BILL NUMBER: AB 2225 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Gaines
FEBRUARY 18, 2010
An act to repeal and add Section 18663 of the Revenue and Taxation
Code, relating to taxation, and declaring the urgency thereof, to
take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 2225, as introduced, Gaines. Taxation: wage withholding.
Existing law requires the Franchise Tax Board to prepare wage
withholding tables to be used by employers for purposes of
withholding taxes on wages paid that produce a sum that is equal to
10% more than the sum specified prior to November 1, 2009. Existing
law allows, in lieu of the withholding tables, withholding at a rate
of 6.6% with respect to supplemental wages and at a rate of 10.23%
with respect to stock options and bonus payments.
This bill would eliminate the requirement that wage withholding
tables produce a sum that is equal to 10% more than the sum specified
prior to November 1, 2009, for purposes of the withholding tables.
This bill would also decrease the withholding rates to 6% for
supplemental wages and to 9.3% for stock options and bonus payments.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 18663 of the Revenue and Taxation Code is
repealed.
18663. (a) (1) The Franchise Tax Board shall annually (or more
often if necessary) prepare and make available to the Employment
Development Department, wage withholding tables that shall be used by
every employer making payment of any wages to a resident employee
for services performed either within or without this state; or to a
nonresident employee for services performed in this state, to deduct
and withhold from those wages for each payroll period, a tax computed
in a manner as to produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that is substantially equivalent to the amount of tax reasonably
estimated to be due under Part 10 (commencing with Section 17001)
resulting from the inclusion in the gross income of the employee the
wages which were subject to withholding.
(2) For wages paid on or after November 1, 2009, wage withholding
tables prepared by the Franchise Tax Board pursuant to this
subdivision shall produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that will significantly prevent underwithholding by using an
amount equal to 10 percent more than the sum described in paragraph
(1).
(b) (1) (A) For supplemental wages paid on or after January 1,
1992, the rate of withholding that may be applied to supplemental
wages in lieu of the wage withholding tables specified in subdivision
(a) shall be 6 percent.
(B) For supplemental wages paid on or after November 1, 2009, the
rate of withholding shall be 6.6 percent.
(2) For purposes of this subdivision, "supplemental wages"
includes, but is not limited to, bonus payments, overtime payments,
commissions, sales awards, back pay including retroactive wage
increases, and reimbursements for nondeductible moving expenses that
are paid for the same or a different period, or without regard to a
particular period.
(c) (1) For stock options and bonus payments that constitute wages
paid on or after January 1, 2002, the rate of withholding that may
be applied to those stock options and bonus payments in lieu of the
wage withholding tables specified in subdivision (a) shall,
notwithstanding subdivision (b), be 9.3 percent.
(2) For stock options and bonus payments that constitute wages
paid on or after November 1, 2009, the rate of withholding shall be
10.23 percent.
SEC. 2. Section 18663 is added to the Revenue and Taxation Code,
to read:
18663. (a) The Franchise Tax Board shall annually (or more often
if necessary) prepare and make available to the Employment
Development Department, wage withholding tables that shall be used by
every employer making payment of any wages to a resident employee
for services performed either within or without this state; or to a
nonresident employee for services performed in this state, to deduct
and withhold from those wages for each payroll period, a tax computed
in a manner as to produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that is substantially equivalent to the amount of tax reasonably
estimated to be due under Part 10 (commencing with Section 17001)
resulting from the inclusion in the gross income of the employee the
wages which were subject to withholding.
(b) (1) For supplemental wages paid on or after the effective date
of the act adding this section, the rate of withholding that may be
applied to supplemental wages in lieu of the wage withholding tables
specified in subdivision (a) shall be 6 percent.
(2) For purposes of this subdivision, "supplemental wages"
includes, but is not limited to, overtime payments, commissions,
sales awards, back pay including retroactive wage increases, and
reimbursements for nondeductible moving expenses that are paid for
the same or a different period, or without regard to a particular
period.
(c) For stock options and bonus payments that constitute wages
paid on or after the effective date of the act adding this section,
the rate of withholding that may be applied to those stock options
and bonus payments in lieu of the wage withholding tables specified
in subdivision (a) shall, notwithstanding subdivision (b), be 9.3
percent.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to provide appropriate tax relief at the earliest time
possible, it is necessary that this act go into immediate effect.