Franchise Tax Board Penalizing Churches

Franchise Tax Board Penalizing Churches

The California Franchise Tax Board (FTB) is taking a hard line on churches failing to file the required Statement of Information form.

The “SI-100” is due every two years before the end of the month in which a church was incorporated. The SI-100 identifies:

  • the church’s physical and/or mailing addresses,
  • its three mandatory corporate officers – president, secretary, and treasurer, and
  • the church’s Agent for Service of Process.

An Agent for Service of Process is the person who may be served with legal papers, such as a civil lawsuit complaint, in lieu of serving any of the corporate officers.

CSBC has been offering to act as Agent for Service of Process for its cooperating churches for nearly three years. We will file the SI-100 form for the church every two years and pay the $20 filing fee for the church in recognition of its faithful Cooperative Program support for CSBC.

State law permits the tax board to charge a $50 late filing/failure penalty when the SI-100 is not filed in a timely manner.

Until about July 2018, this penalty was rarely assessed. In the past, only after a corporation was suspended by the FTB or Secretary of State, might the penalty payment have been required.

However, churches are now receiving penalty notices within just a few months of missing their filing deadlines, and the $50 fee is unavoidable at that point. Failure to pay the penalty by the due date will result in an automatic suspension of the corporation.

When a corporation is suspended, legally it must STOP conducting business.

While suspended, the church no longer has the right to do what it was incorporated to do. Additionally, the church cannot sue to enforce a contract or other agreement, and it cannot defend itself against a lawsuit because a suspended corporation is not recognized as a legal “person” in the eyes of the law.

The only compliance requirement is that the church must provide the names of its president, secretary and treasurer when requested so CSBC can timely file the form on behalf of the church.

For more information, please contact Max Herr.

This Convention serves our culturally diverse congregations as we fulfill the Great Commandment and the Great Commission.