Consequences of Forgetting to File California's Statement of Information
The California Secretary of State imposes a penalty for failure to file the Statements of Information for the following types of business entities:
Corporations - annually (statement due once a year)
Nonprofit Corporations - biennially (statement due once every two years)
Limited Liability Companies - biennially (statement due once every two years)
These forms are also known as Statement of Officer filings and can be completed online on the SOS website. Statements of Information may be filed online at http://www.sos.ca.gov/business-programs/bizfile/.
The Franchise Tax Board will assess the penalty after the business is notified by the Secretary of State of late filing or failure to file. The penalty amount varies depending on the entity.
Domestic and foreign corporations - $250 penalty
Domestic nonprofit corporations - $50 penalty; applies for any entity incorporated as a nonprofit corporation, whether or not the corporation is tax-exempt
Domestic and foreign limited liability companies - $250 penalty
Penalty Waiver or Dispute
Only the Secretary of State can waive the penalty. The Franchise Tax Board is only responsible for the collection of the penalty.
Disputing a Penalty Assessed to a Business Entity
A request to waive the penalty for failure to file the Statement of Information can be submitted in writing to the Secretary of State, Statement of Information Unit – Attention: Penalties, P.O. Box 944230, Sacramento, CA 94244–2300, or you may submit a request online at Email Penalty Waivers.
The waiver request must include an explanation of the reasonable cause or unusual circumstance supporting the business entity's failure to file the required statement timely. Failing to receive a reminder notice to file does not excuse an entity from filing the required statement. Note: If a current statement has not been filed, the waiver request must be accompanied by a completed statement and the applicable filing fee. Online services for submitting the required Statement of Information for all LLCs and for most corporations are available at http://bizfile.sos.ca.gov using a credit card. When submitting online, a free PDF copy of the filed Statement of Information will be returned electronically to the submitter following confirmation of payment if an email address is provided at the time of submission.
FTB Suspension or Revocation of Tax Exempt Status
Beyond assessing a penalty, the Franchise Tax Board may suspend your organization, and worst yet, they may revoke your organization's tax exempt status for failure to file. You can check on the status of your organization by visiting the Secretary of State's website. You may search using your corporation name or entity number. The California Business Search provides online access to information for corporations, limited liability companies and limited partnerships of record with the California Secretary of State.
If your organization needs assistance in filing its Statement of Information, correcting a suspended status, or reinstating tax exempt status, please contact our law firm.