Income Tax/Bank and Corporation Tax
One of the major legislative actions taken in 1997 was to give taxpayers $1 billion in tax relief through the passage of SB 5 (Lockyer) and SB 1233 (Lockyer).
The following consists of the bills that reached the Governor's desk. After the one, a subsection follows consisting of notable bills which are considered 2-year bills:
Generally conforms California Corporation Tax Law with the new federal subchapter S provisions and increases the tax rate on S corporations, as specified. Conforms state law with federal exclusion of gain on sales of principal places of residence. Applies the capital gains provision to sales and exchanges on or after May 7, 1997, and on or before June 30, 1998. Conforms California corporation tax law to federal law treatment of sales of stock to employee stock ownership plans, effective January 1, 1996.
A similar bill on capital gains is SB 569 (Lewis-R), which is in Senate Appropriations Committee; and a similar bill on S corporations was AB 203 (Takasugi-R), in which the motion to withdraw from Assembly Appropriations Committee failed passage.
Appropriates the revenues generated from tax check-offs designated for the California Military Museum and the Drug Abuse Resistance Education California Program.
Reinstates and extends the sunset date for the voluntary contribution Rare and Endangered Species Preservation Fund to January 1, 2002. Repeals the fund in any year in which contributions fall below $250,000.
Brings California tax laws in line with numerous federal changes enacted between 1992 and 1997.
Double-joined with AB 122 (Brown-D), AB 1040 (Assembly Revenue and Taxation Committee), and SB 1106 (Senate Revenue and Taxation Committee).
A similar bill is AB 1044 (Assembly Revenue and Taxation Committee), which is in the Senate Revenue and Taxation Committee.
Extends the sunset date for the Firefighter's Memorial Fund check-off to January 1, 2001, and imposes a minimum contribution threshold of $100,000 in 2000 and $250,000 in 2001. Repeals the fund if it does not meet the threshold.
Extends the Breast Cancer Research Fund tax check-off from January 1, 1998 to January 1, 2003, with an earlier sunset if contributions are less than $250,000 per year.
Extends the sunset date for the California Election Campaign Fund tax check-off to January 1, 2002. Imposes a $250,000 minimum contribution threshold on the fund starting in the year 2000, and repeals the fund if the threshold is not met.
Requires the Bureau of State Audits to determine the actual cost to the state associated with incorporating a new business, and to report the information to the Legislature by May 1, 1998.
Makes a variety of largely technical changes in 1996 legislation which consolidated enterprise zone and program tax benefits into a single program.
Modifies various provisions in the tax laws that affect taxpayer reporting requirements, court-ordered debt collection, the definition of corporations, and tax relief. Extends the State Franchise Tax Board's court-ordered debt collection program for 2 additional years, and increases from 5% to 15% the minimum amount the board may retain to administer the program. Appropriates $400,000 to the board, subject to reimbursement, relative to court collection.
NOTE: SB 1044 (Vasconcellos-D), relating to stock options, was incorporated into SB 1106.
Increases the dependent tax credit by $50 in 1998 and an additional $100 in 1999. Makes permanent the capital gains exclusion for home sales in conformity with the federal Taxpayer Relief Act of 1997. Adopts enhancements to individual retirement accounts program in conformity with the federal Taxpayer Relief Act of 1997. Increases the exemption amounts used in calculating the alternative minimum tax for individuals and indexes the exemption annually. Eliminates the increase in Subchapter S rate (this chaptered out the rate increases contained in SB 5 of 1997.)
Conforms California law to federal entity classification regulations (check-the-box regulations for purposes of determining whether a non-corporate entity is taxable as a partnership or as a corporation.
Double-joined to AB 1040 (Assembly Committee on Revenue and Taxation).
Reinstates the California Military Museum income tax check-off from the 1997 tax year through the 2001 tax year, if the tax checkoff generates $250,000 in contributions in each year, starting in 1998.
Expands provisions that allow accelerated depreciation for grapevines infected with Phylloxera to grapevines infected with Pierce's disease.
Double-joined with AB 1155 (Shelley-D) and SB 455 (Alpert-D).
Permits an income exclusion for the discharge of debt under the California State University Forgivable Loan Program.
Establishes the Golden State Scholarshare Trust Act which provides tax incentives for investors, primarily students and families, to save money to cover costs of postsecondary education.
Similar legislation was AB 13 (Firestone-R). SB 101 (Hayden-D) was similar, but did not contain revenue and taxation provisions.
Permits the State Franchise Tax Board (FTB) to provide the taxing authority of a charter city tax information on business taxpayers located within that city, limited to the name, address, Social Security number and business activity code. Provides that for authors and artists, the address would not be provided by FTB until 90 days has passed since it notified the taxpayer that the taxpayer was to contact the city and failed to do so. Makes the information available only to specified tax officials of the charter city designated as senior supervisory level or above.
Conforms state law to amendments to the federal Taxpayers' Bill of Rights by revising provisions of California's Katz-Harris Taxpayer Bill of Rights and the Personal Income Tax and Bank and Corporation Tax Laws. Among other things, expands notice requirements, extends the time for making tax payments without penalty, allows for abatement of interest under certain circumstances, restricts retroactive application of regulations, and reimburses taxpayer's litigation costs for claims the State Franchise Tax Board cannot substantiate.
Requires the State Franchise Tax Board to make information available, on an annual basis, to the Trade and Commerce Agency and the Legislature pertaining to the dollar value of tax credits claimed each year by businesses within a zone.
Re-establishes the income tax check-off for the State Children's Trust Fund, and extends it until January 1, 2002.
Modifies various provisions in the Revenue and Taxation Code that affect taxpayer reporting requirements, court-ordered debt collection, the definition of corporations, and development zone credit elections.
Double-joined with SB 965 (Costa-D) and SB 1106 (Senate Revenue and Taxation Committee).
Conforms California law with 1996 federal changes to the research and development tax credit.
Similar legislation is AB 1067 (Cunneen-R) and AB 1356 (Figueroa-D), both of which are in Assembly Revenue and Taxation Committee, and AB 1499 (Caldera-D), which is in Assembly Appropriations Committee.
Requires the Trade and Commerce Agency to designate at least 1 targeted tax area in which certain businesses would be granted various tax incentives.
Provides a tax credit for each qualified deposit made by a taxpayer into a community development financial institution. Provides that total qualified deposits for taxpayers could not exceed $10 million in a calendar year.
Suspends the renters' tax credit until January 1, 1998.
Permits income taxpayers to carry over a larger proportion of their excess uninsured casualty losses which are attributable to the storms and floods in December 1996 or January 1997.
Similar legislation was AB 91 (Bowler-R), AB 94 (Cardoza-D), and AB 4X (Bowler-R).
Other Income
Creates a tax credit equal to 6% of qualified property costs for taxpayers engaged in specified warehousing and distribution activities in a qualified facility.
Expands the manufacturer's investment credit by creating a similar investment credit for agricultural production and agricultural services as specified.
Creates an earned income tax credit equal to 15% of the federal credit for taxpayers with dependent children.
Eliminates the 1% personal income tax rate bracket, and reduces the income threshold for the 4% bracket.
Enacts the California Land and Water Conservation Act of 1997 which provides a tax credit of 55% of the fair market value of qualified property that is donated to the state, any local agency, or any nonprofit organization designated by the state or local government.
Permits taxpayers to deduct losses, up to $250,000 incurred in the sale after July 1, 1997 of a California principal residence in which the taxpayer lived for at least 2 years.
Suspends the indexing of the senior exemption tax credit for 5 years. Provides for the transfer of revenue generated from the difference between the fixed credit and an indexed credit from the General Fund to the California Seniors Special Fund to be allocated for specified programs.
Provides a tax credit for wages paid to a blind employee and for any work-related expenses to provide reasonable accommodation of the employee's needs.
Expands the existing manufacturer's investment tax credit by creating a similar investment credit for eating establishments.
Increases the individual tax credit rate for costs paid to restore and improve salmon and steeled trout habitat from 10% to 15%, and increases the amount a taxpayer may claim from $50,000 to $100,000.
Increases the total authorized tax credits for farmworker housing from the current $500,000 annually to $5 million annually.
Requires the State Franchise Tax Board and the State Department of Finance to jointly report and make recommendations to the Legislature regarding double taxation of corporate dividends.
Reduces the minimum franchise tax for newly operating corporations from $800 to $300 annually for the first 2 years of incorporation, if the corporation's gross receipts are less than $1 million.
Provides specified measuring and medical instruments manufacturers (1) an extended carryover period for the manufacturers investment credit by defining them as small businesses, and (2) enhanced net operating loss treatment by defining them as new businesses.
Re-establishes ridesharing tax credit.
Requires the Trade and Commerce Agency to designate an enterprise zone which meets specified criteria applicable to the City of Barstow.
Provides a credit equal to 50% of the qualified wages paid or incurred by a taxpayer to a certified trainee during the first 18 months of employment, if the certified employee is an unemployed recipient of public assistance.
Allows manufacturers to deduct expenses paid or incurred for environmental quality expenses from state and federal income taxes, to the extent they are ordinary and necessary business expenses.
Imposes a specified tax on preference items similar to the tax that was imposed by the Income/Corporation Tax Laws prior to 1987, and repeals the tentative minimum tax provision of law.
Establishes a tax credit for 50% of the costs, up to $2,000 per unit, paid for voluntary lead abatement activities on qualified California residential rental property.
Conforms 100% to the federal medical savings account deduction.
Reduces the minimum franchise tax for the first 2 income years of any bank or corporation that has gross receipts under $1 million.
Expresses legislative intent that a tax credit be considered for small employers who provide health care coverage to their employees.
Makes a legislative declaration of intent to seek to effectuate a reduction in personal income tax.
Repeals the 25% penalty for taxpayers refusing to file returns or supply information.
Reinstates the 10% Greater Avenues for Independence Law tax credit.
Requires the economic development strategy plan to include a review of the top strategies employed by other states to attract and retain business.
Provides for a 50% tax credit for construction, restoration, or rehabilitation of levees on private property owned by the taxpayer in this state.
Eliminates the $100 floor limitation per casualty loss and the requirement that a net casualty loss be computed to the extent the loss exceeds 10% of the individual's adjusted gross income for individuals who have suffered disaster losses. Allows taxpayers to claim as the amount of loss 60% of the replacement cost of the property lost as a result of a disaster.
Allows a tax credit for the purchase or lease of smokemeters for heavy-duty trucks.
Directs the Legislative Analyst to investigate and report to the Legislature regarding the treatment of sales to the U.S. government in the franchise tax income apportionment formula.
Urges the U.S. Congress to enact legislation to allow a tax credit against federal income taxes for contributions to charitable organizations.
Requests the U.S. Congress to replace the current income tax system with a single rate tax system, such as a flat tax, with a generous personal exemption to ease the tax burden on many Americans and eliminate the bias against work, savings, and investment.
Requires that any request by State Franchise Tax Board for documentation related to disaster-related income tax deductions for a post-1995 disaster be reasonable in light of the disaster and the likelihood that the information requested would have survived the disaster. Provides that such information could include sworn testimony, if that is the only available documentation.
Increases the number of local agency military base recovery areas (LAMBRA's) from 5 to 10, and extends the maximum life of a LAMBRA from 8 to 15 years. Makes various changes to the Revenue and Taxation Code relative to expense deductions for the costs of certain depreciable property. Replaces the existing schedule setting forth the maximum amounts of the deduction with a new schedule that provides for a maximum amount that begins at $100,000 and decreases from year to year to $50,000.
States legislative intent to examine the feasibility of changing the amount of the minimum franchise tax.
Similar legislation is AB 27 (Strom-Martin-D), which is in the Senate Revenue and Taxation Committee.
Enacts the Jobs Stimulus Act of 1997 to exclude from income any gain from the sale of a California capital asset.
Conforms state law with federal limits in small business expensing, increasing the amount of tangible property a small business may elect to treat as an expense in the year acquired.
Provides a tax credit for public school construction or expansion.
Extends the sunset date of the Los Angeles Revitalization Zone sales or use tax credit from January 1, 1998 to January 1, 2001, for taxpayers who file under the Personal Income Tax.
Provides a 50% tax credit, up to $5,000, for the cost of replacing shake roof with fire retardant materials.
Similar legislation is AB 109 (Kaloogian-R), which is in the Assembly Appropriations Committee.
Prohibits the owners of unoccupied or abandoned dwellings determined to be substandard by a government enforcement agency from receiving tax deduction benefits.
Extends the Los Angeles Revitalization Zone tax credits from 1998 to 2003.
Provides for a refundable earned income credit, equal to 15% of the federal credit, for taxpayers with a dependent child. Repeals the renter's tax credit.
Expands the manufacturer's investment tax credit to agricultural producers and to independent crude oil producers.
Establishes a $1,000 income tax credit for the qualified costs that are paid or incurred for the adoption of a qualified minor child.
Expands the manufacturers' investment credit exemption to allow taxpayers involved in specified agricultural post-harvesting activities to claim the credit on specified post-harvesting property.
Provides for a 25% tax credit for employer costs of preventive health care for farmworkers.
Increases, from $35 to $50 million, the amount of low-income housing credits that can be allocated annually by the California Tax Credit Allocation Committee.
Provides a tax credit equal to 40% of the cost of employer-provided transit passes or vanpool fares.
Establishes a tax credit for 20% of the cost of agricultural products donated to a nonprofit charitable organization, and requires the State Department of Social Services to report to the Legislature regarding the impact of the credit on food donations.
Enacts the Family and Child Empowerment Act of 1997 by providing a tax credit of $150 for each dependent child of a qualified taxpayer who is under the age of 13.
Increases the percentage of health insurance costs that self-employed individuals are allowed to deduct under the income tax.
Similar legislation is AB 305 (Wayne-D), which is in the Assembly Appropriations Committee.
Increases the basis of a capital asset by the percentage increase in the California Consumer Price Index, from the date of acquisition to the date of sale or exchange. Applies to assets acquired on or after January 1, 1998.
Conforms California tax law to the federal treatment of contributions of appreciated property in computing the alternative minimum tax.
Creates a tax credit of up to $250 for any retired person, aged 65 or older, who provides volunteer services for a California public school.
Provides a $2,000 tax credit for taxpayers who care for an individual receiving public assistance, thereby removing that person from public assistance.
Establishes a 100% tax credit, up to a maximum of $500 per year, for unreimbursed educational expenses that are paid or incurred by a teacher at a qualifying educational institution.
Provides for a tax credit for computer donations to public schools.
Provides a tax credit for sales under contracts/subcontracts awarded pursuant to the U.S. Department of Defense Joint Strike Fighter Program.
Allows members of a commonly controlled group, whether unitary or not, to elect to file a combined report for purposes of measuring income subject to state taxation.
Provides that taxpayers may elect to recognize the gain on the sale or exchange of a personal residence only to the extent that it exceeds their recalculated basis in the property which has been adjusted for inflation.
Increases the dependent tax credit from $67 to $105.
Reduces the bank and corporation tax rate by 10%, and provides a comparable reduction in the corporate alternative minimum tax rate.
Extends the sunset date on the employer child care credit, and increases the maximum amount of the credit for contributions to a qualified care plan. Requires the Legislative Analyst to evaluate the credit.
A similar bill was AB 642 (Baldwin-R), which was unsuccessfully withdrawn from Assembly Appropriations Committee to the Assembly Floor.
Requires that revenues derived from the in-lieu tax for banks and financial corporations be distributed to cities, cities and counties, and counties.
Specifies that anyone who interferes with sports franchise contracts loses all tax credits and exemptions.
Enacts the Health Care Coverage Expansion Act, which states legislative intent to create time-limited tax incentives for employers to provide coverage to targeted employees not currently covered.
Modifies the manufacturers' investment tax credit to allow affiliated corporations that file a combined report with the qualified taxpayer to claim a portion of the excess against the tax of each taxpayer member of the group.
Requires the Legislative Analyst, in consultation with the state revenue and taxation agencies, to conduct accountability evaluations for all personal income tax and corporation tax credits and sale and use tax exemptions.
Permits the State Franchise Tax Board to prescribe the manner and extent of reporting requirements for partnership and limited liability companies. Allows top tier corporate taxpayers to elect to include all the income and apportionment factors of the members of a commonly controlled group in a combined report, regardless of whether the group members are unitary.
A similar bill concerning the reporting requirements of this bill is AB 510 (Ashburn-R), which is in Assembly Revenue and Taxation Committee.
Allows taxpayers to accelerate depreciation on computer hardware and peripherals used for telecommuting.
Designates McClellan Air Force Base as an enterprise zone, which provides tax incentives to businesses located within the zone.
Reduces the income tax rates by 10% over 2 years.
Deletes the limited year carry over provisions for the manufacturers' investment credit, thus providing for unlimited carry overs.
Provides for partial refundable tax credit for reduction in State Supplementary Payments.
Similar bill is AB 1262 (Martinez-D), which is in the Assembly Revenue and Taxation Committee.
Provides that the manufacturers' investment tax credit recapture provisions do not apply to transactions concerning mergers, acquisitions, and reorganizing activities if the property is not removed from the state or put to a nonqualified user as a result of the transaction.
Conforms state treatment of net operating losses to federal law by incrementally increasing the current 50% carryover to 100%.
Provides a 33.3% tax credit for wages paid, up to $5,000, during the first year of employment to a qualified at-risk youth who has spent at least the past 3 months at a county juvenile home or California Youth Authority facility.
Requires the Trade and Commerce Agency to designate 5 industrial, manufacturing, construction, or goods movement incentive zones to those areas including and in proximity to areas designated as intermodal corridors of economic significance which would be provided various tax incentive and credits.
Provides a tax credit for costs incurred for adding or upgrading approved safety devices for residential swimming pools built before January 1, 1998.
Provides that the Katz-Harris Taxpayers' Bill of Rights complies to specified statutes pertaining to the administration of franchise and income tax laws by the State Franchise Tax Board.
Establishes tax credits for energy conservation measures and retrofitting for energy conservation.
Allows a tax credit for employer costs of paying employees who are on jury duty.
Provides a non-refundable tax credit for liquefied petroleum gas purchases by low-income persons.
Extends the manufacturers' investment credit to teleproduction and postproduction services.
Expands the manufacturers' investment credit to allow taxpayers involved in specified computer program and software activities to claim the credit.
Establishes a new applicable date for each deficiency assessment on a corporation regarding underpayments exceeding $100,000.
States legislative intent to examine the feasibility of allowing a corporation commercially domiciled in California to deduct interest expense attributed to specified dividends received from an insurance company.
Permits a tax credit equal to 25% of the first $10,000 in wages paid to a new employee, previously unemployed and receiving welfare benefits, who fills a new position.
Exempts corporations whose only presence in California is warehousing of goods.
Expands the existing tax credit paid to restore and improve salmon and steelhead trout habitat, and extends the sunset date on the law. Partially conforms to federal tax law changes which deny deductions for club dues and for executive pay in excess of $1 million.
Allows a tax credit to 100% of the unreimbursed qualifying educational expenses paid or incurred by a parent or legal guardian for his or her child.
Allows an employee to exclude from gross income the amount, not to exceed $5,250 per year, that an employer pays for employee taking graduate level courses.
Denies tax deduction for costs of tobacco advertising.
Exempts state-chartered credit unions from the 2% bank tax and the corporation tax.
Conforms state law with federal law which created a new type of entity called a financial asset securitization investment trust to facilitate the securitization of revolving, non-mortgage debt obligations.
Reduces the minimum franchise tax from $800 to $100.
Allows a tax credit up to $750 for expenses of sending a child to a California State University or University of California.
Deletes the 1% personal income tax bracket, and reduces the threshold for the 2% tax brackets.
Expands the definition of substantial unintentional noncompliance for the purpose of permitting the perfection of a voter's edge election.
A similar bill is AB 1488 (Pringle-R), which is in Assembly Revenue and Taxation Committee.
Exempts income from taxation of those below poverty income.
Allows taxpayers to carryover the aggregate of unused credits for an unlimited period.
Prohibits the retroactive increase or decrease of personal income tax rates.
Clarifies that interest on property tax refunds would accrue at 9% prior to 1993 for pre-1993 tax refunds still outstanding, and the county pooled apportioned rate for refunds thereafter.
Establishes a rebuttable presumption that public interests in public transportation corridors do not give rise to a taxable possessory interest for property tax purposes.
Allows counties to exempt from property tax up to $50,000 in value of fairground possessory interests.
Requires assessors to compile and make public, on or before July 1, 1998, a list of the life insurance companies that have filed an Insurance Company Separate Account Property Statement.
Extends the property tax college exemption to include an educational institution that provides a master's degree program based on a course study of at least 1 year in flight test technology or flight test science that is approved by the California Council for Private Postsecondary and Vocational Education or the Bureau for Private Postsecondary and Vocational Education.
Expands the authority of nonprofit organizations to purchase properties that have been tax defaulted for more than 5 years to include purchase of multifamily housing. Allows nonprofit organizations to rent to or otherwise use to serve low-income persons tax-defaulted property which the organization has bought and rehabilitated.
Limits the Educational Revenue Augmentation Fund Contribution for Special Education in basic aid counties to $4 million in fiscal year 1997-98, provides a portion to the county superintendent of schools, and allocates any remaining funds to local taxing entities.
Lengthens the time and changes the process for a county and a city to negotiate the property-tax-sharing agreement before an annexation application is accepted by the local area formation commission. Sunsets January 1, 2005.
Grants the parent-child exclusion on a prospective basis where the customary time period for filing the claim to receive the exclusion from the initial date of the transfer has expired. Extends the provisions of law regarding the timing for challenging tax delinquency assessments to escape assessments. Changes the date on which assessors mail out homeowners' exemption claim forms from March 15 to February 15 so that this date is consistent with previous date changes made in the process for claiming such exemptions. Requires the county assessor, on or after January 1, 1998, to determine the assessed value of pipelines and related rights-of-way that are located wholly within the county on the basis of a single, countywide parcel per taxpayer, and to combine the assessed value of each component or segment of those pipelines or rights-of-way. Contains language of AB 240 (Takasugi-R) and SB 1105 (Senate Revenue and Taxation Committee) to avoid chaptering-out problems.
Changes the statutory 3-year time limit for replacement of disaster-damaged or destroyed property to 5 years in the case of the Northridge earthquake. Applies to both intra- and inter-county transfers.
Allows property tax increases to pay for public employee pension obligations, as specified.
Expresses legislative intent that Education Revenue Augmentation Fund (ERAF) transfers be frozen at the 1996-97 level, and that the transfer be eliminated over a 10-year period.
Note: Coalition of local agencies, builders, developers, realtors, and taxpayer advocates want to return property tax revenues to local agencies by capping local agencies' ERAF contributions and gradually eliminate the shift of property tax revenues from counties, cities, and special districts to ERAF.
Other pending legislation on this issue includes SB 854* (O'Connell-D), SB 889* (Hayden-D), SB 1294 (Leslie-R), AB 1* (Aguiar-R), AB 95* (Sweeney-D), AB 393* (Richter-D), AB 864 (Thomson-D), AB 1349 (Kaloogian-R), and ACA 4 (Aguiar-R).
Makes a number of changes to the administration of the property tax law and the Timberland Tax Law. Modifies the 12-month period for calculating the change in the California Consumer Price Index from the current measurement of December of the prior fiscal year to December of the current fiscal year to an October to October measurement. Clarifies the application of the area of reasonable size standard to residential properties qualifying for base-year value transfers. Moves forward the date the State Board of Equalization certifies values for timberland valuation to conform with the recent change in the lien date. Conforms dates applicable to reimbursing the General Fund for administrative costs incurred by the board in administering the Timber Tax. Requires schools to provide the board with information necessary to process tax rate areas for school facilities improvement district special assessments. Conforms the filing deadlines for redevelopment agencies' districts boundary changes to the filing deadlines required of other taxing entities when their district boundaries change. Requires that the factored base-year value of a property be included in the notice to the taxpayer of reduced assessed value. Modifies the filing period for assessment appeal applications, to provide for situations where county offices are closed on the final filing date or closed prior to 5:00 p.m. on the final filing date for reasons other than an official holiday or a weekend (this sentence is also contained in SB 542).
Makes a number of administrative changes to the property tax administration laws. Clarifies that a tax collector may "foreclose" or "execute" on tax lien certificates in order to assure proper collection of taxes under the new tax lien certificate program. Clarifies that property for which a "power to sell" has actually been recorded is not subject to the 30-year time limit normally applicable to tax liens. Reduces the amount of tax threshold for electronic filing of property tax from the current $100,000 to $50,000. Allows electronic billing to accommodate future technological capabilities. Allows the tax collector to waive penalties where it is clear that the taxpayer has not received a bill for unsecured taxes. Allows the tax collector to recover actual costs when taxpayers wish to initiate a 4-year payment plan on escaped assessment tax bills. Clarifies that the "required equity" calculation for senior citizen property tax postponement purposes may be based on current appraised value, rather than assessed value, so long as the state's interests are protected. Clarifies when a tax collector may sell property subject to a nuisance abatement lien. Allows post-lien data assessments to be added to the amount being collected only if the tax collector approves. Clarifies that the State Department of Motor Vehicles must notify the tax collector when a vessel subject to lien is transferred or not renewed for 26 months to eliminate a conflict with AB 122 of 1996.
Permits additional property tax revenues to be allocated to "no and low-tax cities" which increase taxes after January 1, 1998.
Exempts from property taxation any privately owned agricultural land that is actively used to propagate a sustaining breeding, migrating, or wintering population of indigenous wild animals in 3 or more of certain specified ways.
Expands provisions that allow special assessment for grapevines infested with Phylloxera to grapevines infested with Pierce's disease.
Removes the 1999 sunset date for elderly homeowners and disabled to transfer the Proposition 13 base-year value of their homes to another home in another county.
Requires the State Board of Equalization to determine the average number of each class of private railroad cars physically present in the state upon the basis of car mileage relative to the private railroad car tax.
Increases the veterans' exemption from property taxation that is authorized in the California Constitution from $4,000 to $7,700 when it is being claimed for real property, and removes the personal wealth limitation for those claims. Becomes operative only if ACA 9 (Morrissey-R) is adopted by the Legislature and approved by the voters.
Establishes a minimum percentage, and later a fixed percentage, of property taxes that county governments shall receive.
Provides for the extension of the existing State-County Property Tax Administration Program to fiscal year 2000-2001, and changes the base year for maintaining existing levels of effort in the assessor's office to 1995-96, if the county was unable to maintain the 1993-94 or 1994-95 level of effort.
Eliminates the "maintenance of tax effort" requirement on a "no and low" property tax city to receive 7% of the property taxes collected within the boundaries of the city if the city's taxes are reduced as a result of either a court decision or a vote of the city's electorate. Does not apply to Santa Clara County.
Adjusts the tax equity allocation (TEA) formula in order to exempt Riverside County from having to make a TEA payment to the City of Rancho Mirage, if the city forms a community services district to provide fire and library services, and if the transfer of the associated property taxes to the community services district causes the City of Rancho Mirage to fall below the "no and low" property tax level.
Makes several changes to existing law relating to exemption claim filing dates, intra-county pipeline assessments, court challenges to Williamson Act contract cancellations, and extending the deadline for assessment appeals based upon assessor notices of declines in Proposition 13 base-year values. Changes the Business Property Statement filing date from May 30 to March 31. Clarifies existing law provisions concerning assessor access to information. Permits counties to appear before the State Board of Equalization (SBE) in state assessee valuation proceedings. Allows multiple counties to collectively retain and compensate counsel and expect witnesses in any legal action brought by a SBE - or county-assessed taxpayer seeking a refund of property taxes. Requires SBE to give all persons a 90-day notice-and-comment period before issuing assessor's handbooks. Allows county assessment appeals boards to adopt rules of procedure.
Prohibits an assessor in the valuation of improvements on irrigated agricultural land and where the owner has fulfilled certain requirements, from determining a higher value on the basis of the installation on that land, for purposes of water conservation, of improvements consisting of drip or sprinkler irrigation systems, tailwater return systems, or soil moisture measuring devices.
Prohibits certain deceptive advertising practices related to services which offer to file either a property tax homeowners' exemption, or a property tax assessment appeal.
Increases the time period allowed for local agencies to negotiate tax sharing agreements, from 30 days to 90 days.
Expands the definition of "fixtures" for property assessment purposes, to include heap leach pads, tailings facilities, and settling ponds used for mineral processing on mining properties.
Requires a paid preparer of an opinion of value on real property, with an assessed value of $1 million or less, to prepare an appraisal report pursuant to the requirements of the Uniform Standards of Professional Appraisal or to provide specified notification that the report was not prepared pursuant to current law. Sunsets January 1, 2001.
Adds an exception to the tax rate limit established by Proposition 13 for bonded indebtedness incurred by a school district, county office of education, or community college district for the construction, reconstruction or rehabilitation of school facilities, the mitigation of toxic sites for school use, or the acquisition of real property for school facilities.
Increases the veterans' exemption from property taxation from $4,000 to $7,700 when it is being claimed for real projects, and removes the personal wealth limitation for those claims.
Permits owners of environmentally contaminated properties to transfer base-year values to either new construction or a replacement property.
Requests the State Board of Equalization to rescind its action classifying automated teller machines as personal property for purposes of property taxation.
Requires the State Controller to reimburse affected counties for the property tax revenue lost as a result of storms and floods in California in December 1996 or January 1997.
Similar legislation included AB 91 (Bowler-R) and AB 4X (Bowler-R).
Sales Tax
Applies the same sales tax exemption to pharmacists who sell replacement lenses that applies to optometrists, physicians and opticians. This is a clean-up bill to AB 1107 (Campbell-D) of 1995, which allowed pharmacists to sell replacement contact lenses. The law inadvertently did not add pharmacists to the existing list of professionals authorized to dispense replacement lenses without collecting sales tax at the retail level.
Provides a partial sales and use tax exemption for the sale or purchase of any implement of husbandry that is purchased for use by a qualified person in the conduct of agricultural operations.
Provides a sales and use tax exemption for any purchase of tangible personal property by a qualified fire protection district when the gross receipts from the sale of that property or the sales price of that property exceeds $25,000.
Permits the examination of the State Board of Equalization's (SBE's) records pertaining to the collection of sales tax for a local entity. Establishes the Bradley-Burns Bill of Rights for Cities and Counties in order for the local jurisdictions to understand, from the SBE, the local sales and use tax laws administered by the SBE. Establishes the right of local jurisdictions to rely on written advice of the SBE. Allows certain specified large purchasers, including counties, cities, and redevelopment agencies, to apply for a direct payment permit from the SBE, authorizing them to self-assess and pay their use tax liability directly to the SBE, relieving out-of-state retailers of the duty.
Allows a local transaction and use tax to be imposed at a rate of either 1/8% sales tax or 1/4% sales tax for up to 16 years, subject to 2/3 voter approval, to fund public libraries.
Allows a quarter-cent local sales tax in the City of Madera for public safety purposes, with 2/3 voter approval.
Allows San Mateo County to create a special taxing authority, and limits what the State Board of Equalization may charge Stanislaus County to collect its Transaction and Use Tax.
Clarifies the allocation of local use tax on automobile leases. States that the allocation provisions apply only to new automobile leases and defines "motor vehicles" to include passenger vehicles and light-duty pick-up trucks.
Allows the Los Angeles County Board of Supervisors to modify its contract with the State Board of Equalization to require that not more than $60 million of the local Bradley-Burns sales tax be deposited in the County General Fund instead of the Local Transportation Fund (LTF) for one fiscal year. Makes this authorization contingent upon a court-ordered repeal of County General Fund revenues which were similarly diverted from LTF and deposited in the General Fund by the Los Angeles County Board of Supervisors in fiscal year 1995-96 pursuant to existing law.
Exempts from the sales tax the currently authorized $14 fee charged by the State Department of Justice (DOJ) to determine whether a person is qualified to purchase a firearm. Permits DOJ to require that firearm dealers charge firearm purchasers for that fee.
Exempts the reproduction rights for artwork and drawings produced at social gatherings by an artist from sales tax.
Revises the distribution of sales tax revenues on jet fuel to local governments. Allocates local sales tax receipts from the sale of jet fuel to the local jurisdiction where it is delivered into an aircraft, rather than the current practice of being allocated based on where the sale was negotiated.
Similar legislation is AB 66* (Baca-D), which is in the Assembly Appropriations Committee.
Allows refund of sales taxes for manufacturing equipment purchased by biopharmaceutical and biotechnology firms that operate at a loss.
Enacts the Adult Entertainment Tax Law, which allows a 5% adult entertainment tax to the sale of adult entertainment products or services.
Allows the refund of sales taxes for manufacturing equipment purchased by computer manufacturers that operate at a loss.
Provides a sales and use tax exemption for any ground control station sold to a nonresident or foreign government for use outside the United States.
Deletes the provisions relating to "engaged in business in the state" under the Sales and Use Tax Law that were determined to violate the commerce clause of the U.S. Constitution. Extends from 2 to 3 years the amount of time that the County of Napa and any cities located in Napa County may take to repay the Board of Equalization for specified tax refunds that the Board made in their behalf. (These refunds are those dealing exclusively with overpayments of Sales and Use Tax on the sale of oak barrels purchased for the making of wine.)
Authorizes the State Board of Equalization to implement a managed audit program that would allow certain taxpayers to self-assess their business. Specifies that if a tax liability is due the state, interest would be assessed at one-half the existing statutory rate. Sunsets on January 1, 2001.
Similar legislation was AB 890 (Caldera-D), which died in the Assembly Revenue and Taxation Committee.
Exempts, from sales tax, items sold at a thrift shop that provides medical and social services to individuals with any chronic, life-threatening illness.
Exempts the purchase of food eaten by animals held by a nonprofit zoo or aquarium from sales tax.
States legislative intent that the exemption from sales tax for newspapers and periodicals be reinstated and that the exemption be balanced by a corresponding balance in revenue.
Similar legislation is AB 1608* (Pringle-R), which is in the Assembly Revenue and Taxation Committee.
Permits any city, county, or city and county, that adopts a sales and use tax ordinance to impose an additional sales tax, at a rate of 1% phased in over 5 years, in lieu of an equivalent rate of sales tax imposed by the state, provided the imposing ordinance is approved by a majority of the voters cast on the ordinance in an election on the issue, as specified.
Enacts the Pet Adoption Sales and Use Tax Relief Act of 1997 to exempt, from sales tax, the charges assessed in connection with pet adoptions by a city, county, city and county, or other local government animal shelter or specified non-profit animal welfare organization.
Exempts, from sales, tax agricultural products that constitute food for human consumption, feed and medicines for food animals, and fertilizer for food plants.
Specifies that out-of-state entities whose sole activity in the state is engaging in specified convention and trade show activities, and who meet specified criteria regarding those activities, shall not be considered sellers or retailers for the purposes of sales and use taxation. Does not exempt from sales and use taxes those sales that are completed at in-state convention and trade shows or are made pursuant to orders taken at in-state convention and trade shows.
Similar legislation is SB 1308 (Lewis-R), which is in Senate Revenue and Taxation Committee.
Changes the allocation of Proposition 172 public safety sales tax revenue in Los Angeles County, if AB 339 (Takasugi) is enacted. Specifies that each city in Los Angeles County and the county would get the same percentage of the sales tax revenue that it received in 1995-96, and that the 1996-97 allocation would be corrected in specified installments through September 30, 1998. Corrects a drafting error of AB 1191 of 1996, which inadvertently reduced the allocation for cities by changing the location of the 50% multipliers in the allocation formula.
Changes the allocation of Proposition 172 public safety sales tax between cities and counties, if AB 334 (Wildman) is enacted. Specifies that, within each county, each city and the county would get the same percentage of the sales tax revenue that it received in 1995-96, and the 1996-97 allocation would be corrected in equal installments over the next 36 months. Corrects a drafting error in AB 1191 of 1996, which inadvertently reduced the allocation for cities by changing the location of the 50% multiplier in the allocation formula.
Extends the sales tax exemption for bunker fuel purchased in California, but used outside of California, for 5 years from January 1, 1998 to January 1, 2003, and requires the Legislative Analyst to report to the Legislature concerning the effect on bunker fuel rates of the sales tax exemption, as specified.
Similar legislation is AB 120* (Kuykendall-R), which is in the Assembly Appropriations Committee.
Defines the base year as the 1993-94 fiscal year for purposes of determining the public safety services allocations to be made to the City of San Clemente, and provides that the change be applied beginning with funds from 1995-96.
Extends a partial sales tax exemption for various specified good furnished by a licensed acupuncturist in the course of his or her professional duties.
Enacts the Tax Accountability Act of 1997, which requires the Legislative Analyst's office to conduct accountability evaluations for all sales and use tax exemptions enacted on or before January 1, 1998, as specified.
Exempts, from sales and use tax, the sale of a used vehicle between two private parties.
Provides a sale and use tax collection for cellulose casings used in the production of skinless wieners, provided the casings are later incorporated into tax-exempt animal food.
Limits the State Board of Equalization (BOE) tax administration cost charges to special taxing districts to 1.5% of the revenue generated in the special taxing district by the BOE-administrative tax.
Provides a sales and use tax exemption for blood collection units and blood pack units.
States legislative intent to provide an exemption from sales tax in the case of liquefied petroleum gas that is delivered to households with low-income persons.
Expands the sales and use tax exemption to allow taxpayers involved in specified computer program and software activities to claim the exemption.
Authorizes an assignee that purchases accounts from retailers to either take a deduction from sales tax owed or file a claim for refund for sales tax paid to the State Board of Equalization on a worthless account that has been charged off for income tax purposes or otherwise.
Specifies that the sale of goods by a retailer from out-of-state to construction jobsite within California is subject to the sales tax, rather than the use tax, as specified.
Exempts the price of a used vehicle that is traded in during the purchase of a new vehicle from sales tax.
Specifies that a retailer is not "engaged in business in the state" based solely on its use of a representative or independent contractor in the state for purposes of performing warranty or repair service with respect to tangible personal property sold by the retailer, as specified.
Changes the allocation of Proposition 172's public safety funds for San Diego County and the cities in San Diego County from a special formula to the statewide formula.
Permits the City of Woodland to levy a quarter-cent or half-cent local transactions and use tax by a 2/3 city council vote and majority voter approval.
Allows local agencies, by approval of their governing bodies, to agree to share sales or use tax revenue, if appproved by a 2/3 vote of each entity's governing body who is party to the contract.
Requests the State Board of Equalization to revise its current regulatory interpretation on allocation of local sales taxes derived from the sale of jet fuel.
Requests the President and Congress to establish a moratorium on the imposition of any taxes of fees, with specified exceptions, by any state, county, or municipal taxing authority on the Internet or any other on-line activity.
Increases the sales and use tax by 1/4% for the period of June 1, 1997 to May 31, 1998, to be used for disasters, as decided by the Governor.
Repeals the $300 smog impact fee imposed on out-of-state vehicles when first registered in California, if the vehicle is not California-certified by the State Air Resources Board.
Imposes, until January 1, 2008, a seismic retrofit surcharge equal to $1 per vehicle for passage on state-owned toll bridges in the region within the area of the jurisdiction of the Metropolitan Transportation Commission, except for vehicles that are authorized toll-free passage on those bridges, for the purpose of funding seismic retrofit of currently listed bridges.
Exempts out-of-state motor vehicles first sold through a dealer conducting a motor vehicle auction from the existing $300 smog impact fee imposed on out-of-state vehicles first registered in California.
Releases all child support obligations that the district attorney is responsible for enforcing to the State Franchise Tax Board for collection, as specified. Requires the district attorney to use all collection services of the board.
Double-joined with AB 573 (Kuehl-D) and AB 1395 (Escutia-D).
Allows subdividers of land to request that their cash deposits be used to pay taxes and special assessments, and a county to waive the advance payment (deposit) of taxes or assessments for parcel maps with 4 or fewer parcels.
Continues the allowable use of motor vehicle fees in the Bay Area Quality Management District for bicycle facility improvements from January 1, 1998 to January 1, 2000.
Requires persons who generate specified classes of low-level radioactive wastes that are to be disposed of at the Ward Valley site to pay a disposal surcharge of $12 per cubic foot.
Extends the sunset date on the authority of the South Coast Air Quality Management District to impose a $1 annual vehicle registration fee surcharge to fund clean fuels programs from August 1, 1999 to July 1, 2009.
Appropriates $907,595 from the General Fund to the State Department of Insurance for the purpose of funding, for the 1997-98 fiscal year, the tax return processing and tax audit duties of the department.
Similar legislation is SB 956 (Rosenthal-D), which is in Assembly Revenue and Taxation Committee.
Increases the cigarette tax by 50 cents per pack and imposes a 50-cents-per-pack floor tax on cigarettes in a wholesaler's or distributor's inventory.
Imposes a 25% sales and use tax on several chemicals and in the production of methamphetamine to fund drug programs.
Makes various changes to the Motor Vehicle Fuel License Tax Law and the Diesel Fuel Tax Law, including (1) indefinitely extending the scheduled sunset of provisions which allow wholesalers to postpone payment of the diesel tax to their supplier until 5 days before the supplier is required to make payment of the diesel tax to the board, and (2) allowing diesel fuel suppliers to claim a bad debt deduction on accounts found to be worthless.
Restructures and simplifies the existing hazardous waste fee system. Eliminates a number of fees and replaces some with service-specific fees. Reduces fees levied on the hazardous waste industry and increases the broadbased environmental fee level on all corporations.
Exempts vehicles operated by a nonprofit agency that provides transportation for senior citizens and persons with disabilities from vehicle weight and license fees.
Authorizes the State Employment Development Department to provide tax consulting services to businesses on a statewide basis.
Permits the Alameda-Contra Costa Transit District to impose a special tax, with 2/3 voter approval, in the boundaries of a city or contiguous cities in the district.
Enacts the Proposition 218 Omnibus Implementation Act which prescribes definitions and implementation provisions of Proposition 218 relating to imposition of taxes, assessments and property-related fees and charges. Specifies how the constitutional requirements apply to ongoing annual assessments with specified exceptions.
A similar bill was AB 1506 (Ortiz-D) which is in Assembly Elections, Reapportionment and Constitution Amendments Committee.
Provides that designated employees of the State Franchise Tax Board be made peace officers, as specified.
Double-joined with SB 826 (Greene-D).
Requires the State Board of Equalization to apply local government-imposed user fees or license taxes as a credit against a hazardous waste facility's fee payments that are collected and deposited in the Hazardous Waste Central Account, until December 31, 1999.
Allows the State Board of Equalization to share motor fuel tax information with other specified state and federal governmental agencies, principally to act in investigation of motor fuel tax law violations. Gives a taxpayer the option to prorate the flat rate fuel tax on newly registered vehicles in order to make all the taxpayer's vehicles subject to the excise tax payment at the same time each year. Makes various changes in the Diesel Fuel Tax law such as conforms to federal law by lowering the standard of knowledge of intent to evoke the Diesel Fuel Tax law, and reduces the penalty to $100 for failure to obtain a license under the law when no tax is due.
Double-joined with SB 506 (Senate Transportation Committee), AB 1226 (Granlund-R), and AB 1269 (Granlund-R).
Creates the Federal Tax Fund, which requires any person liable for any federal excise, income, or consumer tax to remit the tax to the State Treasurer for deposit and the state would release the taxes from the fund to the federal government, minus interest earned, on a quantity basis. Requires the state to defend its citizens against any action taken by the federal government against individuals (i.e., collection actions), for compliance with this bill.
A companion measure is SCA 19 (Mountjoy-R), which is in Senate Rules Committe awaiting assignment to a policy committee.
Prohibits the state and its political subdivisions from levying or collecting any tax or fee on Internet communications or Internet users.
Requests Congress to oppose any legislation permitting the United Nations or any agency established by the United Nations to levy taxes.
Changes the California Tax Credit Allocation Committee's voting membership and the application and appeals procedures.
Requires that interest with respect to both underpayments and overpayments of tax be calculated at the modified adjusted rate per annum determined by specified provisions of the Internal Revenue Code plus 3 percentage points.
Permits the Director of Employment Development to approve a settlement involving a reduction of tax or an amount of $7,500 or less, with the approval of the State Attorney General. Permits the StateUnemployment Insurance Appeals Board to approve settlements above that amount, as well as those below $7,500, if they meet specified criteria.
Expands use of the State Franchise Tax Board to collect child support. Provides that collection of delinquent personal income tax liabilities shall take priority over collection of current child support obligations, unless certain conditions are satisfied.
Doubled-joined with SB 247 (Lockyer-D) and AB 1395 (Escutia-D).
Allows the Metropolitan Transportation Commission to impose, with voter approval, a regional tax on gasoline in the Bay Area region of up to 10 cents per gallon to fuel locally and regionally inspected transportation projects.
Imposes a 10% marijuana distribution tax.
Provides for an annually adjusted excise tax rate on gasoline and diesel fuel based on the percentage change in the California Consumer Price Index.
Consolidates 36 existing state general obligation bond financing authorities and committees into 8 new financing authorities maintaining the original members of the 36 bond financing committees. Provides that each of the 8 committees will include the Director of Finance, the State Controller, and the State Treasurer.
Grants the State Board of Equalization (SBE) authority to disclose information about tax liability to successors, receivers, trustees, executors, administrators, assignees, and guarantors who are liable for the taxes due. Adds interest and penalty provisions for taxes imposed on surplus line brokers. Allows the SBE to share motor fuel information with state and federal agencies. Allows proration of the flat rate fuel tax when a vehicle is added to an existing flat.
Authorizes the SBE to issue jeopardy determinations under the Energy Resources Surcharge Law and the Energy Telephone Lease Surcharge Law. Adds penalties for failure to file an underground storage tank maintenance fee return. Confirms penalties for misuse of dyed diesel fuel to federal law. Conforms the definition of "interstate users" for reporting and payment purposes under the Diesel Fuel Tax Law. Reduces penalty for failure to obtain a license and Diesel Fuel Tax Law where no tax is due.
Makes it unlawful for any local jurisdiction imposing a utility tax, or certain person, as specified, to disclose or allow the examination of certain tax-related information on documents.
Extends, for 2 years, the formula that provides a higher allocation of vehicle license fee revenue to cities that incorporated after January 1, 1997.
Imposes a surcharge on diesel fuel purchased out-of-state but used in vehicles operating in California, which is equivalent to the sales tax charged on diesel fuel purchased in California. Provides for refunds of the portion of diesel fuel sales tax paid on fuel purchases within the state but which fuel is used out-of-state.
Expands the use of the State Franchise Tax Board to help collect the approximately $5 billion delinquent child support currently owing California's children. Requires district attorney's to refer to the board for collection, all their child support delinquencies that are 90 days past due. Allows district attorneys to refer cases that are 30 days or more delinquent.
Double-joined with AB 573 (Kuehl-D) and SB 247 (Lockyer-D).
Increases motor vehicle registration fees by $1 from $27 to $28 and increases fees for the transfer of vehicles on September 1,1997, July 1, 1998, and July 1, 1999.
Enacts the California Internet Tax Freedom Act which prohibits any tax or fee directly or indirectly on, or in connection with, the Internet, as specified.