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 Bill Text - AB-2084 Corporation Tax Law: tax-exempt organizations: revocation of tax-exempt status.

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 |Add To My Favorites |Track Bill | Version: 04/20/26 - Amended Assembly
 03/27/26 - Amended Assembly
 02/18/26 - Introduced

 AB-2084 Corporation Tax Law: tax-exempt organizations: revocation of tax-exempt status.(2025-2026)

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 Date Published: 04/20/2026 02:00 PM

AB2084:v97#DOCUMENTBill Start

 Amended
 IN 
 Assembly
 April 20, 2026

 Amended
 IN 
 Assembly
 March 27, 2026

 CALIFORNIA LEGISLATURE—
 2025–2026 REGULAR SESSION

 Assembly Bill

No. 2084

Introduced by Assembly Member Bauer-Kahan

February 18, 2026

 An act to amend Section 23701 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 2084, as amended, Bauer-Kahan.
 Corporation Tax Law: tax-exempt organizations: revocation of tax-exempt status.

Existing law, the Corporation Tax Law, exempts organizations that are organized and operated for nonprofit purposes, as specified, from taxes imposed by that law if the Franchise Tax Board issues a determination exempting the organization from tax, except as provided. To receive a determination of exemption from the board, existing law requires the organization to either submit an application for exemption or to submit documentation of exemption from federal income tax law, as provided. For organizations that submit documentation of their federal exemption, existing law requires the board to suspend or revoke, as applicable, an organization’s state exemption upon notification that the organization’s federal exemption is suspended or revoked.

This bill would instead authorize the board, in its discretion, to retain the organization’s tax-exempt
 status for state income tax purposes if it determines this suspension or revocation occurred for reasons other than fraud, intentional misrepresentation, misuse or diversion of organizational funds, failure to file necessary returns or reports, or other significant breaches of organizational reporting or governance requirements.

This bill would take effect immediately as a tax levy.

Digest Key

 Vote:
 MAJORITY 
 Appropriation:
 NO 
 Fiscal Committee:
 YES 
 Local Program:
 NO 

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 23701 of the Revenue and Taxation Code is amended to read:

23701.

 (a) Organizations which are organized and operated for nonprofit purposes within the provisions of a specific section of this article, or are defined in Section 23701h (relating to certain title-holding companies) or Section 23701x (relating to certain title-holding companies), are exempt from taxes imposed under this part, except as provided in this article or in Article 2 (commencing with Section 23731) of this chapter if both of the following occur:

(1) An application for exemption is submitted in the form prescribed by the Franchise Tax Board.

(2) The Franchise Tax Board issues a determination exempting the organization
 from tax.

(b) (1) Notwithstanding subdivision (a), an organization organized and operated for nonprofit purposes in accordance with Section 23701a, 23701d, 23701e, 23701f, 23701g, or 23701w shall be exempt from taxes imposed by this part, except as provided in this article or in Article 2 (commencing with Section 23731), upon its submission to the Franchise Tax Board of one of the following:

(A) A copy of the determination letter or ruling issued by the Internal Revenue Service recognizing the organization’s exemption from federal income tax under Section 501(a) of the Internal Revenue Code, as an organization described in Section 501(c)(3), (c)(4), (c)(5), (c)(6), (c)(7), or (c)(19) of the Internal Revenue Code.

(B) A copy of the group exemption letter issued by the Internal Revenue Service that states that both the central organization and all of its subordinates are tax-exempt under Section 501(c)(3), (c)(4), (c)(5), (c)(6), (c)(7), or (c)(19) of the Internal Revenue Code and substantiation that the organization is included in the federal group exemption letter as a subordinate organization.

(2) (A) Upon receipt of the documents required in subparagraph (A) or (B) of paragraph (1), the Franchise Tax Board shall issue an acknowledgment that the organization is exempt from taxes imposed by this part, except as provided in this article or in Article 2 (comme