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We are an LLC , filing for tax exemption with the IRS , what are the laws for the state of California ?

Chico, CA |

The state of California requires that you are incorporated as a public benefit corporation . What if you are already an LLC ? We are confused , we want to make sure we follow all the requirements when filling out the IRS 1023 .

Attorney Answers 3


  1. HI. I have worked with a lot of 501(c)(3)'s in the past on the Form 1023s. Unfortunately, it is very difficult to get tax-exempt status as an LLC -- the rules are designed for corporations and not LLCs. The advice I usually give my clients is to dissolve the LLC and reincorporate as a corporation if you are interested in pursuing 501(c)(3) status.

    Thank you for your question and best of luck!


  2. California law will recognize a LLC as a nonprofit entity - you don't have to be a public benefit "corporation." It's just not the most common entity used to apply for tax-exempt status as it's more complex.

    In California, a domestic nonprofit LLC is a taxable entity and subject to the minimum tax requirements unless the LLC has applied for tax-exempt status and the FTB determines the LLC qualifies for tax-exempt status.

    Until such a determination is made, a nonprofit LLC must file a return and pay the associated tax (and, if applicable, the fee) every year until the LLC is formally cancelled.

    To become a nonprofit LLC, at the time of filing its Articles of Organization with the SOS, the LLC must include, in an attachment to that document, additional statements as required by the law under which the LLC is seeking exemption.

    After filing its Articles of Organization with the SOS, the LLC may apply for tax-exempt status by mailing an Exemption Application (Form FTB 3500), along with a copy of the filed Articles of Organization and all other required supporting documentation, to the FTB.

    I would recommend consulting an experienced attorney to help you with completing the IRS exemption application ( Form 1023) in concert with FTB Form 3500, as the California form mirrors the IRS Form - or, at minimum, having an attorney review your self-prepared application prior to submission to the FTB and the IRS.

    Warmly,

    -- May

    May L. Harris, J.D., M.A.
    For Purpose Law Group, a PLC

    The information that has been provided on this website, including information contained in any link or informational reference, does not – and shall not be considered to – constitute legal or professional advice. The reader should not consider such information to be an invitation for an attorney-client relationship, should neither act nor rely on such information, and should always seek the advice of competent counsel licensed in the reader's state. Attorneys with the For Purpose Law Group are generally licensed to practice law only in the State of California. The ability of the reader to access this website in another jurisdiction does not constitute the practice of law outside of California, or a representation that members of the For Purpose Law Group are licensed to practice in any other jurisdiction. This site is not intended to, nor does it establish an attorney / client relationship between you and this office.


  3. Looks like you got some good answers here. I'd start by calling the two lawyers that answered your question.

    Total Mobility Law is an international law firm that lets companies do global business with the knowledge and confidence they need to comply in any country. Our answers on this site do not constitute legal advice, nor do they establish an attorney-client relationship. The only thing that can do that is a signed Engagement Letter and Fee Agreement, which you can get by contacting us through www.totalmobilitylaw.com.

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