Legislative wrap-up 2008
Here is our annual summary of tax-related legislation enacted this session.
AB 583 (Hancock, Stats. 2008, Ch. 735): Establishes the Fair Elections Fund and places the Voters Fair Elections Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 return.
AB 1279 (Assembly Budget Committee, Stats. 2008, Ch. 759): Requires the transfer of Franchise Tax Board’s (FTB’s) duties and authority for the California Child Support Automated System to the Department of Child Support Services effective January 1, 2009.
AB 1389 (Committee on Budget, Stats. 2008, Ch. 751): Does the following:
- Modifies group return filing requirements to allow less than two nonresident individuals, as specified; allows nonresident individuals, as specified, with more than $1 million of California taxable income to be included in the group return and subject to an additional one percent tax on their entire California taxable income.
- Requires personal income taxpayers with estimated tax or extension payments that exceed $20,000 or with tax liabilities of more than $80,000 to remit their payments electronically.
- Adds bail as a type of debt that could be referred by the Courts to FTB for collection.
- Authorizes Department of Industrial Relations to refer assessments and penalties under the California Occupational Safety and Health Administration Targeted Inspection Program to FTB for collection.
AB 1452 (Committee on Budget, Stats. 2008, Ch. 763): Does the following:
- Suspends net operating loss (NOL) deductions for two years, makes the NOL carryover period 20 years, and allows taxpayers a two-year carryback for NOLs from 2011 and later.
- Authorizes FTB to conduct a tax amnesty for the 2003 through 2006 taxable years for corporation and personal income taxpayers. (Repealed by SBX1 28.)
- Requires a limited liability company (LLC) to estimate and pay its LLC fee by a specific date. (Clarified by SBX1 28.)
- Limits the amount of tax credits that may reduce tax for two years, and allows tax credits to be assigned among members of a combined reporting group under the Corporation Tax Law. (Clarified by SBX1 28.)
AB 1812 (Arambula, Stats. 2008, Ch. 160): Extends the repeal date for the California Firefighters’ Memorial Fund and the California Peace Officer Memorial Foundation Fund from January 1, 2011, to January 1, 2016.
AB 1935 (Fuller, Stats. 2008, Ch. 324): Establishes the California Ovarian Cancer Research Fund as a voluntary contribution designation on the personal income tax return. This act specifies that the designation may be added to the income tax return when another voluntary contribution designation is removed.
AB 2202 (Caballero, Stats. 2008, Ch. 261): Requires every state agency, upon request from the California Public Employees’ Retirement System, to provide information on its employees who are not enrolled as members of CalPERS to carry out administration of the system.
AB 2249 (Niello, Stats. 2008, Ch. 234): Allows a taxpayer to recover an income tax refund that they misdirected to the wrong bank account. Also allows FTB, where necessary, to use its assessment and collection powers to get a misdirected refund back from a third-party who is the unintended recipient of a misdirected refund.
AB 2291 (Mendoza, Stats. 2008, Ch. 328): Establishes the Municipal Shelter Spay-Neuter Fund as a voluntary contribution designation on the personal income tax return. This act specifies that the designation may be added to the income tax return when another voluntary contribution designation is removed.
AB 2518 (Torrico, Stats. 2008, Ch. 330): Establishes the California Cancer Center Research Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 personal income tax return.
AB 2928 (Spitzer, Stats. 2008, Ch. 752): Authorizes the California Department of Corrections and Rehabilitation to refer restitution orders to FTB for collection and allows the person who is owed the restitution to decline the collection assistance.
AB 3016 (Cook, Stats. 2008, Ch. 645): Revised references within the statute from the California National Guard to the Armed Forces of the United States, and extends the repeal date for the California Military Family Relief Fund from January 1, 2010, to January 1, 2015.
AB 3078 (Assembly Revenue & Taxation Committee, Stats. 2008, Ch. 305): Does the following:
- Allows entities to file a tax return on behalf of certain nonresidents.
- Closes loopholes in current tax withholding on the payments that nonresident individuals and non-California businesses receive from the sale of California real property.
- Extends the statute of limitations for claiming the credit for taxes paid to another state.
- Gives discretionary authority to the Taxpayers' Rights Advocate to grant relief from penalties, fees, or interest imposed on a taxpayer because of erroneous actions of the department.
- Increases the Personal Income Tax estimated tax penalty threshold.
- Clarifies the rules for the elimination from income of certain dividends received.
SBX1 28 (Senate Budget Committee, Stats. 2008, First Ex. Sess. 2007-2008, Ch. 1): Does the following:
- Accelerates the amount of estimate tax payments required to be made for taxable years beginning on or after January 1, 2009, and eliminates the option for certain taxpayers to use last year’s income tax in calculating estimate payment requirements for current year.
- Repeals Tax Amnesty provisions and penalty, as enacted in AB 1452.
- Enacts a new corporation tax penalty for understatements of tax in excess of $1 million for taxable years beginning on or after January 1, 2003.
- Clarifies the operative date for the requirement to estimate and pay the limited liability company fee of taxable years beginning on or after January 1, 2009.
- Clarifies legislative intent on business tax credit assignment language in AB 1452 for purposes of proper implementation of that section.
SB 31 (Simitian, Stats. 2008, Ch. 746): Makes it a crime to read or attempt to read personal identification documents using radio frequency identification without the owner’s knowledge and consent. The crime will be punishable by imprisonment in a county jail for up to one year, a fine of not more than $1,500, or both.
SB 585 (Lowenthal, Stats. 2008, Ch. 382): Specifies that the state Low-Income Housing Credit may be allocated to partners without regard to “substantial economic effect” rules and when losses of partners may be recognized upon disposition of the partnership interest.
SB 797 (Ridley-Thomas, Stats. 2008, Ch. 33): Requires income tax returns prepared by an employee of an exempt tax preparer to be signed by either of the following:
- An exempt tax preparer (Certified Public Accountant, Attorney, or Enrolled Agent).
- A tax preparer that is registered with the California Tax Education Counsel.
SB 1055 (Machado, Stats. 2008, Ch. 282): Allows taxpayers to exclude up to $250,000 of cancellation-of-debt income that results from a discharge of a loan that was used to acquire, construct, or substantially improve the principal residence of the taxpayer. The maximum amount of a loan eligible to be excluded is $800,000, and the exclusion is phased-out for discharged loans that exceed $800,000.
SB 1064 (Hollingsworth, Stats. 2008, Ch. 386): Allows special tax treatment, called disaster loss treatment, for losses sustained as a result of the wildfires and rainstorms that occurred in Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura Counties during calendar year 2007; damage that occurred in the Riverside county during October, 2007, as a result of strong winds; and the wildfires that occurred in May, June, and July, 2008, in Butte, Kern, Humboldt, Mariposa, Mendocino, Monterey, Plumas, Santa Barbara, Santa Clara, Santa Cruz, Shasta, and Trinity Counties to the current list of specified disasters under the personal income tax law and the corporation tax law. In addition, this act adds the July, 2007, Inyo wildfire and July, 2008, rainstorms that occurred in Inyo County to the list of specified disasters.
Specifically, under this act, a taxpayer may elect to claim the loss either in the year the loss occurred or in the year preceding the loss. If a taxpayer elects to take the loss in the preceding year, allows the taxpayer to file an amended return immediately for the prior year.
SB 1101 (Cedillo, Stats. 2008, Ch. 203): Changes the name of the voluntary contribution fund to be shown on the Personal Income Tax return from “Emergency Food Assistance Program Fund” to the “Emergency Food for Families Fund” and extends the repeal date of the Fund from January 1, 2009, to January 1, 2014.
SB 1146 (Cedillo, Stats. 2008, Ch. 345): Requires a city that administers a business tax to provide specific data to FTB and provide annual funding in the Budget Act to reimburse cities for actual costs not to exceed $1 per usable record, adjusted annually for the implicit price deflator, and adds a repeal provision in the event of a determination by the Commission on State Mandates that the reimbursement does not cover a city’s costs to provide data to FTB.
SB 1247 (Lowenthal, Stats. 2008, Ch. 521): Consolidates the farmworker housing tax credit (FWHC) program into the state low-income housing tax credit (LIHC) and does the following:
- Repeals the farmworker housing assistance program from the Health and Safety Code.
- Adds new language to the Health and Safety Code requiring the FWHC to be allocated in the same manner as the state low-income housing tax credit.
- Specifies $500,000 annual cap plus any unallocated credit under prior law is for farmworker housing exclusively.
- Provides that if a disaster occurs, nonfarmworker households can temporarily occupy vacant farmworker units.
- Specifies farmworker housing credits that are unallocated or returned be added to the annual credit allocation cap until exhausted.
- Adds a provision that allows FWHCs to be awarded independently of federal LIHCs.
SB 1285 (Corbett, Stats. 2008, Ch. 711): Requires FTB to establish appraisal standards and requirements for the purpose of substantiating the amount of charitable contributions claimed by a seller for conservation land acquired using state funds.
SB 1498 (Senate Judiciary Committee, Stats. 2008, Ch. 179): Makes technical, non-substantive changes to various code sections, including the Revenue & Taxation Code.
SB 1502 (Steinberg, Stats. 2008, Ch. 354): Establishes the Amyotrophic Lateral Sclerosis Research Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 return.
SB 1696 (Yee, Stats 2008, Ch. 62): Provides, as declaratory of existing law, that a state agency may not allow another party to control the disclosure of information otherwise subject to the Public Records Act.