California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 2 - The Bank and Corporation Franchise Tax › Article 1 - Definitions and General Provisions › Section 23101.5 - Exclusion of Certain Activities from Taxing Jurisdiction

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The Franchise Tax Board may determine
					 that a corporation is neither "doing business" and subject to the corporation
					 franchise tax under Chapter 2 nor "deriving income from sources within the
					 state" and subject to the corporation income tax under Chapter 3 if the number
					 of the corporation's employees and its only activities within the state are
					 limited to those described in Revenue and Taxation Code section
					 23101.5,
					 subdivision (a).
(b) Purchasing,
					 Inspecting, and Consulting Activities. All of the employees' duties enumerated
					 in Revenue and Taxation Code section
					 23101.5,
					 subdivision (a)(1), refer to activities in connection with the corporation's
					 purchase of personal property or services in this state. The term "purchase of
					 personal property" includes the storage of property purchased, manufactured or
					 assembled in this state pending shipment to destinations outside California. An
					 employee "temporarily present in this state" will not invalidate a
					 corporation's qualification for this exclusion by causing the corporation to
					 exceed the limitation of 100 or 200 employees, as applicable. An employee is
					 "temporarily present in California" if his contact with this state,
					 disregarding the provisions of Revenue and Taxation Code section
					 23101.5,
					 would not be sufficient to subject his employer to California's franchise or
					 income tax.
(c) Educational
					 Activities. A corporation may qualify for the exclusion provided by Revenue and
					 Taxation Code section
					 23101.5,
					 if the presence of employees in this state is only for the purpose of attending
					 a public or private school, college or university or other educational or
					 training program, including those at industrial facilities.
(d) Information to Be Reported. A corporation
					 claiming an exclusion with respect to the activities described in Revenue and
					 Taxation Code section
					 23101.5,
					 subdivisions (a)(1) and (b), must submit an application containing the
					 following information:
(1) Applicant's
					 corporate name and federal employer identification number, if any,
(2) Applicant's mailing address,
(3) Applicant's date of
					 incorporation,
(4) Applicant's
					 accounting period for tax purposes,
(5) Years applicant has filed California
					 franchise tax or corporate income tax returns within the four taxable years
					 preceding the taxable year for which the exemption is sought,
(6) Corporations in which applicant owns 50
					 percent or more of the voting stock,
(7) Corporations which own 50 percent or more
					 of applicant's voting stock,
(8)
					 Names and addresses of businesses or individuals with which the applicant
					 expects to or has purchased personal property or services and which are to be
					 covered by the exclusion,
(9) To
					 the extent determinable, the names of employees applicant expects to be present
					 within the state during the taxable year, and the expected duration of each
					 employee's presence in this state,
(10) To the extent determinable, destination
					 and use of personal property and services contracted for which are to be
					 covered by the exclusion,
(11) The
					 period for which the exclusion is requested, or facts which would support an
					 exclusion of indefinite duration,
(12) The estimated number of California jobs
					 created and economic effect upon California resulting from the activities for
					 which the exclusion is sought.