Introduction
Nonprofit corporations formed outside of California may be required to file several forms to allow them to legally operate within the state of California. This blog summarizes filing requirements, due dates, and potential ramifications for failure to comply with filing requirements for California “foreign” or “out-of-state” nonprofit corporations.
What is a “Foreign Corporation”?
“Foreign corporation” is a term that describes a corporation that operates in a state outside of its state of incorporation. More specifically, a California foreign nonprofit corporation, sometimes called an “out-of-state” nonprofit corporation is a nonprofit corporation operating in Californiathat was formed in a state other than California.
What are the required initial filings for foreign nonprofit corporations to do business in California?
To transact business within the state of California, a foreign nonprofit corporation must first:
(1) Register with the Secretary of State;
(2) Register with the Attorney General’s Registry of Charities and Fundraisers (unless an exception applies); and
(3) Apply for exemption from state income and franchise tax with the Franchise Tax Board(“FTB”) (note that while California recognizes nonprofits that are exempt under section 501(c)(3) of the Internal Revenue Code as automatically exempt within this State, all nonprofits must still complete and submit an application with the FTB).
Other municipal filings and local business licenses may be required depending upon the foreign nonprofit corporation’s registered principal place of business in California.
What are the required filings for California foreign nonprofit corporations on an annual basis?
After the required initial filings have been completed, the following annual filings are requiredfor foreign nonprofit corporations to continue to do business in California:
• Registry of Charities and Fundraisers Form RRF-1;
• IRS Form 990, 990-EZ, 990-N, or 990-PF (to be included with the RRF-1 filing; see here for information on which form(s) are applicable to your organization);
• Registry of Charities and Fundraisers Form CT-TR-1 (for Form 990-N filers);
• Franchise Tax Board Form 199 or 199-N; and
• Secretary of State’s Statement of Information (Form SI-550).
IMPORTANT: Timely filing of the required annual forms is vital to maintaining good standing in the state of California and avoiding penalties.
When are California foreign nonprofit corporations required to file the annual forms?
FTB Forms 199, Registry of Charitable Trusts Forms RRF-1, and CT-TR-1 (if applicable) are due on the same date as the nonprofit’s Form 990 series filing (i.e., four months and fifteen days after the end of the foreign nonprofit corporation’s fiscal year, or as extended).
The Secretary of State’s Statement of Information (Form SI-550) is due annually at the end of the calendar month in which the foreign nonprofit corporation initially registered with the Secretary of State to do business.
IMPORTANT: Late filing of the Statement of Information may result in suspension by the Secretary of State and/or the Franchise Tax Board and a $50 penalty. Additionally, failure to file Forms RRF-1 could lead to delinquency, revocation, or suspension by the Registry of Charities and Fundraisers. An organization that is not current with the Registry of Charities and Fundraisers is not able to legally conduct business in California, including by expending or soliciting charitable assets.
Additional Practice Tips
Foreign nonprofit corporations should retain copies of all required annual filings along with the corporation’s records. Additionally, it is a good practice to regularly monitor the respective agencies’ websites to ensure the entity remains in good standing.
It is also important to remember that a foreign nonprofit corporation is still required to maintain filings in its home state, even if it only operates in California.
Conclusion
With our expert knowledge of filing requirements for foreign corporations operating in California, The Law Firm for Non-Profits is here to help you navigate the filing obligationsapplicable to your organization.