Your Church and the Secretary of
State, California
Governance and Taxes
California Has Requirements, too
•
•
•
•
Tougher than the IRS
CA can’t print money
Churches are low hanging fruit
“Go, sin no more!” is CA attitude
Statement of Information
• Updates your church office address
• Updates your Principal Officers; Pastor (CEO),
Secretary, Chief Financial Officer (Treasurer in
small church)
• Must be done biennially, unless Welfare Status
http://www.sos.ca.gov/business/corp/pdf/so/corp_so100.pdf
• Cost: $20
• Penalty for not doing so: possible Corporate
Status Suspension
• To see your status: http://kepler.sos.ca.gov/
Penalties
• $50 penalty
• When FTB or SOS suspends an organization, it
cannot legally transact business, defend or initiate
an action in court, protest assessments, or file a
claim for refund of paid amounts. Your organization
also loses the right to use the entity name.
• Your organization will remain suspended by SOS
until all revivor requirements are met
• https://www.ftb.ca.gov/businesses/Exempt_organizati
ons/Suspended.shtml
Franchise Tax
• Every church or ministry that incorporates in the
state of California has to pay a minimum tax of
$800.00 per year unless the church or ministry
files for an exemption. The exemption is not
automatic!
• Churches get these notices because they never
filed for the exemption. In order to apply for the
exemption, you need to file Form FTB-3500A. If
you have recently incorporated (within the last 4
years), and have not filed for the exemption, we
encourage you to do it immediately.
Penalties
• Suspension (see previous penalties)
• $800.00 tax every year
DE-9 (CA) - Quarterly Wage & With holding Report
•
•
•
•
Can be done online at www.edd.ca.gov
State version of IRS 941
DE-9C Employee Information
Both must be sent in each Quarter
Form DE-542 (CA)– Independent
Contractors-EDD
• WHO MUST REPORT:
• Any business or government entity (defined as a “ServiceRecipient”) that is required to file a Federal Form 1099MISC for service performed by an independent contractor
(defined as a “Service-Provider”) must report. You must
report to the Employment Development Department
within twenty (20) days of EITHER making payments of
$600 or more OR entering into a contract for $600 or more
with an independent contractor in any calendar year,
whichever is earlier. This information is used to assist
state and county agencies in locating parents who are
delinquent in their child support obligations.
Withholding on Out of State Guest
Speakers
• California requires all churches and ministries to
withhold 7% of all honorariums over $1,500.00
paid to guest speakers that live outside the state
• Report to the state on form 592-B the amount of
earnings and the amount of withholdings.
• Beginning January 1st, 2010 the limit is
$600.00. Therefore, it may be safer to
automatically withhold the 7%. The penalty for
not withholding is at least 10% of the entire
honorarium. This is a penalty against the
church.
Penalties
• $50 for each payee statement not provided
by the due date
• $100 or 10% of the amount required to be
reported (whichever is greater), if the failure
is due to intentional disregard of the
requirement.
DE-34 (CA) - REPORT OF NEW
EMPLOYEE(S)-EDD
• WHO MUST BE REPORTED:
• Federal law requires all employers to report all newly
hired or rehired workers to EDD within 20 days of their
start-of-work date. State and county agencies use this
information to assist them in locating parents who are
delinquent in their child support obligations.
• An individual is considered a new hire on the first day in
which he/she performs services for wages. An
individual is considered a rehire if the
employer/employee relationship has ended and the
returning individual is required to submit a W-4 form to
the employer.
DE-1NP (CA)– Employment form for
Non-Profits-EDD
• An employer is required by law to file a
registration form with the Employment
Development Department (EDD) within
fifteen (15) calendar days after paying over
$100 in wages for employment in a
calendar quarter, or whenever a change in
ownership occurs.
Excise taxes-BOE
• If a church in California purchases something from an
out of state vendor, the church is usually not charged
sales tax because the vendor is from another
state. However, in California tax code 165.0014 excise
taxes are to be imposed upon churches and religious
organizations that purchase tangible personal
property from out-of-state sellers for use in
California.
• FORM 401-DS by January 31st of each year
• When the church gets products and begins to use
them, it is required to report the purchase and pay an
excise tax equal to the regular California sales tax.
Useful California Government Websites
• http://www.ca.gov/ Home page for California
Government
• http://www.ca.gov/Apps/Agencies.aspx All
California Agencies
• http://www.sos.ca.gov/ Secretary of State
• http://www.edd.ca.gov/ Employment
Development Department
• https://www.ftb.ca.gov/ Franchise Tax Board
• http://www.boe.ca.gov/ Board of Equalization
EDD
DOL
INSURANCE
IRS BOE
CA
FTB
Homeland Security
What Questions can I answer for
You?
Rod Wiltrout
Church Finance Specialist
(559) 256-0858 direct line
(559) 287-7840 cell phone
rwiltrout@csbc.com
www.csbc.com/financialmatters
16