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Legislative Wrap up 2006

The following is a summary of tax-related legislation signed by Governor Schwarzenegger by September 30, 2006.

AB 339 (Harman, Stats. 2006, Ch. 495). This act adopts provisions of the Uniform Limited Partnership Act of 2008, allowing a general partner to be shielded from liability for the debts and obligations of the limited partnership.

AB 546 (Garcia, Stats. 2006, Ch. 848). It is unlawful to knowingly use a state-owned or state-leased computer to access, view, download, or otherwise obtain obscene matter.

AB 970 (Torrico, Stats. 2006, Ch. 343). A corporation is allowed to file a tax return on behalf of certain nonresident directors.

AB 1282 (Mullin, Stats. 2006, Ch. 712). The availability of the Employer Child Care Program Credit and the Employer Child Care Contribution Credit is extended to taxable years beginning on or after January 1, 2007, and before January 1, 2012. The bill will revise the automatic repeal date for both credits to December 1, 2012.

AB 1302 (Horton, Stats. 2006, Ch. 713). New procedures adopting "emergency regulations" are established for state agencies.

AB 1418 (Horton, Stats. 2006, Ch. 716). On their respective Websites, the State Board of Equalization and the Franchise Tax Board are required to make public a list of each agency's top 250 tax delinquencies in the state.

AB 1550 (Arambula, Stats. 2006, Ch. 718). This act makes various changes and reforms to the law applying to the following Economic Development Areas:

  • Designation of Enterprise Zones.
  • Designation of Targeted Employment Areas.
  • Designation of G-TEDAs (Geographically targeted economic development areas).
  • Tax Incentives.

AB 1798 (Berg, Stats. 2006, Ch. 896). The severe rainstorms and related events that occurred in Del Norte, Humboldt, Lake, Mendocino, Napa, Sonoma, and Trinity counties starting in December 2005, are added to the current list of specified disasters under the Personal Income Tax Law and the Corporation Tax Law.

AB 1806 (Assembly Budget Committee, Stats. 2006, Ch. 69). The following statutory changes relating to the Budget Act of 2006 are made:

  • Repeal the sunset date for Department of Housing & Community Development to assess and collect a fee assessed to Enterprise Zones for each application for a hiring credit voucher certificate.
  • Modify an existing reporting requirement regarding state agency's internal accounting systems.

AB 1809 (Assembly Budget Committee, Stats. 2006, Ch. 49). The Teacher Retention Tax Credit is suspended for the 2006 taxable year.

AB 2085 (Parra, Stats. 2006, Ch. 607). Eligibility requirements for financial aid grants issued by the Military Department are modified.

AB 2098 (Liu, Stats. 2006, Ch. 818). The Electronic Funds Transfer Task Force is established to develop a comprehensive approach to implementing an electronic payment system for all state agencies.

AB 2341 (Villines, Stats. 2006, Ch. 773). This act eliminates the tax clearance certificate requirement for those business entities required to obtain one. The new process provides that the minimum franchise tax or the annual tax will not be assessed for a taxable year if the following conditions are met:

  • The entity files a timely final annual tax or minimum franchise tax return for the preceding taxable year.
  • The entity did not conduct business in California after the end of the taxable year for which the final return was filed.
  • The entity files documents for dissolution, surrender, or cancellation within 12 months of the due date of the final return.

AB 2367 (LaSuer, Stats. 2006, Ch. 347). This act clarifies the criminal penalties for persons who willfully divulge computer software obtained by subpoena and for check cashers that willfully fail to report information to FTB regarding certain check cashing transactions.

AB 2439 (Klehs, Stats. 2006, Ch. 90). FTB is required to give taxpayers the option of splitting a tax refund made by direct deposit into more than one account.

AB 2485 (Jones, Stats. 2006, Ch. 296). This act establishes the California Sea Otter Fund so taxpayers may designate a contribution on the personal income tax return.

AB 2591 (Keene, Stats. 2006, Ch. 506). State agencies are required to submit an annual report to the Department of Finance on the status of liquidated and delinquent accounts.

AB 2638 (Laird, Stats. 2006, Ch. 892). This act makes changes to the Local Housing Trust Fund Matching Grant Program, and technical amendments under the Revenue and Taxation Code to resolve non-controversial housing-related items.

AB 2715 (Runner, Stats. 2006, Ch. 423). This act provides the authority for filing and recording state tax liens by electronic or magnetic media that is substantially the same as the authority for filing a federal tax lien.

AB 2735 (Nava, Stats. 2006, Ch. 897). The severe rainstorms and related events that occurred in the following counties in December 2005, January 2006, March 2006, or April 2006, are added to the current list of specified disasters under the Personal Income Tax Law and the Corporation Tax Law: Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, El Dorado, Fresno, Kings, Lake, Lassen, Madera, Marin, Mariposa, Merced, Monterey, Napa, Nevada, Placer, Plumas, Sacramento, San Joaquin, San Luis Obispo, San Mateo, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tulare, Tuolumne, Yolo, and Yuba.

This act also adds the wildfires that occurred in San Bernardino County in July 2006 to the current list of specified disasters.

AB 2831 (Ridley-Thomas, Stats. 2006, Ch. 580). The repeal date of the Community Development Financial Institution Credit is extended from December 1, 2007, to December 1, 2012.

AB 2914 (Leno, Stats. 2006, Ch. 426). This act extends the repeal date for limited liability partnerships to engage in the practice of architecture.

AB 2962 (Benoit, Stats. 2006, Ch. 428). This act helps to reduce the amount of over-withholding resulting from provisions requiring withholding on real property sales by allowing a seller of California real estate to elect to withhold three and one-third percent of the sales price, or an amount not less than the maximum tax rate on the gain multiplied by the gain from the sale.

SB 286 (Lowenthal, Stats. 2006, Ch. 890). This act makes technical amendments to resolve non-controversial housing-related items under the low-income housing tax credit.

SB 663 (Migden, Stats. 2006, Ch. 22). Some taxpayers assert that by qualifying a controlled foreign corporation as a California taxpayer, reportable Subpart F income is not reportable for California purposes. This act closes the loophole.

SB 763 (Lowenthal, Stats. 2006, Ch. 634). This act:

  • Extends authority to the Department of Housing and Community Development (DHCD) to assess and collect a fee related to the specified economic development areas (EDAs).
  • Directs DHCD to develop and adopt regulations that govern vouchering certificates issued by local governments to the specified EDAs.

SB 1183 (Ackerman, Stats. 2006, Ch. 57). Conditions are expanded under which a foreign corporation would be exempted from obtaining a certificate of qualification from the Secretary of State.

SB 1249 (Alquist, Stats. 2006, Ch. 645). This act:

  • Fixes the minimum contribution requirement for the California Fund for Senior Citizens at $250,000.
  • Makes changes to the minimum contribution amounts for 12 funds.

SB 1374 (Cedillo, Stats. 2006, Ch. 513). The repeal date for current law that allows FTB to provide taxpayer information to city officials is extended from December 31, 2008, to December 31, 2011.

SB 1436 (Figueroa, Stats. 2006, Ch. 234). State agencies are required to designate a liaison for small businesses.

SB 1452 (Speier, Stats. 2006, Ch. 452). The Omnibus Audit Accountability Act of 2006 is enacted, and requires an ongoing internal audit function of state agencies to safeguard public funds and the public trust.

SB 1827 (Migden, Stats. 2006, Ch. 802). Registered domestic partners are required to file personal income tax returns using the same rules applicable to married individuals.

SB 1852 (Senate Judiciary Committee, Stats. 2006, Ch. 538). This act makes technical, non-substantive changes to various code sections, including the Revenue and Taxation Code.