Nonprofit Tax-exemption form 3500 California

[workonnet1]

What is the name of your state (only U.S. law)? California

I founded a nonprofit in CA two years ago. We only have two board members including myself. We recently filed for Tax-exemption status in CA using FTB form 3500. The nonprofit has not been able to raise any funds for the last two years ($0) so I expected that the tax-exemption would be granted quickly.

However, the tax auditor sent a letter asking for more information about Board meeting minutes. I was confused as to why the auditor contacted me as the organization has no income and no financial transactions. We have conducted board meetings irregularly over the last 2 years.

Shouldn't the tax-exemption status been granted without request for more information?
Will the irregular board meetings be a concern? Is it not correct that there is no requirement on the how often the Board of directors must meet for a public-benefit nonprofit organization?

 

[FlyingRon]

Not making a profit isn't the gold standard to determining whether you are exempt as a non-profit. If that were true, a lot of major corporations would be non-profits.

The corporation needs to be incorporated for one of the reasons that the code spells out (public benefit, mutual benefit, religious) and operated as such to receive the exemption.
You're going to have to comply with the requests.

 

[workonnet1]

Not making a profit isn't the gold standard to determining whether you are exempt as a non-profit. If that were true, a lot of major corporations would be non-profits.

The corporation needs to be incorporated for one of the reasons that the code spells out (public benefit, mutual benefit, religious) and operated as such to receive the exemption.
You're going to have to comply with the requests.

The organization was incorporated as a 501c3 public benefit organization in the state of California. We also adopted a set of bylaws at that time.

Is there a requirement on the minimum frequency of Board of directors Meeting for a public-benefit nonprofit organization in CA? What is the minimum number of Board members required in a CA nonprofit?

 

[davew128]

The organization was incorporated as a 501c3 public benefit organization in the state of California.

No, it was incorporated and intended to be a 501c3 corporation. As you are dealing with the FTB in getting a STATE tax exemption rather than the IRS in getting a federal one (which would have automatically exempted you with FTB anyway) I am surmising that your organization is intended to sell certain medicinals to people with BS medical medicinal cards?

 

[Zigner]

... BS medical medicinal cards?

And the super-rare, but actually real, not-BS person with a non-BS card who actually does gain relief from said medicinals.

 

[workonnet1]

No, it was incorporated and intended to be a 501c3 corporation. As you are dealing with the FTB in getting a STATE tax exemption rather than the IRS in getting a federal one (which would have automatically exempted you with FTB anyway) I am surmising that your organization is intended to sell certain medicinals to people with BS medical medicinal cards?

When I checked with FTB, they told me that the federal tax exemption with IRS (form 1023) does not automatically exempt from FTB. One still has to file a form to get FTB exemption even with federal exemption. The organization doesn't do anything with medicinals. It's a regular public service very small nonprofit.

I looked up the form 1023 for federal exemption and that says that one must file within 27 months. This org is a bit older than 27 months.
Since the org has had no income, there was never a need for federal exemption so far, but if federal makes it easier to get the FTB exemption, then filing 1023 may make sense.

Can one still get federal exemption retroactive from the date of formation filing later than 27 months?

Is federal easier to get than FTB? Does getting FTB become easier after federal exemption?

 

[davew128]

https://www.ftb.ca.gov/businesses/Exempt_organizations/California_Tax_Exempt_Status_and_Federal_Exemption.shtml
https://www.ftb.ca.gov/businesses/Exempt_organizations/The_Process.shtml#Retroactive_tax_exempt_status

 

[workonnet1]

i looked at the above links but nowhere can i find support for the bolded part below.

As you are dealing with the FTB in getting a STATE tax exemption rather than the IRS in getting a federal one (which would have automatically exempted you with FTB anyway)

where does it say that irs exemption automatically gives FTB exemption?