Legislative bill watch list July 2020 Tax News

Many tax bills are introduced at the beginning of each legislative season. As bills move through the first house portion of the legislative process, the number of bills that continue to move forward dwindles. Below are a number of franchise and income tax related bills that have passed to the second house:

  • AB 2068 Voluntary contribution – California Firefighters’ Memorial Fund and California Peace Officer Memorial Foundation Fund
  • AB 2247 Dependent Exemption Credit – allow alternate identification for dependent ineligible for ITIN
  • AB 2660 Nonresident group return with nonresident aliens
  • AB 3372 Electronic Withholding Orders/Water’s Edge Election and Doing Business
  • SB 587 Voluntary Contribution – California Sea Otter Fund
  • SB 934 Exempt Organizations Filing Fees
  • SB 1030 Housing omnibus – Low-income Housing Credit
  • SB 1410 COVID-19 Eviction Relief Credit

Other bills of interest that have passed to the second house include:

  • AB 102 CalSavers Retirement Savings Trust Act
  • AB 289 Establish a California Public Records Act Ombudsperson to review contested denials of public records requests
  • AB 2028 State Agencies/Bagley-Keene Open Meeting Act
  • AB 2528 Taxpayer Bill of Rights timeframe for response to request for written advice
  • AB 2570 Expand False Claims Act to include tax matters
  • AB 3362 State Bar nontax debt collection – Client Security Fund

The California legislature passed a state budget on June 15, 2020. On June 10, 2020, two budget trailer bills, AB 85 and SB 114, were amended to include provisions that would impact FTB. On June 22, 2020, two additional budget trailer bills, AB 93 and SB 124, were amended to include changes to the CalEITC. AB 85 is currently enrolled, and includes provisions that:

  • For taxable years beginning on or after January 1, 2020, and before January 1, 2023, limit the amount of allowable business credits, as specified, to $5 million.
  • Extend film credit carryover periods under Revenue and Taxation Code sections 17053.95 and 23695.
  • Suspend NOL deductions for taxable years beginning on or after January 1, 2020, and before January 1, 2023, for taxpayers with income, as defined, of $1 million or more. The provision would also extend the carryover period, as specified in the bill.
  • Provide a first year exemption from the annual tax for limited partnerships, limited liability partnerships, and limited liability companies that register, file, or organize with the Secretary of State on or after January 1, 2021, and before January 1, 2024.
  • Allow the credit related to new advanced strategic aircraft to reduce tax below the tentative minimum tax.
  • Make clarifying changes to the Individual Shared Responsibility Penalty and limit the monthly penalty for a responsible individual with an applicable household size of five or more to the maximum monthly penalty for a responsible individual with an applicable household size of five individuals.

AB 93 is currently enrolled, and would modify the CalEITC by removing restrictions requiring certain SSNs and allowing limited use of federal ITINs by eligible individuals who have a qualifying child under six years old as of the last day of the taxable year. As a result of the changes to the CalEITC, this bill also would expand eligibility for the YCTC.

For more information on these and other bills we’re currently analyzing, search for legislative information on our website. You can also follow legislative bills by using California Legislative Information website.