AB-2084 • 2026

Corporation Tax Law: tax-exempt organizations: revocation of tax-exempt status.

Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Bauer-Kahan
Last action: 2026-04-21
Official status: Re-referred to Com. on REV. & TAX.
Effective date: Not listed

Plain English Breakdown

The bill summary does not provide specific details on how the Franchise Tax Board will make decisions about retaining tax-exempt status.

Rules for Nonprofit Organizations' Tax Status

The bill allows the Franchise Tax Board to retain California's tax-exempt status for nonprofit organizations that lose their federal tax-exempt status, unless it is due to specific reasons such as fraud or misuse of funds.

What This Bill Does

Changes rules about when a nonprofit organization can lose its California tax exemption.
Allows the Franchise Tax Board to decide whether to keep an organization's tax-exempt status in California even if it loses federal tax-exempt status for reasons other than serious misconduct or failure to follow rules.

Who It Names or Affects

Nonprofit organizations in California
The Franchise Tax Board

Terms To Know

Franchise Tax Board: A state agency that collects taxes from businesses and individuals in California.
Tax-exempt status: When an organization does not have to pay certain types of taxes because it serves a public or charitable purpose.

Limits and Unknowns

The bill does not specify what happens if the Franchise Tax Board decides to keep an organization's tax-exempt status.
It is unclear how this change will affect specific organizations that lose their federal tax-exempt status.

Bill History

2026-04-21 California Legislative Information
Re-referred to Com. on REV. & TAX.
2026-04-20 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2026-04-13 California Legislative Information
In committee: Set, second hearing. Referred to REV. & TAX. suspense file.
2026-04-06 California Legislative Information
In committee: Set, first hearing. Hearing canceled at the request of author.
2026-04-06 California Legislative Information
Re-referred to Com. on REV. & TAX.
2026-03-27 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
2026-03-02 California Legislative Information
Referred to Com. on REV. & TAX.
2026-02-19 California Legislative Information
From printer. May be heard in committee March 21.
2026-02-18 California Legislative Information
Read first time. To print.

Official Summary Text

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.

Current Bill Text

Read the full stored bill text

Download Bill PDF