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 .
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.
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.
May L. Harris, J.D., M.A.
For Purpose Law Group, a PLC
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Looks like you got some good answers here. I'd start by calling the two lawyers that answered your question.
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