Legislative update November 2019 Tax News

The following bills were chaptered in the 2019-2020 session of the California State Legislature:

AB 37 (Chapter 792, Statutes of 2019) PIT Deduction/Commercial Cannabis Activity:

Under the Personal Income Tax Law, specifies that the federal disallowance of tax expenditures related to the illegal sale of drugs would not apply to licensees engaged in the trade or business of commercial cannabis activities in the State.

AB 91 (Chapter 39, Statutes of 2019) Loophole Closure and Small Business and Working Families Tax Relief Act of 2019:

Under the Personal Income Tax Law, did the following:

• Provision No. 1: Modified the California Earned Income Tax Credit
• Provision No. 2: Created the Young Child Tax Credit
• Provision No. 3: Conformed to the Achieving a Better Life Experience Accounts Increased Contributions and Internal Revenue Code Section 529 Account Rollovers
• Provision No. 4: Conformed to the Death and Disability Exclusion for Cancellation of Indebtedness of Student Loans
• Provision No. 5: Conformed to Disallowance of the Federal Deposit Insurance Corporation Premiums Deduction
• Provision No. 6: Conformed to the Limitation of a Deduction for Excessive Employee Remuneration
• Provision No. 7: Eliminated Net Operating Loss Carrybacks
• Provision No. 8: Conformed to the Small Business Accounting Method Changes
• Provision No. 9: Modified Conformity to the Loss Limitations for Non-Corporate Taxpayers
• Provision No. 10: Conformed to the Repeal of Technical Partnership Termination
• Provision No. 11: Modified Conformity to the Limitation on Like-Kind Exchanges to Real Property
• Provision No. 12: Disallowance of Separate State IRC Section 338 Elections

AB 101 (Chapter 159, Statutes of 2019) Housing Development and Financing:        

Under the Personal Income Tax Law and the Corporation Tax Law, modified the Low-Income Housing Credit.

AB 136 (Chapter 511, Statutes of 2019) Charitable Contribution Deduction:

Disallowed a charitable contribution deduction made to a postsecondary institution or to the Key Worldwide Foundation, and a deduction for a business expense related to a payment made to the Edge College and Career Network, Limited Liability Company, by taxpayers who met specified conditions, including that they are named in a specified criminal complaint.

AB 263 (Chapter 743, Statutes of 2019) Tax Expenditure Information:

Under the Revenue and Taxation Code, repealed and replaced existing law requiring legislation authorizing a new tax credit to include specific goals, purposes, objectives, and performance measures to instead apply to legislation authorizing a new tax expenditure.

AB 308 (Chapter 421, Statutes of 2019) Exemption from Annual Tax and Minimum Franchise Tax for Small Business Limited Liability Companies and Corporations Owned by a Deployed Member of the U.S. Armed Forces:

• Under the Personal Income Tax Law and the Corporation Tax Law, allowed an exemption from the annual tax or the minimum franchise tax for certain small business Limited Liability Companies and corporations that are solely owned by a deployed member of the United States Armed Forces. If double-joining language becomes effective before January 1, 2020, this bill would also modify the minimum franchise tax for corporations having less than $15 million in gross receipts.

AB 414  (Chapter 801, Statutes of 2019) Minimum Health Care Coverage/Establish Heath Care Penalty Fund:

Under the Revenue and Taxation Code, required the Franchise Tax Board to report to the Legislature specified information regarding the Minimum Essential Coverage Individual Mandate, Individual Shared Responsibility Penalty, and state financial assistance paid for health care coverage.

AB 614 (Chapter 431, Statutes of 2019) Agriculture Product Donations to Food Bank Credit:

Under the Personal Income Tax Law and the Corporation Tax Law, expanded eligibility for the existing donated fresh fruits or vegetables credit (Fruits and Vegetables Credit) to additional agricultural products (Agriculture Product Donation Credit).

AB 984 (Chapter 445, Statutes of 2019) Suicide Prevention Voluntary Tax Contribution Fund:

Under the Personal Income Tax Law, allowed a taxpayer to make a voluntary contribution to the Suicide Prevention Voluntary Tax Contribution Fund on the state personal income tax return.

AB 991 (Chapter 497, Statutes of 2019) Code Maintenance:

Made numerous technical, but no substantive changes as a matter of code maintenance to various California codes, including to the Revenue and Taxation Code.

AB 1130 (Chapter 750, Statutes of 2019) Personal Information: Data Breaches:

Under the Civil Code, changed the definition of personal information to include certain government identification numbers and biometric data.

AB 1296 (Chapter 626, Statutes of 2019) Tax Recovery in the Underground Economy (TRUE) Criminal Enforcement Program:

Under the Government Code, expanded the required membership and duties of the Joint Enforcement Strike Force (JESF) as provided for in the Unemployment Insurance Code, and required information sharing among the JESF members and the continuation of two investigative teams maintained by the Department of Justice.

SB 63 (Chapter 468, Statutes of 2019) Student Loan Debt Relief:

Under the Personal Income Tax Law, provided an exclusion from gross income for student loans that are forgiven when the borrower is unable to complete a program of study because a school closes, the borrower successfully asserts the school did something wrong or failed to do something it should have done, or where the borrower attended Brightwood College or The Art Institute of California, under specific circumstances.

SB 78 (Chapter 38, Statutes of 2019) Health Omnibus:

Created the California Minimum Essential Coverage Individual Mandate, a program similar to the Affordable Care Act administered by the Internal Revenue Service, but the state program will be administered by the California Health Benefit Exchange and the Franchise Tax Board.

SB 92 (Chapter 34, Statutes of 2019) Office of Tax Appeals: Establish Alternative to Appear Before a Tax Appeals Panel:

Under the Government Code, required the Office of Tax Appeals to establish a process for appellants to elect to appear before one administrative law judge instead of appearing before a tax appeals panel.

SB 309 (Chapter 325, Statutes of 2019) California Senior Citizen Advocacy Voluntary Tax Contribution Fund:

Under the Personal Income Tax Law, repealed the minimum contribution requirement for the California Senior Citizen Advocacy Voluntary Tax Contribution Fund.

SB 451 (Chapter 703, Statutes of 2019) Rehabilitation of Certified Historic Building Credit

Under the Personal Income Tax Law and the Corporation Tax Law, created a tax credit for a portion of the costs paid or incurred to rehabilitate certain historic structures.

SB 637 (Chapter 327, Statutes of 2019) Prevention of Animal Homelessness & Cruelty Voluntary Tax Contribution Fund:

Under the Administration of Franchise and Income Tax Law, this act modified provisions of the Prevention of Animal Homelessness and Cruelty Voluntary Tax Contribution Fund.

SB 790 (Chapter 332, Statutes of 2019) State Only Election/Partnership Audit Adjustments:

Under the Administration of Franchise and Income Tax Law, clarified when the Franchise Tax Board would be required to grant a partnership’s request to make a state election to report federal audit adjustments different from its federal election.