what is the state of california franchise tax board

What is the California Franchise Tax Board?

The California Franchise Tax Board ( FTB) collects state personal income tax and corporate income tax of California. It is part of the California Government Operations Agency . The board is composed of the California State Controller, the director of the California Department of Finance, and the chair of the California Board of Equalization.

How much does the FTB collect in California?

Over the past decade, the FTB has collected an average of $9.5 billion per year in corporate income taxes.

What does the FTB do?

The FTB also collects delinquent vehicle registration debt collections on behalf of the California Department of Motor Vehicles and delinquent court ordered debt. The FTB also does financial audits of certain candidates for state office, ballot proposition committees, and lobbyists, according to a random selection process by the California Fair Political Practices Commission .

What is the FTB tax?

Corporate income tax. The FTB levies a franchise tax on businesses for doing business in California. The FTB's name reflects the fact that it was originally created to collect this tax. The agency's name was left unchanged even after the state created a personal income tax and added it to the FTB's responsibilities.

How much does the FTB collect?

Meanwhile, non-residents are taxed on their California-based income. In recent years, the FTB collects more than $50 billion each year in personal income taxes.

Who was the first woman to be a franchise tax commissioner?

The Executive Officer of the Franchise Tax Board is Selvi Stanislaus, the first woman to hold the post. She assumed this position in 2006.

When did California adopt its constitution?

In 1879 California adopted its state constitution which among many other programs created the State Board of Equalization and the State Controller, which administered all tax programs.

How long has Rachael been with FTB?

Rachael has been with FTB since 1991. Her extensive knowledge of audit programs came from serving as the Individual and Pass-Through-Entity (IPTE) Bureau Director and managing and working in several audit business areas for 26 years. Her experience covers personal income tax, pass-through entities, federal audits, audit policy, protest resolution, financial operations, and human resource activities for audit.

Who is the Chairman of the Board of Equalization?

Antonio Vazquez serves as Chairman of the Board of Equalization (BOE), representing 10 million constituents living in the 3rd District, which includes most of Los Angeles County, all of Ventura County, and a portion of San Bernardino County.

Who is Jennifer from FTB?

Jennifer has worked for FTB since 1988. She began her career in the filing program. Since then she has held a variety of positions in the Filing and Accounts Receivable Management (ARM) Divisions. She has led and managed large collection programs. She directed the recovery of delinquent business entity taxes, personal income taxes, and all nontax debts (referred from 400 state and local agencies). ARM collects more than $3.4 billion and $578 million annually for the tax and nontax programs respectively.

Who Must Pay the California Tax Franchise Fee?

California business entities must pay the $800 minimum franchise tax each year, even if they don’t conduct any business or operate at a loss. Types of businesses that must pay the minimum tax include:

What is a business in California?

In general, a business is “doing business” in California if it engages in transactions in California for financial gain or if it meets other criteria such as having a certain amount of sales or property or paying a certain amount of compensation in California. Sole proprietorships and general partnerships do not have to pay the fee.

What is an out of state business?

Out of state business entities that are registered with the Secretary of State to do business in California. Out of state business entities that do business in California, even if they are not formally registered. In general, a business is “doing business” in California if it engages in transactions in California for financial gain ...

What does double billing mean in California?

This double billing can mean that the cost to start a business in California is more than you budgeted for.

When are franchise taxes due?

The first year’s franchise tax fee is due no later than the fifteenth day of the fourth month after the business entity was formed. After that, the annual fee must be paid by April 15th. Thus, if you formed an LLC on June 1st, the first annual fee would be due on October 15th, and the second year’s fee would be due on April 15th of the following year.

Do sole proprietorships have to pay fees?

Sole proprietorships and general partnerships do not have to pay the fee.

Does California have franchise tax?

California imposes a minimum franchise tax on all business entities in the state. Find out who must pay the tax and how you can avoid being double billed if you are forming a business near the end of the year. If you are starting a business in California you may be surprised to learn that California business entities must pay a minimum franchise ...

What is franchise tax in California?

The California annual franchise tax is exactly what it sounds like—a tax that the state's business owners must pay yearly. It is simply one of the costs of doing business if you choose to register your entity in California. The franchise tax is a special business tax required in California and about a dozen other U.S. states.

When are franchise taxes due?

For corporations, the minimum franchise tax is due the first quarter of each accounting period . For LLCs, the first-year annual franchise tax is due the 15th day of the fourth month from the date you file your business with the secretary of state.

What is the minimum franchise tax due?

For corporations, the $800 figure is the minimum franchise tax due. The state requires corporations to pay either $800 or the corporation's net income multiplied by its applicable corporate tax rate, whichever is larger.

How long do you have to file a franchise tax return?

Generally, however, the entity must pay a franchise tax whether the company is fully active, inactive, operating at a loss, or files a return for a period shorter than 12 months. This rule holds for all types of business entities subject to the franchise tax, making this business expense extremely difficult to escape.

Is a limited liability company subject to franchise tax?

If your business is any of the types that offer limited liability—including limited liability company (LLC), S corporation, C corporation, limited partnerships (LP), or limited liability partnership (LLP)—it will be subject to the California annual franchise tax. Sole proprietorships, general partnerships, and tax-exempt nonprofits are not required to pay this tax.

Overview

History

Tax programs

Non-tax programs

See also

External links