Assembly Bill 1040 (Assembly Revenue and Taxation Committee), as enacted on October 3, 1997, made the following changes to California law:
SUBJECT: Information Reporting/Discharges, Information Reporting/Bond Interest, Corporate Definition to Include Banks, Remove Credit Elections, Operative Date, Financial Corporation Offset, Apportioning Reference Correction, Interest on Overpayment, Reference Correction, Redundant Reference, Legislative Intent
Unless otherwise specified, the provisions of this act apply to taxable or income years beginning on or after January 1, 1997.
Section 30 of the Business and Professions Code is amended.
This act corrects a reference to reflect the renumbering of Section 19276 to Section 19528 in prior legislation.
NOTE: This act chaptered out the changes to Section 30 of the Business and Professions Code made by Senate Bill 1106 (Stats. 1997, Ch. 604). However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106.
Section 1666.5 of the Insurance Code is amended.
This act corrects a reference to reflect the renumbering of Section 19276 to Section 19528 in prior legislation.
NOTE: This act chaptered out the changes to Section 1666.5 of the Insurance Code made by Senate Bill 1106 (Stats. 1997, Ch. 604). However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106.
Sections 17052.15, 17053.45, 17053.46, 23612.6, 23645, and 23646 of the Revenue and Taxation Code are amended.
This act removes the election provision from the LARZ sales or use tax credit, the LAMBRA sales or use tax credit and the LAMBRA hiring credit that required the taxpayer to elect, on the original return, one credit if the expenditure for the property or employee’s wages qualifies the taxpayer for more than one credit. This act replaces that election with a provision limiting the taxpayer to one credit with respect to qualified property or employees that qualify for the specified credits (i.e., LARZ or LAMBRA sales or use tax credit or LAMBRA hiring credit).
This act also replaces the phrase "bank or corporation" with the term "corporation" in Sections 23612.6 and 23645 (see #5 below).
The credit election provisions retroactively apply to the dates the affected code sections were originally enacted.
Section 17220 of the Revenue and Taxation Code is amended
This act removes an unnecessary and redundant reference to Section 23097. The reference in this section to tax imposed under Part 11 is all inclusive of the taxes imposed under that part, which includes Section 23097.
NOTE: This act chaptered out the changes to Section 17220 made by Senate Bill 1106 (Stats. 1997, Ch. 604). However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106.
Sections 18402, 18604, 18606, 18621.5, 18637, 18638, 18662, 18670, 19009, 19011, 19023, 19058, 19132.5, 19141.5, 19147, 19164, 19192, 19254, 19263, 19301, 19392, 19411, 19542, 19563, 19701, 19705, 19706, 19719, 23037, 23038, 23040.1, 23095, 23098, 23151, 23151.1, 23151.2, 23153, 23303, 23305.2, 23334, 23501, 23610.5, 23623.5, 23625, 23731, 24346, 24356.4, 24356.8, 24357, 24358, 24359, 24402, 24407, 24408, 24409, 24411, 24416, 24416.2, 24677, 24678, 24901, 24912, 24916, 24917, 24942, 25105, 25110, 25111, 25112, and 25128 of the Revenue and Taxation Code are amended.
This act makes the following changes relating to the definition of "corporation:"
- Modifies the definition of "corporation" to include banks, unless specifically provided otherwise; Provides specific language to exempt banks from existing provisions of law for which intentional differences between the treatment of corporations and banks is clear, such as the corporation income tax; and Replaces the phrase "bank or corporation" with the term "corporation."
This act also makes various minor technical changes to Sections 23037, 23095, 23098, 23153, 23334, 23501, 24346, 24357, 24359, 24402, 24407, 24408, 24409, 24677, 24678, 24901, 24912, 24916, 24917, 24942, 25105, 25110, 25111, 25112, and 25128.
The department’s policy of not allowing section 24411 to be applicable to banks is reversed by this act. As a result, this act allows foreign banks to pay exempt dividends to a domestic water’s edge taxpayer.
This provision retroactively applies to the dates the affected code sections were originally enacted, except the changes made to Section 24411, which applies to income years beginning on or after January 1, 1998.
NOTE: The changes made by this act to Section 23038 were chaptered out by Senate Bill 1234 (Stats. 1997, Ch. 608). However, since this act and SB 1234 were double-joined and SB 1234 contained these provisions of this act, the enactment of SB 1234 preserved the provisions of this act.
NOTE: The changes made by this act to Section 24359 were chaptered out by Senate Bill 455 (Stats. 1997, Ch. 611). However, since this act and SB 455 were double-joined and SB 455 contained these provisions of this act, the enactment of SB 455 preserved the provisions of this act.
NOTE: This act chaptered out the changes to Section 24416.2 made by Senate Bill 1106 (Stats. 1997, Ch. 604) relating to an expired enterprise zone or Los Angeles Revitalization Zone and by AB 1217 (Stats. 1997, Ch. 604) relating to tax incentives for targeted tax areas. However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106. Clean-up legislation will be sought to reinstate the provisions of AB 1217.
NOTE: Pursuant to Section 110 of this act, amendments to Section 24411 apply from original effective date of that section, while Section 112 of this act provides that the amendments apply to income years beginning on or after January 1, 1998. Clean-up legislation will be sought in 1998 to clarify that the amendments apply to income years beginning on or after January 1, 1998.
Section 18639 of the Revenue and Taxation Code is amended.
This act creates a reporting requirement for certain payers of interest or dividends attributable to bonds issued by another state that are exempt from federal taxation. The reporting requirement does not apply if the payment is made to any of the following:
- A corporation.
- An organization exempt from taxation under Section 23701 or an individual retirement plan.
- The United States or any wholly owned agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States, any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing.
- A foreign government, a political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing.
- An international organization or any wholly owned agency or instrumentality thereof.
- A foreign central bank of issue.
- States or a state, the District of Columbia, or possession of the United States.
- An investment company, as defined in Section 80a-3 of the United States Code, registered at all times during the taxable year under the Investment Company Act of 1940.
- A common trust fund, as defined in Section 17671.
- Any trust that is exempt from tax under Section 664(c) of Title 15 of the Internal Revenue Code.
This provision applies to information returns required to be filed after January 1, 1998.
Section 18645 of the Revenue and Taxation Code is amended.
This act allows the department to require taxpayers to file with the department a copy of the federal information return relating to the discharge or cancellation of indebtedness.
This provision applies to returns required to be filed on or after January 1, 1998, for discharges made in taxable or income years beginning on or after January 1, 1997.
NOTE: Senate Bill 455 (Stats 1997, Ch. 611) chaptered out the changes to Section 18645 made by this act. However, since SB 455 contained the same provisions as this act, the enactment of SB 455 preserved the provisions of this act.
Sections 19021, 19024, 23183.1, and 23183.2, 23332, 23332.5, 23455, 23802,23809, 23811, of the Revenue and Taxation Code are amended.
This act removes references to Section 23184 made obsolete by the repeal of that section by this act (see #11 below).
This act also replaces the phrase "bank or corporation" with the term "corporation" in Sections 19021, 19024, and 23455 (see #5 above).
NOTE: This act chaptered out the changes to Sections 19021, 19024, 23183.1, 23183.2, 23809, and 23811 made by Senate Bill 1106 (Stats. 1997, Ch. 604). However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106.
NOTE: The changes made by this act to Section 23802 were chaptered out by SB 5 (Stats. 1997, Ch. 610), SB 455 (Stats. 1997, Ch. 611), and SB 1233 (Stats. 1997, Ch. 612). Thus, the reference to Section 23184 remains in this section, but clean-up legislation will be sought in the 1998 legislative session.
Section 19141.6 of the Revenue and Taxation Code is amended.
This act removes an obsolete reference to Section 18634, which was repealed by Senate Bill 887 (Stats. 1995, Ch. 490).
This act also replaces the phrase "bank or corporation" with the term "corporation" in these code sections (see #5 above).
NOTE: This act chaptered out the changes to Section 19141.6 made by Senate Bill 1106 (Stats. 1997, Ch. 604). However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106.
Section 19340 of the Revenue and Taxation Code is amended.
This act provides that when an overpayment is credited against any amount due, any interest on that overpayment also will be credited against any amount due. This act also includes a reference to "this part," which is the AFITL.
NOTE: This act chaptered out the changes to Section 19340 made by Senate Bill 1106 (Stats. 1997, Ch. 604). However, since this act contained the same provisions as SB 1106, the enactment of this act preserved the provisions of SB 1106.
Sections 23184, 23184.5, 23185, 23185a, and 23185b of the Revenue and Taxation Code are repealed.
This act repeals code sections relating to financial corporation offsets made obsolete by the enactment of Assembly Bill 66 (Stats. 1979, Ch. 1150). AB 66 eliminated the purpose of the offset provisions by granting financial corporations the same treatment as banks with respect to local governments.
NOTE: Senate Bill 1106 (Stats. 1997, Ch. 604) also contained provisions to repeal these code sections.
Section 23186 of the Revenue and Taxation Code is amended.
This act removes language regarding the calculation of the bank tax rate that was made obsolete by the provision that sets the bank tax rate at the franchise tax rate plus 2% for income years ending on or after December 31, 1995.
The removal of the language is operative on January 1, 1998.
Sections 23186.1, 23186.2, and 23186.5 of the Revenue and Taxation Code are repealed.
This act repeals sections, which relate to the bank tax rate calculation, made obsolete by the 2% rate in Section 23186 (see #12 above).
Section 109 of this Act.
This act amends Chapter 952 of the Statutes of 1996, which enacted SB 715 on September 26, 1996, to reflect that its provisions apply to taxable or income years beginning on or after January 1, 1997. SB 715 as enacted specified only that the provisions applied to taxable years beginning on and after January 1, 1997.
Section 113 of this Act.
This act states the intent of the Legislature to replace references to the Standard Industrial Classification Manual published by the United States Office of Management and Budget, 1987 edition, with code section references to the North American Industry Classification System (NAICS), which was published in 1997.
This act does not require any reports by the department to the Legislature.