Existing law also authorizes the corporate powers, rights, and privileges of a domestic corporation exempt from income tax to be suspended and the exercise of the corporate powers, rights, and privileges of a foreign corporation in this state exempt from income tax to be forfeited if the organization fails to file the annual information return or a specified statement for organizations not required to file the information return or pay a specified amount due. Existing law requires notice prior to the suspension or forfeiture of a taxpayer's corporate powers, rights, and privileges. Existing law requires the Franchise Tax Board to transmit to the Secretary of State the names of those taxpayers subject to these suspension or forfeiture provisions and thereby makes the suspension or forfeiture effective. Under existing law, the Secretary of State's certificate is prima facie evidence of the suspension or forfeiture. This bill would make a nonprofit public benefit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a foreign nonprofit corporation, subject to administrative dissolution or administrative surrender, as specified, if the nonprofit corporation's or foreign corporation's corporate powers are, and have been, suspended or forfeited by the Franchise Tax Board for a specified period of time. Prior to the administrative dissolution or administrative surrender of the nonprofit corporation or foreign corporation, the bill would require the Franchise Tax Board to provide notice to the corporation of the pending administrative dissolution or administrative surrender. The bill would require the Franchise Tax Board to transmit to the Secretary of State and the Attorney General's Registry of Charitable Trusts the names and Secretary of State file numbers of the corporations subject to administrative dissolution or administrative surrender. The bill would also require the Secretary of State to provide notice of the pending administrative dissolution or administrative surrender on its Internet Web site, as specified. The bill would authorize a nonprofit corporation or foreign corporation to provide the Franchise Tax Board with a written objection to the administrative dissolution or administrative surrender. If there is no written objection or the written objection fails, the bill would require the corporation to be administratively dissolved or administratively surrendered and would provide that the certificate of the Secretary of State is prima facie evidence of the administrative dissolution or administrative surrender. Upon administrative dissolution or administrative surrender, the bill would abate the nonprofit corporation's liabilities for qualified taxes, interest, and penalties, as provided. (2) Existing law, the Nonprofit Corporation Law, authorizes a nonprofit public benefit corporation, nonprofit mutual benefit corporation, and nonprofit religious corporation to elect voluntarily to wind up and dissolve by either approval of a majority of all members or approval of the board and approval of the members. Under existing law, the General Corporation Law, when a corporation has not issued shares, a majority of the directors, or, if no directors have been named in the articles or have been elected, the incorporator or a majority of the incorporators, are authorized to sign and verify a specified certificate of dissolution. Existing law requires the certificate to be filed with the Secretary of State and requires the Secretary of State to notify the Franchise Tax Board of the dissolution. Existing law provides that, upon the filing of the certificate, a corporation is dissolved and its powers, rights, and privileges cease. This bill would enact provisions similar to those General Corporation Law provisions and make them applicable to nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations. The bill would additionally provide that liability to creditors, if any, is not discharged, the liability of the directors of the dissolved nonprofit corporation is not discharged, and the dissolution of a nonprofit corporation does not diminish or adversely affect the ability of the Attorney General to enforce specified liabilities. (3) Existing law requires every corporation doing business within the limits of this state and not expressly exempted from taxation to annually pay to the state, for the privilege of exercising its corporate franchises within this state, a tax according to or measured by its net income, as specified. Under existing law, every corporation, except as specified, is subject to the minimum franchise tax until the effective date of dissolution or withdrawal or, if later, the date the corporation ceases to do business within the limits of this state. Upon certification by the Secretary of State that a nonprofit public benefit corporation or a nonprofit mutual benefit corporation has failed to file the required Statement of Information, existing law requires the Franchise Tax Board to assess a specified penalty. This bill would require the Franchise Tax Board to abate, upon written request by a qualified nonprofit corporation, as defined, unpaid qualified taxes, interest, and penalties, as defined, for the taxable years in which the nonprofit corporation certifies, under penalty of perjury, that it was not doing business, as defined. The bill would make this abatement conditioned on the dissolution of the qualified corporation within a specified period of time of filing the request for abatement. The bill would require the Franchise Tax Board to prescribe rules and regulations to carry out these abatement provisions and would exempt these rules and regulations from the Administrative Procedure Act. (4) Existing state constitutional law prohibits the Legislature from making any gift, or authorizing the making of any gift, of any public money or thing of value to any individual, municipal, or other corporation. This bill would make certain legislative findings and declarations that abatement of a nonprofit corporation's liabilities for specified taxes, penalties, and interest serves a public purpose, as provided. (5) By expanding the crime of perjury, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.

Bill Text

• Chaptered 09/30/15 - Chaptered Current pdf September 30, 2015
• Enrolled 08/31/15 - Enrolled pdf August 31, 2015
• Amended 08/17/15 - Amended Senate pdf August 17, 2015
• Amended 05/28/15 - Amended Assembly pdf May 28, 2015
• Introduced 02/23/15 - Introduced pdf February 23, 2015
• AB557 View text html

Action History

1. September 30, 2015

   Chaptered by Secretary of State - Chapter 363, Statutes of 2015.

2. September 30, 2015

   Approved by the Governor.

3. September 03, 2015

   Enrolled and presented to the Governor at 4 p.m.

4. August 27, 2015

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 78. Noes 0. Page 2602.).

5. August 20, 2015

   In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 22 pursuant to Assembly Rule 77.

6. August 20, 2015

   Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 2117.).

7. August 18, 2015

   Read second time. Ordered to Consent Calendar.

8. August 17, 2015

   From committee: Be placed on second reading file pursuant to Senate Rule 28.8 and ordered to consent calendar.

9. August 17, 2015

   From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on APPR.

10. July 15, 2015

    From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 6. Noes 0.) (July 15). Re-referred to Com. on APPR.

11. July 02, 2015

    From committee: Do pass and re-refer to Com. on GOV. & F. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (July 1). Re-referred to Com. on GOV. & F.

12. June 11, 2015

    Referred to Coms. on B. & F.I. and GOV. & F.

13. June 02, 2015

    In Senate. Read first time. To Com. on RLS. for assignment.

14. June 02, 2015

    Read third time. Passed. Ordered to the Senate. (Ayes 78. Noes 0. Page 1804.)

15. June 01, 2015

    Read second time. Ordered to third reading.

16. May 28, 2015

    Read second time and amended. Ordered returned to second reading.

17. May 28, 2015

    From committee: Amend, and do pass as amended. (Ayes 17. Noes 0.) (May 28).

18. May 06, 2015

    In committee: Set, first hearing. Referred to APPR. suspense file.

19. April 28, 2015

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 27). Re-referred to Com. on APPR.

20. April 14, 2015

    From committee: Do pass and re-refer to Com. on REV. & TAX. (Ayes 11. Noes 0.) (April 13). Re-referred to Com. on REV. & TAX.

21. March 05, 2015

    Referred to Coms. on B. & F. and REV. & TAX.

22. February 24, 2015

    From printer. May be heard in committee March 26.

23. February 23, 2015

    Read first time. To print.

Sponsors

• Jacqui Irwin · Primary

Votes

Subjects