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What is the California Form 3500 and who needs to fill it out?

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The California 3500 form, officially known as the Exemption Application, serves a vital function for various organizations within the state. It is used by entities to apply for tax-exempt status, ensuring compliance with California's regulations. Containing sections for organizational information, representative details, organizational structure, and specific activities, the form requires thorough documentation to assess eligibility for exemption.

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Organizations seeking tax-exempt status in California navigate a comprehensive process established by the California Franchise Tax Board, marked significantly by the submission of Form 3500. This form, known as the Exemption Application, stands as a critical document for entities desiring recognition of their tax-exempt status under California law. Detailed within, entities must provide extensive information about their organizational structure, including whether they are foreign corporations, trusts, or limited liability companies (LLCs), and clarify their current standing with the Internal Revenue Service regarding tax exemption. Furthermore, applicants must describe their organizational purpose, activities (both current and planned), and financial data, which collectively demonstrate their eligibility for exemption. Moreover, Form 3500 requires disclosure of officers, directors, and trustees, ensuring transparency about who governs these entities. Specific activities such as fundraising, publishing, leasing property, and whether the organization operates internationally are addressed, underscoring the comprehensive nature of the form. The form's exhaustive detail underscores the rigorous standards applied to entities requesting this valuable status, ultimately aimed at ensuring only qualifying organizations benefit from California's tax-exemption provisions.

							CALIFORNIA FORM
							CALIFORNIA FORM
Exemption Application						3500
Exemption Application						3500

Organization Information
California corporation number/California Secretary of State file number			FEIN

Name of organization as shown in the organization’s creating document				Web address

Street address (suite, room, or PMB no.)

City				State	ZIP code

Telephone		Second telephone		Fax

Representative Information
Name of representative				Email address

Street address (suite, room, or PMB no.)

City				State	ZIP code

Telephone		Second telephone		Fax

General Questions
Part I	Organizational Structure

If the listed documents are not provided, the organization’s request for exemption will be delayed, or denied . Copies are acceptable .

1	.Is this a foreign corporation?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	.□. .Yes. . 1	□No
	See General Information F, Foreign Corporations .
2	Is this a trust?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2	□Yes	□No
	See General Information H, Trusts .
3	Is this a limited liability company (LLC)?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	.□. Yes. . .	□. .No
	See General Information I, Limited Liability Companies .

a Is the parent organization a nonprofit organization? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . □. .Yes. . .□. No. . . . . . .

If “Yes,” enter parent’s employer identification number (EIN) ___________________

If “No,” STOP, the LLC does not qualify for California tax-exempt status .

4 Are you currently tax-exempt with the Internal Revenue Service? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . □. Yes. . . .□. No. . . . . . .

5 Are you applying for group exemption? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . □. . Yes. . . . □. 5No See General Information L, Group Exemption .

Mail form FTB 3500 to: EXEMPT ORGANIZATIONS UNIT MS F120, FRANCHISE TAX BOARD, PO BOX 1286, RANCHO CORDOVA, CA 95741-1286 .

Under penalties of perjury, I declare that I have examined this application, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete.

DATE

SIGNATURE OF OFFICER OR REPRESENTATIVE

TITLE

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FTB 3500 2021 Side 1

If “No,” explain why the organization is not planning any activities .

Organization name: __________________________

Corp number/CA SOS file number:

Part II Narrative of Activities

Was the organization’s California tax-exempt status previously revoked?

. . . . . . . . . . . . . . . . . . . . .

. . . . . . .

. . □. Yes. .

.□. No. . . . . 1

If “No,” the organization may qualify to file form FTB 3500A, Submission of Exemption Request . For more information, get form FTB 3500A .

Enter the California Revenue and Taxation Code (R&TC) section that best fits the organization’s purpose/activity

See the Exempt Classification Chart on page 6

. . . . . . . . . . . . . . . . . . . . .

. . R&TC. . . . Section. . . . 23701. . . .

. . 2

Enter the date the organization formed

. . . . . . . . . . . . . . . . . . . . .

. . . . . ./ .

. .

. / . .

. . . . . . 3

mm /

yyyy

4What is the organization’s annual accounting period ending?

(must end on the last day of the calendar or fiscal year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 . . . . . / . . . . . . . . .

mm / dd

5What is the primary purpose of the organization?

Side 2 FTB 3500 2021

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Organization name: __________________________	Corp number/CA SOS file number:

Part II Narrative of Activities (continued)

7Describe the organization’s past, present, and planned activities below. Do not merely refer to or repeat the language in the organizational document . List each activity separately, in the order of importance based on the relative time and other resources devoted to the activity. Indicate the percentage of time for each activity. Each description should include a:

a Detailed description of the activity, including its purpose and how it furthers the organization’s exempt purpose . b Detailed description of when the activity was or will be initiated .

c Detailed description of where and by whom the activity will be conducted .

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FTB 3500 2021 Side 3


Organization name: __________________________	Corp number/CA SOS file number:

Part III Financial Data

1a Has the organization filed the Form 199, California Exempt Organization Annual Information Return, for the current

and prior years?	1a □Yes	□No
b Has the organization filed the FTB 199N, California e-Postcard, for the current and prior years?	. . . □1bYes	□No

We will review information reported on previously filed Form 199 to determine exemption eligibility. If the FTB 199Ns were filed or no returns were filed, attach a detailed income and expense statement for the current year and three previous years . If you are not yet active, attach a proposed budget covering the next four years .

Part IV Officers, Directors, and Trustees

1List names, titles, and mailing addresses of all officers, directors, and trustees whether or not compensation is or will be paid . For each person listed, state their total annual compensation, or proposed compensation, for all services to the organization, whether as an officer, employee, or other position . Use actual figures, if available . Enter “none” if no compensation is or will be paid . If additional space is needed, attach a separate sheet .

Name

Title

Mailing Address

Compensation Amount (annual actual or estimated)

2Will any incorporator, founder, board member or other person(s) or entity:

a Share any facilities with the organization?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. a.

. □. Yes. .

. .□. No

b Rent, sell, or transfer property to this organization?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

□Yes

□No

c Be compensated for services other than performing as a board member or employee?

□Yes

□No

Part V

History

. . . . .

1 Has the organization been issued any previous California ID number?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .□. Yes. .

. □. .No.

Was this organization’s exemption previously revoked by the Internal Revenue Service?

. □. .Yes. .

. □. No. . 2

If “Yes,” enter date revoked

yyyy

Part VI

Fund Raising

Does or will the organization participate in fund-raising activities? . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

. .□. .Yes. □. 1No. .

If “Yes,” check all the fund-raising programs the organization conducts, or will conduct .

□ Mail solicitations

□ Phone solicitations

□ Email solicitations

□ Accept donations on the organization’s website

□ Personal solicitations

□ Receive donations from another organization’s website

□ Vehicle, boat, plane, or similar donations

□ Government grant solicitations

□ Foundation grant solicitations

□ Other - Attach description

Side 4 FTB 3500 2021

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Organization name: __________________________		Corp number/CA SOS file number:

Part VII Specific Activities

1	Does the organization conduct any gaming activities (bingo, raffles, etc .) .	. . . . . . . . . . . . . . . . . . . . . . .	. . .	. . . . . . . . .		.	. .	.	. .	.		1 □Yes □No

2	Does the organization lease property from others?	. . . . . . . . . . . . . . . . . .	. .	. . . . .	. . .	.	.	.	.	. .		. . .□. Yes. . . .	□. . No. 2
	If “Yes,” attach copy of lease agreement .

3	Does the organization lease property to others?	. . . . . . . . . . . . . . . . . . . . . . .				.	.	.	.	.	.	. . □. Yes. . .	.□. No
	If “Yes,” attach copy of lease agreement .

4	Does or will the organization publish, sell, or distribute any literature? . . .	. . . . . . . . . . . . . . . . . . . . . .	. . .	. . . . . .	. . .	.	. .	.	. .	.	.	4 □Yes	□No

5	Does or will the organization own, or have rights in music, literature, tapes, artworks, choreography, scientific discoveries,											. . □. Yes. . .	.□. No
	or other intellectual property?	. . . . . . . . . . . . . . . . . . . . . . .				.	.	.	.	.	.	. . □. Yes. . .	.□. No

6Does or will the organization accept contributions of real property, conservation easements, closely held securities, intellectual

property such as patents, trademarks, and copyrights, works of music or art licenses, royalties, automobiles, boats, planes, or

other vehicles, or collectibles of any type? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . □. Yes. . . .□. No. . . . . . .

7Does or will the organization operate outside of the United States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .□. Yes. . . □. .No. . . . . . .

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FTB 3500 2021 Side 5

Organization name: __________________________

Corp number/CA SOS file number:

Schedule 1

Section A R&TC Section 23701a – Labor, agricultural, or horticultural organization

1 Are any services to be performed for members? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. . .□. Yes. . . . □. . No If “Yes,” explain .

2	Is the organization formed as a cooperative?
	If “Yes,” provide a copy of the federal exemption letter showing exemption under IRC Section 501(c)(5)	2 □Yes □No

Section B R&TC Section 23701b – Fraternal societies, orders, or associations, etc. (Lodge system with benefits)

Operating under the lodge system means carrying on activities under a form of organization that comprises local branches called lodges, chapters, or the like, that are largely self-governing and chartered by a parent organization .

1 Is the organization a college fraternity or sorority or a chapter of a college fraternity or sorority? . . . . . . . . . . . . . . . . . . . . . . . 1 □Yes □No

If “Yes,” college fraternities and sororities generally qualify as organizations described in R&TC Section 23701g .

For more information, get FTB Pub 1077, Guidelines for Social and Recreational Organizations . If R&TC Section 23701g appears to apply, do not complete Section B . Go to Section G on Schedule 3, Social and recreational organization .

2Does the organization operate, or plan to operate under the lodge system or for the exclusive benefit of the members of

	the lodge system?	. . . . . 2	□Yes	□No

3	Is the organization a subordinate of a national or state level organization?	. . . . 3.	. □. .Yes. .	. □. No
	If “Yes,” attach a certificate signed by the secretary of the parent organization certifying that the subordinate is a duly
	constituted body operating under the jurisdiction of the parent body.

4	Is the organization a parent or grand lodge?	. . . . . 4	□Yes	□No

5Describe the types of benefits (life, sick, accident, or other benefits) paid, or to be paid, to members .

Section L R&TC Section 23701l – Fraternal beneficiary societies, orders, or associations, etc. (Lodge system with no benefits)

Operating under the lodge system means carrying on activities under a form of organization that comprises local branches (called lodges, chapters, or the like) that are largely self-governing and chartered by a parent organization .

1 Is the organization a college fraternity or sorority, or a chapter of a college fraternity or sorority? . . . . . . . . . . . . . . . 1. . □. .Yes. . . □No

If “Yes,” college fraternities and sororities generally qualify as organizations described in R&TC Section 23701g .

For more information, get FTB Pub 1077, Guidelines for Social and Recreational Organizations . If R&TC Section 23701g appears to apply, do not complete Section L . Go to Section G on Schedule 3, Social and recreational organization .

2Does the organization operate or plan to operate under the lodge system or for the exclusive benefit of the members of

	a lodge system?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. .	.□. .Yes. . .	□No

3	Is the organization a subordinate of a national or state level organization?	. . . . . . . . . . . . . . . . . . . . . . . . . . . 3.	. □. .Yes. . . □. No

4	Is the organization a parent or grand lodge?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4	□Yes	□No

Side 6 FTB 3500 2021

7226213


Organization name: __________________________	Corp number/CA SOS file number:

Schedule 2

Section D R&TC Section 23701d – Religious, charitable, scientific, literary, or educational organization

1Check the box(es) below that best describes the organization .

□ Charitable	□ Educational	□ Credit Counseling
□ Synagogue	□ School	□ Testing for public safety
□ Church	□ Literary	□ Hospital, Medical Center
□ Temple	□ Scientific	□ Qualified sports organization
□ Mosque	□ Religious	□ Prevent cruelty to children or animals

2Has the organization received or expect to receive 10% or more of its assets from any organization or group of affiliated organizations (affiliated through stockholding, common ownership, or otherwise), any individuals, or members of a family

	group (brother or sister whether whole or half blood, spouse/RDP, ancestor or lineal descendant)?	2	□Yes	□No

3	Does the organization attempt to influence legislation?	3. . .	□. Yes. . . .	□. . No

4Does the organization support or oppose candidates in political campaigns in any way? . . . . . . . . . . . . . . . . . . . . 4. . □. Yes. . . .□. No.

5Does the organization hold, or plan to hold, 10% or more of any class of stock or 10% or more of the total combined

	voting power of stock in any corporation?		. 5. .	.□. .Yes.	□No

6	a	Does the organization operate as a church, mosque, synagogue, or temple?	.6a. .	.□. .Yes	□No
		If “Yes,” complete Schedule 2A, Churches .
	b	Is the organization’s main function to provide hospital or medical care?	6b	□Yes	□No
		If “Yes,” complete Schedule 2B, Hospitals .
	c	Is the organization a credit counseling organization?	6c	□Yes	□No
		If “Yes,” complete Schedule 2C, Credit Counseling Organizations .

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FTB 3500 2021 Side 7

Organization name: __________________________

Corp number/CA SOS file number:

Schedule 2A – Churches

Complete Schedule 2A only if the organization answered “Yes” to Specific Section D, Question 6a .

1Check the box that best describes the organization .

	□Church □Mosque □Synagogue	□Temple
2	Has a place of worship been established?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . □. Yes. . . .□. No
	If “Yes,” at what address? Who is the legal owner of the property? Other property use?
	If “No,” explain where religious services are held .

3 Does the organization have a regular congregation or conduct religious services on a regular basis?. . . . . . . . . . . . . . . . . . . . 3 □Yes □No If “Yes,” how many usually attend the regular worship services? How often are religious services held?

If “No,” explain .

4Explain the background and training of the religious leaders .

5Will income be received from incorporators, ministers, officers, directors, or their families? . . . . . . . . . . . . . . . . . . . . □. Yes. . . .□. No5 If “Yes,” explain, including dollar amounts received .


6	Will any founder, member, or officer take a vow of poverty? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .□. Yes. . . □. .No
	If “Yes,” explain .

7Will any founder, member, or officer transfer personal assets to this organization, like a home, automobile, furnishings,

business, or recreational assets, etc ., that will be made available for the personal use of the donors? . . . . . . . . . . . . . . . □. .Yes. . 7□No If “Yes,” explain .

Side 8 FTB 3500 2021

Schedule 2A Churches continued

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Organization name: __________________________	Corp number/CA SOS file number:

Schedule 2A – Churches (continued)

8Will any founder, member, or officer assign or donate income to the organization that will be used to pay their own personal salary, living allowance, or that will result in any other personal benefit (such as food, medical expenses, clothing,

	insurance, etc .)?	8 □Yes □No
	If “Yes,” explain .

9	Does the organization have a written creed, statement of faith, or summary of beliefs?	9 □Yes □No
	If “Yes,” explain .

10	Do the religious leaders conduct baptisms, weddings, funerals, etc .?	10. . . .□Yes □No
	If “Yes,” explain .

11	Does the organization ordain, commission, or license ministers or religious leaders?	11 □Yes □No
	If “Yes,” describe .

7229213

FTB 3500 2021 Side 9

Organization name: __________________________

Corp number/CA SOS file number:

Schedule 2B – Hospitals

Complete Schedule 2B only if the organization answered “Yes” to Specific Section D, Question 6b . Attach a statement to explain any answers .

1	Are all the doctors in the community eligible for staff privileges?	1 □Yes □No
	If “No,” give the reasons why and explain how the medical staff is selected .

2a Does or will the organization provide medical services to all individuals in the community who can pay for themselves

or have private health insurance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a. . . □. Yes. . . □. .No. . . . . . .

If “No,” explain .

bDoes or will the organization provide medical services to all individuals in the community who participate in

Medicare? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . □. Yes. . . .□. No. . . . . . .

If “No,” explain .

3a Does or will the organization require persons covered by Medicare or Medicaid to pay a deposit before receiving

		services?	3a	□Yes	□No
		If “Yes,” explain .
	b Does the same deposit requirement, if any, apply to all other patients?		3b	□Yes	□No
		If “No,” explain .
4	a	Does or will the organization maintain a full-time emergency room?	4a	□Yes	□No
		If “No,” explain why the organization does not maintain a full-time emergency room . Also, describe any emergency
		services provided .
	b	Does the organization have a policy on providing emergency services to persons without apparent means to pay? . . . .	4b. .	□Yes	□No
		If “Yes,” provide a copy of the policy.

cDoes the organization have any arrangements with police, fire, and voluntary ambulance services for the delivery

		or admission of emergency cases?	. . .	.□. Yes. . 4c □No
		If “Yes,” describe the arrangements, including whether they are written or oral agreements . If written, submit copies of
		all such agreements .
5	a	Does the organization provide for a portion of the organization’s services and facilities to be used for charity patients? . . .	5a	□Yes	□No
		If “Yes,” answer question 5b through question 5e .
	b	Explain the organization’s policy regarding charity cases, including how the organization distinguishes between charity
		care and bad debts . Submit a copy of the written policy.
	c	Provide data on the organization’s past experience in admitting charity patients, including the amounts expended for
		treating charity care patients and types of services provided to charity care patients .
	d	Describe any arrangements with federal, state, or local governments or government agencies for paying for the cost
		of treating charity care patients . Submit copies of any written agreements .
	e	Does the organization provide services on a sliding fee schedule depending on financial ability to pay?	5e	□Yes	□No
		If “Yes,” submit the sliding fee schedule .
6	a	Does or will the organization carry on a formal program of medical training or medical research?	6a	□Yes	□No
		If “Yes,” describe such programs, including the type of programs offered, the scope of such programs, and affiliations
		with other hospitals or medical care providers with which the organization carries on the medical training or research
		programs .
	b	Does or will the organization carry on a formal program of community education?	. . .	.□. Yes6b	□No
		If “Yes,” describe such programs, including the type of programs offered, the scope of such programs, and affiliations
		with other hospitals or medical care providers with which the organization offers community education programs .

Schedule 2B Hospitals continued

Side 10 FTB 3500 2021

7229213

➤ California 3500 File

Fact	Detail
Form Title	California Exemption Application 3500
Purpose	To apply for tax-exempt status for an organization in California
Applicable To	Foreign corporations, trusts, limited liability companies (LLC), and other entities seeking tax-exempt status
Submission Address	Exempt Organizations Unit MS F120, Franchise Tax Board, PO Box 1286, Rancho Cordova, CA 95741-1286
Governing Laws	California Revenue and Taxation Code (R&TC) Section 23701
Requirement for Approval	Submitting documents indicating organizational structure, narrative of activities, financial data, and information on officers, directors, and trustees
Attachments	May include lease agreements, detailed descriptions of activities, previously filed Form 199 or FTuponB 199N returns, and proposed budget
Special Sections	Includes parts on fundraising activities, specific activities like gaming and leasing, and operation outside of the United States

Filling out the California Form 3500 can be a straightforward process if approached with a clear understanding of what is required. This form is essential for organizations seeking tax exemption status within the state. It asks for detailed information about the organization, including its structure, activities, financial data, and more. The aim is to provide the Franchise Tax Board with a comprehensive overview to assess eligibility for exemption. Below are the steps to complete the form accurately and efficiently.

Start with the Organization Information section. Enter the California corporation number or California Secretary of State file number, the Federal Employer Identification Number (FEIN), the name of the organization as shown in its creating document, web address, street address including suite, room, or PMB number, city, state, ZIP code, and contact numbers including a fax number if available.
Fill out the Representative Information section. This includes the name of the representative, their email address, street address including suite, room, or PMB number, city, state, ZIP code, and contact numbers along with a fax number.
In Part I Organizational Structure, answer whether the organization is a foreign corporation, a trust, or a limited liability company (LLC). If the organization is an LLC with a nonprofit parent organization, provide the parent’s EIN. Also, indicate if the organization is currently tax-exempt with the Internal Revenue Service and if it is applying for a group exemption.
Move to Part II Narrative of Activities. If the organization’s California tax-exempt status was previously revoked, note this, and enter the appropriate Revenue and Taxation Code (R&TC) section that fits the organization's purpose/activity. Include the date the organization formed, its annual accounting period ending, the primary purpose, and whether it is currently conducting or plans to conduct activities, including details on start dates.
Describe the organization's past, present, and planned activities in detail, including the purpose of these activities, initiation dates, locations, and who conducts them. Allocate a percentage of time to each activity based on its importance.
In Part III Financial Data, indicate whether the organization has filed Form 199 or the FTB 199N for current and prior years. If not, attach a detailed income and expense statement for the current year and three previous years, or a proposed budget for the next four years if the organization is not yet active.
Complete Part IV Officers, Directors, and Trustees by listing names, titles, mailing addresses, and compensation amounts for all key personnel. Specify any shared facilities, property transactions, or compensation for services outside of board membership or employment.
Answer questions in Part V History about previous California ID numbers and any revocation of exemption status by the Internal Revenue Service, including the date of revocation.
In Part VI Fund Raising, indicate if the organization participates in fund-raising activities and check all applicable types of fund-raising programs.
Lastly, in Part VII Specific Activities, specify if the organization is involved in gaming, leasing property, publishing materials, or owns intellectual property rights. Also, state if it accepts contributions of various listed types and if it operates outside the United States.
Sign the form, declaring under penalties of perjury that the information provided is true, correct, and complete. Include the date and the title of the officer or representative signing the form.
Mail the completed form to the address provided: EXEMPT ORGANIZATIONS UNIT MS F120, FRANCHISE TAX BOARD, PO BOX 1286, RANCHO CORDOVA, CA 95741-1286.

By carefully following these steps, organizations can ensure that they provide all the necessary information required for their tax exemption status application to be processed without undue delay.

The California Form 3500, also known as the Exemption Application, is a document that organizations use to apply for tax-exempt status in the state of California. It's meant for various types of entities, including nonprofits, trusts, and limited liability companies (LLCs), seeking to be recognized as exempt from California state income tax. The form is necessary for organizations that are newly forming in California, existing organizations that have not previously applied for state tax exemption, or those whose exemption status was previously revoked or has changed.

Organizations apply for tax exemption by completing and mailing Form 3500 to the Franchise Tax Board's Exempt Organizations Unit. The application requires detailed information about the organization, including its structure, activities, financial data, and identifying information. Copies of the organization’s founding documents and detailed descriptions of its activities are critical components of the application. Ultimately, the form must be signed under penalty of perjury by an officer or authorized representative of the organization.

A copy of the organization’s creating document, such as articles of incorporation, trust documents, or articles of organization for an LLC.
Bylaws or operating agreements that describe the governing rules of the organization.
Financial statements for the current and previous years, or a proposed budget if the organization is new.
Any additional information requested in specific sections of the form, such as lease agreements or details about fundraising activities.

As of the last update available before this writing, there is no filing fee for Form 3500 with the California Franchise Tax Board. However, it's important for organizations to check the most current information on the Franchise Tax Board's website or contact them directly for any updates regarding fees.

The processing time for Form 3500 can vary depending on the volume of applications received by the Franchise Tax Board and the complexity of an organization’s application. Generally, it can take several weeks to a few months. Organizations can expedite the process by ensuring their application is complete and includes all necessary documentation upon submission.

Failure to file Form 3500 for organizations that are required to do so can result in not being recognized as tax-exempt by the State of California. Without state tax-exempt status, an organization may be subject to California income tax. Additionally, it may impact the organization’s ability to receive certain grants and donations that require state tax-exempt status.

Yes, significant changes in an organization’s structure, activities, or purpose can affect its tax-exempt status. Organizations are required to report such changes to the California Franchise Tax Board. This might include changes in corporate documents, dissolution, merging with another entity, or altering the organization's primary exempt purpose.

Yes, an organization can lose its tax-exempt status. This may occur if the organization fails to comply with annual filing requirements, engages in prohibited activities, or deviates significantly from the exempt purposes for which it was originally granted exemption. Should the tax-exempt status be revoked, an organization may have to reapply using Form 3500 to regain its status.

Filling out the California Form 3500, the exemption application, requires careful attention to detail. However, there are some common mistakes that individuals tend to make which could delay the processing or even result in the denial of your application. To ensure your application is processed efficiently, be aware of these mistakes:

Overlooking Required Documents: Not including all the necessary documentation is a frequent issue. The form requires specific documents to accompany your submission, depending on your organization's structure, such as being a foreign corporation, trust, or LLC. Always double-check to make sure you've included everything required for your specific situation.
Incomplete Answers in the Narrative of Activities: The narrative of activities plays a crucial role in the review process. Often, applicants provide vague or incomplete descriptions of their organization's activities. It's essential to be clear, detailed, and specific about past, present, and planned activities, indicating the time and resources allocated to each. Remember, repeating the language in the organizational document without elaboration is not sufficient.
Misunderstanding Exempt Status Requirements: A common mistake is assuming that your organization automatically qualifies for California tax-exempt status if it has already obtained tax-exempt status from the Internal Revenue Service (IRS). While related, the state exemption has its own set of requirements and procedures. Ensure you understand California's criteria for tax exemption and complete your application accordingly.
Inaccurate Financial Information: Another area where errors frequently occur is in the financial data section. For both the current year and previous years, you must provide accurate financial statements or a proposed budget if your organization is new. Inaccuracies or omissions in this area can lead to questions about your organization's financial integrity and operational sustainability.

By addressing these common mistakes, you can ensure a smoother process in applying for tax-exempt status with California's Franchise Tax Board. Accurate and thorough application materials not only demonstrate your organization's credibility but also expedite the review process.

When organizations in California set out to obtain a tax-exempt status, they often need to include additional forms and documents alongside the Form 3500, Exemption Application. The paperwork required can vary widely depending on the specific circumstances of each organization. Below is a list of six common documents and forms that are frequently used in conjunction with the California Form 3500 to help complete the exemption application process.

Articles of Incorporation: These are the documents filed with the California Secretary of State to legally establish the organization. They provide essential information about the organization, including its name, purpose, and the names of its directors.
Bylaws: Bylaws are the internal rules that govern the operation of the organization. They cover procedures for meetings, elections of the board of directors, and other essential operational details.
IRS Form 1023 or 1023-EZ: This form is used to apply for federal tax-exempt status with the Internal Revenue Service. While not always required, a copy of the federal determination letter received upon approval can be beneficial to include with the Form 3500.
Financial Statements: Recent financial statements or a detailed budget for the next fiscal year are typically required to provide insight into the finances of the organization. This may include a statement of activities (income and expense statement) and a balance sheet.
Conflict of Interest Policy: Some organizations need to include their conflict of interest policy, which outlines procedures to avoid conflicts of interest among board members and other individuals in positions of authority.
Narrative of Activities: A comprehensive description of the organization's actual or planned activities, demonstrating how these activities support its tax-exempt purpose. This document is especially important if the Form 3500 itself does not provide enough space for a detailed explanation.

In addition to the documents listed above, it's crucial for organizations to check the specific requirements outlined by the Franchise Tax Board and any relevant federal guidelines. Properly preparing and submitting these forms and documents can streamline the exemption application process, preventing unnecessary delays or complications. Always consider the current guidelines and consult with a professional if you're unsure about the requirements for your specific situation.

The California 3500 form is quite comparable to the IRS Form 1023, used for applying for tax-exempt status under section 501(c)(3) of the Internal Revenue Code. Both forms require detailed information about the organization's structure, activities, financial data, and governance practices. They serve a similar purpose: to prove the entity's eligibility for tax-exempt status by showcasing its charitable, educational, or similar types of purposes. Thus, navigating through both necessitates a thorough understanding of the organization's mission and operations.

Similarly, the California 3500 mirrors the IRS Form 1024, which entities use to apply for exemption under sections other than 501(c)(3). Like the 3500, Form 1024 asks for comprehensive details regarding the organization's objectives, governance, and financial transactions to justify its claim for tax-exemption. Both documents play a crucial role in establishing an entity's credibility and legitimacy in the eyes of tax authorities, emphasizing the need for accurate and transparent disclosures.

The FTB 199, California Exempt Organization Annual Information Return, bears resemblance to the California 3500 form in that both are pivotal for tax-related purposes within the state. The FTB 199 is typically filed annually to maintain the entity's exempt status by reporting its income, expenses, and changes in organizational activities. It complements the 3500 form by ensuring ongoing compliance with state tax obligations post-exemption approval, highlighting the organization's continued adherence to its exempt purposes.

The 3500 form is also comparable to the IRS Form 990, an annual return that many tax-exempt organizations must file. Both documents require detailed reports of an organization's financial activities, governance structure, and operational focus over the year. While the 3500 form is part of the initial exemption application in California, Form 990 serves as an annual update, ensuring the organization still meets the criteria for tax-exemption on a federal level. This ongoing reporting mechanism is fundamental in maintaining transparency and accountability in the nonprofit sector.

California's Statement of Information (SOI) for nonprofits is another document related to the California 3500 form. The SOI is filed with the California Secretary of State and includes basics such as the nonprofit's address, agent for service of process, and the names and addresses of directors and officers. While it focuses less on the financial aspects and more on current operational data, it's akin to the 3500 in its role in the organization's regulatory compliance lifecycle, ensuring updated records are accessible to the public and state agencies.

The Charitable Trust Registration form, required by the California Attorney General's Office, parallels the California 3500 in its aim to oversee charitable organizations within the state. This registration is necessary for organizations that hold assets for charitable purposes and requires details about the trust's activities, finances, and governance. Together with the 3500, it represents a dual approach—state tax and charitable trust regulation—to monitor and support the effective operation of charitable entities in California.

The IRS Form 8871, used by political organizations to file for tax-exempt status, shares similarities with the California 3500 in terms of its objective to secure a special tax status. Although aimed at different types of organizations, both forms play critical roles in the establishment phase, requiring detailed disclosures about organizational structure, purposes, and anticipated activities. They serve as foundational documents that enable entities to operate in alignment with specific regulatory benefits and obligations.

Finally, the FTB 3500A, Submission of Exemption Request, is directly tied to the California 3500 as a streamlined alternative for organizations that have already received federal tax-exemption from the IRS. This form simplifies the process of obtaining state-level exemption by recognizing the IRS's determination letter, thereby reducing redundancy. It's designed for entities that can provide evidence of their federal exemption, focusing on aligning state recognition with their established federal status, maintaining the continuity of exemption processes across both levels.

Filling out the California Form 3500 (Exemption Application) involves a detailed process crucial for organizations seeking tax-exempt status. While navigating through the form, organizations must be thorough and accurate. Here’s a compiled list of do’s and don’ts to assist in the process:

Do ensure that all information provided matches the details in the organization’s creating document.
Do include the California corporation number/California Secretary of State file number and FEIN for identification.
Do provide a detailed description of the organization’s activities, ensuring they align with tax-exempt purposes.
Do include copies of documents requested in Part I, as they are essential for verifying the organization's structure and purpose.
Do check the appropriate boxes throughout the form accurately, clarifying the organization’s status, activities, and financial data.
Do attach a detailed income and expense statement if required under Part III for a comprehensive financial overview.
Do list all officers, directors, and trustees in Part IV, providing transparency about the organization's leadership.
Do sign and date the form under penalties of perjury to affirm the accuracy and completeness of the information provided.
Do review the form thoroughly before submitting to ensure all information is true, correct, and complete.
Do mail the form to the correct address provided on the form to avoid delays in processing.

Don’t leave any sections that apply to your organization blank. Always provide detailed answers or explanations.
Don’t miss attaching additional sheets if more space is needed for any part of the application, ensuring all information is included.
Don’t forget to attach the narrative of activities as required in Part II, including detailed descriptions and timelines.
Don’t use vague language or general statements when describing the organization’s purpose and activities; be specific and clear.
Don’t overlook the instructions for foreign corporations, trusts, and LLCs if they apply to your organizational structure.
Don’t ignore the need for a detailed budget or financial statement if the organization has not yet begun its activities.
Don’t submit the form without double-checking the accuracy of all contact information, including addresses and phone numbers.
Don’t underestimate the importance of disclosing any previous revocation of tax-exempt status or other compliance issues.
Don’t engage in activities or financial operations that could conflict with maintaining a tax-exempt status.
Don’t hesitate to seek professional advice or assistance if there are uncertainties or questions about filling out the form.

The California Form 3500, a thorough document required for organizations seeking tax-exempt status, is often misunderstood. These false beliefs can lead to confusion and errors during the application process. By debunking some of the common misconceptions, organizations can navigate the application more effectively.

Only non-profits need to complete it: While Form 3500 is primarily for non-profit organizations, it's essential to understand that other entities, such as trusts and limited liability companies (LLCs) operating under specific non-profit parameters, may also need to submit this form for tax-exempt status. The distinction relies not just on the nature of the organization but its operational and structural intent and setup.
Approval is guaranteed if you submit all documents: The submission of the complete set of requested documents is a fundamental step in applying for exemption; however, it does not guarantee approval. The Franchise Tax Board (FTB) reviews each application in detail to ensure the organization meets all criteria under California law for tax exemption. Factors such as organizational purpose, activities, and financial data play crucial roles in the determination process.
Once exempt, always exempt: Achieving tax-exempt status is not a one-time process but rather an ongoing compliance journey. Organizations must annually file the Form 199 or FTB 199N, depending on their income, to maintain their exempt status. Failure to comply with annual filing requirements or to operate within the scope of qualifying activities can lead to revocation of the tax-exempt status.
The process is instantaneous: The expectation that exemption status will be granted immediately after submission can lead to frustration. The review process for Form 3500 is comprehensive, involving a detailed evaluation of the organization's structure, purpose, and financial activities. Therefore, it can take several months before a final determination is made, depending on the complexity of the application and the current workload of the FTB.
Only initial activities need to be declared: A common misunderstanding is that the organization only needs to report its initial activities or plans at the time of application. In reality, Form 3500 requires a narrative of past, present, and planned activities, emphasizing the necessity for organizations to provide a comprehensive overview of their operations. This requirement ensures the FTB understands the full scope of the organization's mission and activities, allowing for a more informed assessment of its eligibility for tax exemption.

By addressing these misconceptions, organizations can approach the Form 3500 application process with a clearer understanding of the requirements and expectations, ultimately facilitating a smoother path to achieving tax-exempt status in California.

Filling out and using the California 3500 Form, the Exemption Application, is a significant step for organizations aiming to gain or maintain their tax-exempt status in the state of California. Here are eight key takeaways to help navigate this process smoothly:

Know your organization type: It's essential to clarify whether your entity is a foreign corporation, trust, or limited liability company (LLC), as the form requires this specification. This classification impacts your eligibility for tax exemption.
Ensure IRS tax-exempt status first: Before applying with the California Franchise Tax Board, an organization must be recognized as tax-exempt by the Internal Revenue Service. This prerequisite is crucial for a successful exemption application in California.
Group exemption consideration: If applying for a group exemption, ensure that you understand the specifications and requirements, as this can affect multiple entities under a central organization.
Detailed narrative of activities: A thorough explanation of your organization's past, present, and planned activities is required. The form demands specificity about the purpose and how each activity supports the organization's exempt status.
Financial history and planning: Organizations must provide financial data including filed forms like the 199 or 199N, detailing income and expenses or a proposed budget for the next four years. Transparency in financial matters is a critical aspect of the exemption process.
Leadership and compensation: Listing all officers, directors, and trustees, along with their compensation, showcases the organizational structure and financial integrity. Compensation transparency helps in demonstrating compliance with nonprofit operation standards.
Property and fundraising activities: Whether leasing property, engaging in fundraising, or planning to accept substantial donations, disclosing these activities is essential. Each activity potentially affects the organization's tax-exempt status.
International operations: Organizations operating beyond U.S. borders must disclose such activities. International operations can introduce complexities regarding tax-exempt status, requiring careful consideration and reporting.

A successful application necessitates a comprehensive understanding of these points, ensuring that your organization provides all the necessary information with accuracy and transparency. Remember, the California 3500 Form is a detailed document that requires careful attention to each section to uphold the integrity and tax-exempt status of your organization.

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