AB 2084 California Assembly · 2025-2026 Regular Session

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

Summary

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 breaches of organizational reporting or governance requirements. This bill would take effect immediately as a tax levy.

Issues: ✓ Budget & Taxes

Bill status passed both 4 of 5 stages cleared

Introduction

Feb 2026

Committee Review

Aug 2026

Assembly Passage

May 2026

Senate Passage

Aug 2026

Governor

Introduced Feb 18, 2026 Last action Aug 27, 2026

Maddy AI version diff · 4 comparisons

What changed between versions

08/24/26 - Enrolled → AB2084 · 1 edit

MINOR

No substantive policy changes were made between these two versions. The diff reflects a change in presentation format only: the 'From' version is the formal enrolled bill document with page numbers, clerk signature blocks, and traditional legislative formatting, while the 'To' version is a web-based rendering of the same text from the California Legislature website, complete with navigation menus, search tools, and metadata. The statutory language amending Section 23701 of the Revenue and Taxation Code is identical in both versions.

TECHNICAL

The bill text was reformatted from a traditional enrolled legislative document (with page numbers, signature blocks for the Chief Clerk, Secretary of the Senate, and Private Secretary of the Governor) into a web page layout with navigation elements, search functionality, and version history metadata. No changes to the underlying statutory language were made.

03/27/26 - Amended Assembly → 04/20/26 - Amended Assembly · 3 edits · Apr 20, 2026

MINOR

The April 20 amendment removes the detailed 90-day cure period that previously gave organizations a formal window to respond to a federal revocation by submitting proof of error or an independent state exemption application. In its place, the bill now simply grants the Franchise Tax Board discretion to maintain a state tax-exempt status if the federal suspension or revocation was not caused by fraud, misrepresentation, misuse of funds, failure to file, or other significant governance breaches. This shifts the process from a rights-based cure mechanism for organizations to a purely discretionary determination by the board.

Scope change

The bill's scope is narrowed in two ways: (1) the 90-day cure right that applied to any organization whose federal exemption was revoked is removed, and (2) the discretionary retention provision now explicitly references 501(c)(3) organizations, which may limit its application relative to the prior broader language covering all 501(c)(3), (c)(4), (c)(5), (c)(6), (c)(7), and (c)(19) organizations.

REQUIREMENT

The 90-day cure period is eliminated. Previously, upon a federal revocation, the board was required to send written notice of intent to revoke, and the organization had 90 days to submit either evidence that the federal revocation was in error or reinstated, or an application for state exemption independent of federal status. If the organization acted within the window, its state exemption remained active during review.

ENFORCEMENT

The mechanism for handling federal suspensions and revocations is simplified to a single discretionary standard: the Franchise Tax Board may maintain the state exemption if the federal action was not related to fraud, intentional misrepresentation, misuse or diversion of organizational funds, failure to file required returns or reports, or other significant breaches of organizational reporting or governance requirements.

SCOPE

The discretionary retention language now specifically references organizations exempt under Section 501(c)(3) of the Internal Revenue Code, potentially narrowing which organizations qualify for the board's discretionary retention compared to the prior version that applied more broadly across all listed 501(c) categories.

Floor votes · Senate Aug 20, 2026 · Assembly May 21, 2026

How they voted

28–10

Passed · 2 other

Total votes 40

Aug 20, 2026

D Democratic30

28 Yea 2

93% Yea

R Republican10

10 Nay

100% Nay

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Aug 20, 2026

Lower · Passed

In Assembly. Ordered to Engrossing and Enrolling.

lower

Aug 20, 2026

Upper · Passed

Read third time. Passed. Ordered to the Assembly. (Ayes 28. Noes 10.).

upper

Aug 13, 2026

Upper · Passed

From committee: Do pass. (Ayes 5. Noes 2.) (August 13).

upper

Aug 3, 2026

Committee

In committee: Referred to APPR. suspense file.

upper

Jun 24, 2026

Upper · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0.) (June 24). Re-referred to Com. on APPR.

upper

Jun 3, 2026

Committee

Referred to Com. on REV. & TAX.

upper

May 21, 2026

Lower · Passed

Read third time. Passed. Ordered to the Senate. (Ayes 56. Noes 16. Page 5224.)

lower

May 14, 2026

Lower · Passed

From committee: Do pass. (Ayes 11. Noes 3.) (May 14).

lower

May 13, 2026

Committee

In committee: Set, first hearing. Referred to APPR. suspense file.

lower

Apr 28, 2026

Lower · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 2.) (April 27). Re-referred to Com. on APPR.

lower

Apr 21, 2026

Committee

Re-referred to Com. on REV. & TAX.

lower

Apr 20, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.

lower

Apr 13, 2026

Committee

In committee: Set, second hearing. Referred to REV. & TAX. suspense file.

lower

Apr 6, 2026

Lower · Passed

In committee: Set, first hearing. Hearing canceled at the request of author.

lower

Apr 6, 2026

Committee

Re-referred to Com. on REV. & TAX.

lower

Mar 27, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.

lower

Mar 2, 2026

Committee

Referred to Com. on REV. & TAX.

lower

Feb 19, 2026

Lower · Passed

From printer. May be heard in committee March 21.

lower

1 primary · 0 co-sponsors