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Tax News
Legislative wrap-up 2007

Here is our annual summary of tax-related legislation enacted this session.

Assembly bills:

AB 14 (Laird, Stats. 2007, Ch. 568): Establishes the Civil Rights Act of 2007, which amends various California Codes to redefine characteristics that form the basis for prohibited discrimination.

AB 28 (Huffman, Stats. 2007, Ch. 486): Extends the California Breast Cancer Research Fund voluntary contribution “check-off” from 2008 to 2013.

AB 62 (Nava, Stats. 2007, Ch. 224): Adds the wildfires that occurred in El Dorado, Santa Barbara, and Ventura counties to the current list of specified disasters under the Personal Income Tax and Corporation Tax Laws.

AB 67 (Dymally, Stats. 2007, Ch. 259): Adds definitions for “qualified bilingual person, employee, or interpreter” and would expand the instances in which a state agency may be exempted from the requirements of delivering bilingual services.

AB 198 (Assembly Budget Committee, Stats. 2007, Ch. 381): Amends current law to do the following:

  • Determine an LLC's fee based on the LLC’s total income from all sources derived from or attributable to the state. The level of activity would be determined by applying the current law’s franchise/income tax sales factor rules to the total income of the LLC (as defined in the bill) in order to calculate the amount of total income from all sources derived from or attributable to the state.
  • Provide that if the LLC fee is finally adjudged to be discriminatory or unfairly apportioned, any taxpayers that file claims for refund asserting that the LLC fee is discriminatory or unfairly apportioned would have the amount of their claim for refund calculated in an amount necessary to remedy the discrimination or unfair apportionment required by the statute.

AB 297 (Maze, Stats. 2007, Ch. 225): Adds the fruit and nut trees that were severely damaged by the freeze of January, 2007, to the current property tax exemptions allowed for trees subject to other specified freezes.

AB 299 (Tran, Stats. 2007, Ch. 130): Makes technical, non-substantive changes to various code sections, including the Revenue & Taxation Code.  

AB 361 (Ma, Stats. 2007, Ch. 105): Requires an administrator or executor of a deceased person’s estate to provide notice of the estate’s administration to FTB no later than 90 days after the date letters are first issued to a general personal representative. Any estate opened on or after July 1, 2008 must provide to FTB notice of the estate’s administration.

AB 367 (De Leon, Stats. 2007, Ch. 132): Makes the following changes to the existing Court Ordered Debt Collection program:

  • Reduces the minimum amount of court ordered debts referred for collection to FTB from $250 to $100.
  • Adds public defender fees to the county collection programs for court ordered debts.
  • Authorizes debt referrals based on violations for parking and registration, and offenses by pedestrians and bicyclists.

AB 650 (Lieu, Stats. 2007, Ch. 606): Requires employers to notify employees of their potential eligibility for the federal earned income tax credit.

AB 897 (Houston, Stats. 2007, Ch. 238): Eliminates the requirements for certain federally tax-exempt entities to apply for California income tax exemption. Specifically, this bill would allow 501(c)(3) organizations that are granted federal tax-exempt status to submit a copy of the IRS tax-exempt notice to FTB to establish California income tax exemption. 501(c) (3) organizations would no longer be required to file an exemption application with FTB or submit a $25 filing fee.

AB 1020 (Runner, Stats. 2007, Ch. 277): Authorizes the recorder of any county to accept for recording, in lieu of paper, digitized images or digital images or both of a recordable instrument, paper, or notice under the following conditions:

  • The image conforms to all other applicable statutes that prescribe the criteria for recordability.
  • The requester and addressee for delivery of the recorded images are the same and can be readily identified as a local or state government entity or an agency, branch, or instrumentality of the federal government.

AB 1168 (Jones, Stats. 2007, Ch. 627): Requires FTB to truncate Social Security Numbers (SSNs) by redacting the first five digits of the SSN.  The SSN would be redacted on any record created by FTB that is disclosable under the Public Records Act and expressly includes tax liens. 

AB 1199 (Richardson, Stats. 2007, Ch. 408): Applies existing provisions of the white collar crime enhancement statutes to include cases where the felonious acts result in the loss of more than $100,000.

AB 1360 (Anderson, Stats. 2007, Ch. 281): Requires that Notice of Proposed Assessments and final deficiency notices issued by FTB be postmarked for all notices issued on or after January 1, 2008.

AB 1747 (Assembly Revenue & Taxation Committee, Stats. 2007, Ch. 341): Makes three changes to the Revenue and Taxation Code:

  • Revises check-casher reporting requirements to exclude government, payroll, and one-party checks, as defined. 
  • Defines the term "last known address" for legal notices.
  • Changes the date that the annual Taxpayers' Bill of Rights Report is due to the Legislature from October 1 of each year to December 1 of each year.

AB 1748 (Assembly Revenue & Taxation Committee, Stats. 2007, Ch. 342): Amends existing law to more closely conform to federal law by applying the general statute of limitations for claims for refund to complete/partial relief and by disallowing any claims for refund for separateallocation relief.

Senate bills:

SB 38 (Battin, Stats. 2007, Ch. 222): Adds the wildfires that occurred in Riverside County in October, 2006, to the current list of specified disasters under the Personal Income Tax and Corporation Tax Laws. 

SB 41 (Battin, Stats. 2007, Ch. 1): Adds an uncodified provision to the Revenue and Taxation Code that allows payments made by certain tax-exempt organizations to the family members of any firefighter who died as a result of the October, 2006, Esperanza fire to be treated as payments made in furtherance of the charitable purpose of that organization, to prevent the loss of that organization’s California tax-exempt status. 

This act specifically states that the provision would apply to any payments made on or after October 26, 2006, and before June 1, 2007.

SB 87 (Senate Budget Committee, Stats. 2007, Ch. 180): Repeals the Teacher Retention Tax Credit.

SB 105 (Migden, Stats. 2007, Ch. 426): Makes technical changes with respect to how Registered Domestic Partnerships calculate joint federal adjusted gross income (AGI) for the purpose of computing limitations for state purposes, to be consistent with the calculation of joint federal AGI limitations for married persons. 

SB 114 (Florez, Stats 2007, Ch. 223): Allows taxpayers special disaster loss treatment for losses sustained resulting from the January 2007 freezing conditions.

SB 519 (Senate Governmental Organization Committee, Stats. 2007, Ch. 92): Authorizes a state body to call a special meeting for purposes of providing for an interim executive director of the state body upon the death, incapacity, or vacancy in the office of the executive officer.

SB 644 (Correa, Stats. 2007, Ch. 189): Removes the requirement that an abstract of judgment contain the debtor’s full Social Security number (SSN), and replaces it with the requirement that only the last four digits of that debtor’s SSN be shown. This requirement to show only the last four digits of the SSN would be applicable to other related court documents, such as Amendments to an Abstract of Judgment.

SB 788 (Cogdill, Stats. 2007, Ch. 306): Allows FTB to apply discretion for deciding when to examine water’s-edge taxpayers for noncompliance issues, including transfer pricing, based on an analysis of all factors, including the relative levels of noncompliance and materiality.

SB 898 (Simitian, Stats. 2007, Ch. 665): Extends both the State Children’s Trust Fund and the Fish and Game Preservation Fund check-off from 2008 to 2013.

SB 920 (Oropeza, Stats. 2007, Ch. 666): Authorizes FTB, subject to federal requirements, to annually provide the State Controller’s Office with specific information from the business entity returns or other business entity records maintained by FTB. The information authorized for disclosure by this act includes the following:

  • Taxpayer name.
  • Taxpayer identification number.
  • Taxpayer address.
  • Taxpayer’s principal business activity code.

SB 1043 (Senate Revenue & Taxation Committee, Stats. 2007, Ch. 309): Excludes evidence of settlement negations with FTB in administrative and civil tax dispute forums in California.

SB 1044 (Senate Revenue & Taxation Committee, Stats. 2007, Ch. 156): Removes any ambiguity regarding the authority of FTB to disallow deductions for unreported payments made for personal services, by eliminating obsolete cross references.