BILL NUMBER: AB 2338 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Chávez
FEBRUARY 18, 2016
An act to amend Sections 17941, 18601, 18633, 19021, 23224, and
23281 of the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 2338, as introduced, Chávez. Income taxes: returns: due dates.
The Personal Income Tax Law requires a partnership to file an
informational return on the 15th day of the 4th month following the
close of its taxable year, and a limited liability company to file a
return of the taxes due and payable on the 15th day of the 4th month
following the close of its taxable year. The Corporate Tax Law
requires "C" corporation and "S" corporation taxpayers to file
returns on the 15th day of the third month following the close of its
taxable year. These tax return due dates conform to federal income
tax return due dates for taxable years beginning before January 1,
2016.
This bill would require, instead, for taxable years beginning on
or after January 1, 2016, partnerships and limited liability
companies to file a return on the 15th day of the 3rd month, and "C"
Corporations to file a return on the 15th day of the 4th month of the
year, except "C" corporations with fiscal years ending on June 30
would use the new filing date for taxable years beginning on or after
January 1, 2026. These tax return due dates would conform to federal
income tax return due dates for taxable years beginning on and after
January 1, 2016.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17941 of the Revenue and Taxation Code is
amended to read:
17941. (a) For each taxable year beginning on or after January 1,
1997, a limited liability company doing business in this state (as
defined in Section 23101) shall pay annually to this state a tax for
the privilege of doing business in this state in an amount equal to
the applicable amount specified in subdivision (d) of Section 23153
for the taxable year.
(b) (1) In addition to any limited liability company that is doing
business in this state and is therefore subject to the tax imposed
by subdivision (a), for each taxable year beginning on or after
January 1, 1997, a limited liability company shall pay annually the
tax prescribed in subdivision (a) if articles of organization have
been accepted, or a certificate of registration has been issued, by
the office of the Secretary of State. The tax shall be paid for each
taxable year, or part thereof, until a certificate of cancellation of
registration or of articles of organization is filed on behalf of
the limited liability company with the office of the Secretary of
State.
(2) If a taxpayer files a return with the Franchise Tax Board that
is designated as its final return, the Franchise Tax Board shall
notify the taxpayer that the annual tax shall continue to be due
annually until a certificate of dissolution is filed with the
Secretary of State pursuant to Section 17707.08 of the Corporations
Code or a certificate of cancellation is filed with the Secretary of
State pursuant to Section 17708.06 of the Corporations Code.
(c) The (1) For
taxable years beginning before January 1, 2016, the tax
assessed under this section shall be due and payable on or before the
15th day of the fourth month of the taxable year.
(2) For taxable years beginning on or after January 1, 2016, the
tax assessed under this section shall be due and payable on or before
the 15th day of the third month of the taxable year.
(d) For purposes of this section, "limited liability company"
means an organization, other than a limited liability company that is
exempt from the tax and fees imposed under this chapter pursuant to
Section 23701h or Section 23701x, that is formed by one or more
persons under the law of this state, any other country, or any other
state, as a "limited liability company" and that is not taxable as a
corporation for California tax purposes.
(e) Notwithstanding anything in this section to the contrary, if
the office of the Secretary of State files a certificate of
cancellation pursuant to Section 17707.02 of the Corporations Code
for any limited liability company, then paragraph (1) of subdivision
(f) of Section 23153 shall apply to that limited liability company as
if the limited liability company were properly treated as a
corporation for that limited purpose only, and paragraph (2) of
subdivision (f) of Section 23153 shall not apply. Nothing in this
subdivision entitles a limited liability company to receive a
reimbursement for any annual taxes or fees already paid.
(f) (1) Notwithstanding any provision of this section to the
contrary, a limited liability company that is a small business solely
owned by a deployed member of the United States Armed Forces shall
not be subject to the tax imposed under this section for any taxable
year the owner is deployed and the limited liability company operates
at a loss or ceases operation.
(2) The Franchise Tax Board may promulgate regulations as
necessary or appropriate to carry out the purposes of this
subdivision, including a definition for "ceases operation."
(3) For the purposes of this subdivision, all of the following
definitions apply:
(A) "Deployed" means being called to active duty or active service
during a period when a Presidential Executive order specifies that
the United States is engaged in combat or homeland defense. "Deployed"
does not include either of the following:
(i) Temporary duty for the sole purpose of training or processing.
(ii) A permanent change of station.
(B) "Operates at a loss" means a limited liability company's
expenses exceed its receipts.
(C) "Small business" means a limited liability company with total
income from all sources derived from, or attributable, to the state
of two hundred fifty thousand dollars ($250,000) or less.
(4) This subdivision shall become inoperative for taxable years
beginning on or after January 1, 2018.
SEC. 2. Section 18601 of the Revenue and Taxation Code is amended
to read:
18601. (a) Except (1)
For taxable years beginning before January 1, 2016, as
provided in subdivision (b) or (c), every taxpayer subject to the tax
imposed by Part 11 (commencing with Section 23001) shall, on or
before the 15th day of the third month following the close of its
taxable year, transmit to the Franchise Tax Board a return in a form
prescribed by it, specifying for the taxable year, all the facts as
it may by rule, or otherwise, require in order to carry out this
part. A tax return, disclosing net income for any taxable year, filed
pursuant to Chapter 2 (commencing with Section 23101) or Chapter 3
(commencing with Section 23501) of Part 11 shall be deemed filed
pursuant to the proper chapter of Part 11 for the same taxable
period, if the chapter under which the return is filed is determined
erroneous.
(2) (A) (i) For taxable years beginning on or after January 1,
2016, as provided in subdivision (b) or (c), every taxpayer subject
to the tax imposed by Part 11 (commencing with Section 23001) that is
a "C" corporation shall, on or before the 15th day of the fourth
month following the close of its taxable year, transmit to the
Franchise Tax Board a return in a form prescribed by it, specifying
for the taxable year, all the facts as it may by rule, or otherwise,
require in order to carry out this part. A tax return, disclosing net
income for any taxable year, filed pursuant to Chapter 2 (commencing
with Section 23101) or Chapter 3 (commencing with Section 23501) of
Part 11 shall be deemed filed pursuant to the proper chapter of Part
11 for the same taxable period, if the chapter under which the return
is filed is determined erroneous.
(ii) In the case of a "C" corporation with a fiscal year ending on
June 30, the amendments made by clause (i) shall apply to returns
for taxable years beginning on or after January 1, 2026.
(B) For taxable years beginning on or after January 1, 2016, as
provided in subdivision (b) or (c), every taxpayer subject to the tax
imposed by Part 11 (commencing with Section 23001) that is an "S"
corporation shall, on or before the 15th day of the third month
following the close of its taxable year, transmit to the Franchise
Tax Board a return in a form prescribed by it, specifying for the
taxable year, all the facts as it may by rule, or otherwise, require
in order to carry out this part. A tax return, disclosing net income
for any taxable year, filed pursuant to Chapter 2 (commencing with
Section 23101) or Chapter 3 (commencing with Section 23501) of Part
11 shall be deemed filed pursuant to the proper chapter of Part 11
for the same taxable period, if the chapter under which the return is
filed is determined erroneous.
(b) In the case of cooperative associations described in Section
24404, returns shall be filed on or before the 15th day of the ninth
month following the close of its taxable year.
(c) In the case of taxpayers required to file a return for a short
period under Section 24634, the due date for the short period return
shall be the same as the due date of the federal tax return that
includes the net income of the taxpayer for that short period, or the
due date specified in subdivision (a) if no federal return is
required to be filed that would include the net income for that short
period.
(d) For taxable years beginning on or after January 1, 1997, each
"S corporation" "S" corporation
required to file a return under subdivision (a) for any taxable year
shall, on or before the day on which the return for the taxable year
was filed, furnish each person who is a shareholder at any time
during the taxable year a copy of the information shown on the
return.
(e) For taxable years beginning on or after January 1, 1997:
(1) A shareholder of an "S corporation" "S"
corporation shall, on the shareholder's return, treat a
Subchapter S item in a manner that is consistent with the treatment
of the item on the corporate return.
(2) (A) In the case of any Subchapter S item, paragraph (1) shall
not apply to that item if both of the following occur:
(i) Either of the following occurs:
(I) The corporation has filed a return, but the shareholder's
treatment of the item on the shareholder's return is, or may be,
inconsistent with the treatment of the item on the corporate return.
(II) The corporation has not filed a return.
(ii) The shareholder files with the Franchise Tax Board a
statement identifying the inconsistency.
(B) A shareholder shall be treated as having complied with clause
(ii) of subparagraph (A) with respect to a Subchapter S item if the
shareholder does both of the following:
(i) Demonstrates to the satisfaction of the Franchise Tax Board
that the treatment of the Subchapter S item on the shareholder's
return is consistent with the treatment of the item on the schedule
furnished to the shareholder by the corporation.
(ii) Elects to have this paragraph apply with respect to that
item.
(3) In any case described in subclause (I) of clause (i) of
subparagraph (A) of paragraph (2), and in which the shareholder does
not comply with clause (ii) of subparagraph (A) of paragraph (2), any
adjustment required to make the treatment of the items by the
shareholder consistent with the treatment of the items on the
corporate return shall be treated as arising out of a mathematical
error and assessed and collected under Section 19051.
(4) For purposes of this subdivision, "Subchapter S item" means
any item of an "S corporation" "S"
corporation to the extent provided by regulations that, for
purposes of Part 10 (commencing with Section 17001) or this part, the
item is more appropriately determined at the corporation level than
at the shareholder level.
(5) The penalties imposed under Article 7 (commencing with Section
19131) of Chapter 4 shall apply in the case of a shareholder's
negligence in connection with, or disregard of, the requirements of
this section.
SEC. 3. Section 18633 of the Revenue and Taxation Code is amended
to read:
18633. (a) (1) Every (A)
For taxable years beginning before January 1, 2016, every
partnership, on or before the 15th day of the fourth month following
the close of its taxable year, shall make a return for that taxable
year, stating specifically the items of gross income and the
deductions allowed by Part 10 (commencing with Section 17001). Except
as otherwise provided in Section 18621.5, the return shall include
the names, addresses, and taxpayer identification numbers of the
persons, whether residents or nonresidents, who would be entitled to
share in the net income if distributed and the amount of the
distributive share of each person. The return shall contain or be
verified by a written declaration that it is made under penalty of
perjury, signed by one of the partners.
(2)
(B) In addition to returns required by
paragraph (1), subparagraph (A), every limited
partnership subject to the tax imposed by subdivision (b) of Section
17935, on or before the 15th day of the fourth month following the
close of its taxable year, shall make a return for that taxable year,
containing the information identified in paragraph (1).
subparagraph (A). In the case of a limited
partnership not doing business in this state, the Franchise Tax Board
shall prescribe the manner and extent to which the information
identified in paragraph (1) subparagraph (A)
shall be included with the return required by this
paragraph. subparagraph.
(2) (A) For taxable years beginning on or after January 1, 2016,
every partnership, on or before the 15th day of the third month
following the close of its taxable year, shall make a return for that
taxable year, stating specifically the items of gross income and the
deductions allowed by Part 10 (commencing with Section 17001).
Except as otherwise provided in Section 18621.5, the return shall
include the names, addresses, and taxpayer identification numbers of
the persons, whether residents or nonresidents, who would be entitled
to share in the net income if distributed and the amount of the
distributive share of each person. The return shall contain or be
verified by a written declaration that it is made under penalty of
perjury, signed by one of the partners.
(B) In addition to returns required by subparagraph (A), every
limited partnership subject to the tax imposed by subdivision (b) of
Section 17935, on or before the 15th day of the third month following
the close of its taxable year, shall make a return for that taxable
year, containing the information identified in subparagraph (A). In
the case of a limited partnership not doing business in this state,
the Franchise Tax Board shall prescribe the manner and extent to
which the information identified in subparagraph (A) shall be
included with the return required by this subparagraph.
(b) Each partnership required to file a return under subdivision
(a) for any taxable year shall (on or before the day on which the
return for that taxable year was required to be filed) furnish to
each person who is a partner or who holds an interest in that
partnership as a nominee for another person at any time during that
taxable year a copy of the information required to be shown on that
return as may be required by regulations.
(c) Any person who holds an interest in a partnership as a nominee
for another person shall do both of the following:
(1) Furnish to the partnership, in the manner prescribed by the
Franchise Tax Board, the name, address, and taxpayer identification
number of that other person, and any other information for that
taxable year as the Franchise Tax Board may by form and regulation
prescribe.
(2) Furnish to that other person, in the manner prescribed by the
Franchise Tax Board, the information provided by that partnership
under subdivision (b).
(d) The provisions of Section 6031(d) of the Internal Revenue
Code, relating to the separate statement of items of unrelated
business taxable income, shall apply.
(e) The provisions of Section 6031(f) of the Internal Revenue
Code, relating to electing investment partnerships, shall apply,
except as otherwise provided.
SEC. 4. Section 19021 of the Revenue and Taxation Code is amended
to read:
19021. In (a) For
taxable years beginning before January 1, 2016, the case of
taxpayers subject to the tax imposed by Article 3 (commencing with
Section 23181) of Chapter 2 of Part 11, there shall be due and
payable on or before the 15th day of the third month following the
close of the preceding year from each taxpayer a percentage of its
net income as disclosed by its return which is equal to the rate
applicable to corporations subject to the tax imposed by Article 2
(commencing with Section 23151) of Chapter 2 of Part 11 plus the
personal property tax rate equivalent included in the bank and
financial corporation tax rate determination by the Franchise Tax
Board pursuant to Sections 23186 and 23186.1. The payment required by
this section shall not be less than the minimum tax specified in
Section 23153.
(b) (1) (A) For taxable years beginning on or after January 1,
2016, in the case of taxpayers that are "C" corporations subject to
the tax imposed by Article 3 (commencing with Section 23181) of
Chapter 2 of Part 11, there shall be due and payable on or before the
15th day of the fourth month following the close of the preceding
year from each taxpayer a percentage of its net income as disclosed
by its return which is equal to the rate applicable to corporations
subject to the tax imposed by Article 2 (commencing with Section
23151) of Chapter 2 of Part 11 plus the personal property tax rate
equivalent included in the bank and financial corporation tax rate
determination by the Franchise Tax Board pursuant to Section 23186.
The payment required by this section shall not be less than the
minimum tax specified in Section 23153.
(B) In the case of a "C" corporation with a fiscal year ending on
June 30, the amendments made by subparagraph (A) shall apply to
returns for taxable years beginning on or after January 1, 2026.
(2) For taxable years beginning on or after January 1, 2016, in
the case of taxpayers that are "S" corporations subject to the tax
imposed by Article 3 (commencing with Section 23181) of Chapter 2 of
Part 11, there shall be due and payable on or before the 15th day of
the fourth month following the close of the preceding year from each
taxpayer a percentage of its net income as disclosed by its return
which is equal to the rate applicable to corporations subject to the
tax imposed by Article 2 (commencing with Section 23151) of Chapter 2
of Part 11 plus the personal property tax rate equivalent included
in the bank and financial corporation tax rate determination by the
Franchise Tax Board pursuant to Section 23186. The payment required
by this section shall not be less than the minimum tax specified in
Section 23153.
SEC. 5. Section 23224 of the Revenue and Taxation Code is amended
to read:
23224. (a) Notwithstanding the provisions of Section 23222 and
Section 23223, if a corporation, which has been subject to the
provisions of Chapter 3 (commencing with Section 23501)
commences to do business in this state, its tax shall be computed as
follows:
(1) Such corporation shall pay a tax under Chapter 3
(commencing with Section 23501) for the whole of the year it
commences to do such business;
(2) Such corporation shall, for the taxable year succeeding the
year it commences to do business in this state, pay a tax under this
chapter measured by its income for that taxable year;
(3) Such corporation shall, for its third taxable year, pay a tax,
under this chapter, measured by its income for its second taxable
year;
(4) (A) Notwithstanding any other provisions
of this part, for taxable years beginning before January 1,
2016, such corporation shall file its return for such second
and third taxable years on or before the 15th day of the third month
following the close of its second taxable year.
(B) (i) (I) Notwithstanding any other provisions of this part, for
taxable years beginning on or after January 1, 2016, such
corporation that is a "C" corporation shall file its return for such
second and third taxable years on or before the 15th day of the
fourth month following the close of its second taxable year.
(II) In the case of a "C" corporation with a fiscal year ending on
June 30, the amendments made by subclause (I) shall apply to returns
for taxable years beginning on or after January 1, 2026.
(ii) Notwithstanding any other provisions of this part, for
taxable years beginning on or after January 1, 2016, such corporation
that is a "S" corporation shall file its return for such second and
third taxable years on or before the 15th day of the third month
following the close of its second taxable year.
(b) The provisions of subdivision (a) shall be applicable only if
a taxpayer commenced doing business in this state before January 1,
1972.
SEC. 6. Section 23281 of the Revenue and Taxation Code is amended
to read:
23281. (a) (1) When a taxpayer ceases to do business within the
state during any taxable year and does not dissolve or withdraw from
the state during that year, and does not resume doing business during
the succeeding taxable year, its tax for the taxable year in which
it resumes doing business prior to January 1, 2000, shall be the
greater of the following:
(A) The tax computed upon the basis of the net income of the
income year in which it ceased doing business, except where the
income has already been included in the measure of a tax imposed by
this chapter.
(B) The minimum tax prescribed in Section 23153.
(2) When a taxpayer ceases to do business within the state during
any taxable year and does not dissolve or withdraw from the state
during that year, and does not resume doing business during the
succeeding taxable year, its tax for the taxable year in which it
resumes doing business, on or after January 1, 2000, shall be
according to or measured by its net income for the taxable year in
which it resumes doing business.
(b) The (1) For
taxable years beginning before January 1, 2016, the tax shall
be due and payable at the time the corporation resumes doing
business, or on or before the 15th day of the third month following
the close of its taxable year, whichever is later. All the provisions
of this part relating to delinquent taxes shall be applicable to the
tax if it is not paid on or before its due date.
(2) (A) (i) For taxable years beginning on or after January 1,
2016, the tax shall be due and payable at the time the "C"
corporation resumes doing business, or on or before the 15th day of
the fourth month following the close of its taxable year, whichever
is later. All the provisions of this part relating to delinquent
taxes shall be applicable to the tax if it is not paid on or before
its due date.
(ii) In the case of a "C" corporation with a fiscal year ending on
June 30, the amendments made by clause (i) shall apply to returns
for taxable years beginning on or after January 1, 2026.
(B) For taxable years beginning on or after January 1, 2016, the
tax shall be due and payable at the time the "S" corporation resumes
doing business, or on or before the 15th day of the third month
following the close of its taxable year, whichever is later. All the
provisions of this part relating to delinquent taxes shall be
applicable to the tax if it is not paid on or before its due date.
(c) This section does not apply to a corporation which became
subject to Chapter 3 (commencing with Section 23501) after it
discontinued doing business in this state (see Section 23224.5).