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Senator Patricia Bates. (Photo: Kevin Sanders for California Globe)

Non-Profit Organizations Would Not Have to Pay Filing Fees Under SB 934

According to the bill it currently costs more to collect fees than what it gets back in taxes from them

By Evan Symon, February 24, 2020 1:41 pm

Late last week a new bill that would eliminate California Franchise Tax Board (FTB) filing fees for non-profit organizations was introduced to the Senate.

Senate Bill 934, introduced by Senator Patricia Bates (R-Laguna Niguel), would get rid of the current $25 filing fee for non-profit organizations looking for a tax exemption starting in 2021, as well as eliminate the $10 fee currently paid for by special tax-exempt organizations for an additional filing.

While helping save non-profits money was a mentioned reason, the larger concern was that the cost of collecting those fees outweighed how much the FTB was taking in from them each year. According to Senator Bates, this would end up saving the state money each year.

“I’m pleased to work with the Franchise Tax Board to help non-profits save money, reduce paperwork, and make more efficient use of state resources,” said Senator Bates in a statement. “My legislation will enable the FTB to devote additional resources on more urgent matters, such as processing tax refunds for families.”

“I’ve authored SB 934 in partnership with the FTB to eliminate filing fees for non-profit organizations applying for a state tax exemption,” added Senator Bates in a Facebook posting. “It costs more for the FTB to collect these fees from the nonprofits than the amount of money they bring in to the state.”

SB 934 has already received support from members of both parties in the Senate, as well as from tax-reduction organizations and the Franchise Tax Board itself.

“This cuts wasteful spending,” stated Lucas Wolfe, an accountant who has worked with several non-profit organizations in the past. “Paying the fee is more a hassle than anything. It’s not about saving charities money like they say, because $25 is honestly not that much even to smaller charities and non-profits. Not having to do paperwork does save time though.”

“And if the FTB itself is saying that they want this, you just know it’s not doing anything for them.”

“The downside here is that it free up FTB resources, and while it could go to helping families like the Senator said, most likely they’re going to put those resources into collecting taxes. When the IRS receives more money in funding, the amount of tax money collected goes up. So that’s a concern.”

“A hike of organizations looking to be non-profit may be seen too with the fee elimination, and remember all non-profits looking for an exemption are looked into. So now there may be some more scrutiny there.”

“On the whole though, this is a no-brainer bill, as every side seems to want this and gives good points for it.”

SB 934 is currently in Committee and is expected to be discussed next month.

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