BILL NUMBER: AB 970	CHAPTERED  09/20/06

	CHAPTER  343
	FILED WITH SECRETARY OF STATE  SEPTEMBER 20, 2006
	APPROVED BY GOVERNOR  SEPTEMBER 20, 2006
	PASSED THE ASSEMBLY  AUGUST 24, 2006
	PASSED THE SENATE  AUGUST 16, 2006
	AMENDED IN SENATE  SEPTEMBER 6, 2005
	AMENDED IN SENATE  JUNE 9, 2005
	AMENDED IN ASSEMBLY  MAY 4, 2005

INTRODUCED BY   Assembly Member Torrico

                        FEBRUARY 18, 2005

   An act to add Section 18536 to the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 970, Torrico  Tax administration: tax returns: nonresident
directors.
   Existing income tax laws authorize the Franchise Tax Board to
provide for the filing of a group return for electing nonresident
partners, as specified.
   This bill would authorize the board to provide for the filing of a
group return for electing nonresident directors of a corporation, as
specified, and to adjust the income of those taxpayers to properly
reflect income, as provided.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 18536 is added to the Revenue and Taxation
Code, to read:
   18536.  (a) In lieu of electing nonresident directors filing a
return pursuant to Section 18501, the Franchise Tax Board may,
pursuant to requirements and conditions set forth in applicable forms
and instructions, provide for the filing of a group return by a
corporation for electing nonresident individuals who receive wages,
salaries, fees, or other compensation from that corporation for
director services, including attendance of board of directors'
meetings that take place in this state. The tax rate or rates
applicable to each director's compensation for services performed in
this state shall be the highest marginal rate or rates provided for
by Part 10 (commencing with Section 17001) of Division 2 and no
deductions or credits should be allowed. As required by the Franchise
Tax Board, the corporation, as the agent for the electing
nonresident directors, shall make the payments of tax, additions to
tax, interest, and penalties otherwise required to be paid by, or
imposed on, the electing directors.
   (b) The Franchise Tax Board may adjust the income of an electing
nonresident taxpayer included in a group return filed under this
section to properly reflect the income under Part 10 (commencing with
Section 17001) of Division 2.