BILL NUMBER: AB 84 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 12, 2007
AMENDED IN ASSEMBLY FEBRUARY 22, 2007
INTRODUCED BY Assembly Members Nakanishi and Smyth
(Principal coauthor: Assembly Member Plescia)
(Coauthors: Assembly Members Benoit,
Aghazarian, Anderson, Benoit,
Duvall, Gaines, Horton, Jeffries,
Maze, Houston, Huff,
Jeffries, La Malfa, Maze,
Sharon Runner, Silva, and Tran
Strickland, Tran, and Villines )
(Coauthors: Senators Ackerman, Harman, and Wyland)
DECEMBER 13, 2006
An act to amend Sections 17072, 17215, and 19184 of, to amend
and repeal Sections 17131.4, 17131.5, 17215.1, and 17215.4 of,
and to add Sections 17138.5, 17138.6, and 17216 to, the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 84, as amended, Nakanishi. Income tax: health savings accounts.
The Personal Income Tax Law authorizes various deductions in
computing income that is subject to tax under that law.
This bill would allow a deduction in connection with health
savings accounts in conformity with federal law. In general, the
deduction would be an amount equal to the aggregate amount paid in
cash during the taxable year by , or on behalf of ,
an eligible individual, as defined, to a health savings account
of that individual, as provided. This bill would also provide
related conformity to that federal law with respect to treatment of
the account as a tax-exempt trust, the allowance of rollovers from
Archer Medical Savings Accounts , health flexible
spending arrangements, or health reimbursement accounts to a
health savings account, and penalties in connection therewith.
This bill would take effect immediately as a tax levy. However,
the provisions of this bill would not become operative until January
1, 2008.
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 17072 of the Revenue and Taxation Code is
amended to read:
17072. (a) Section 62 of the Internal Revenue Code, relating to
adjusted gross income defined, shall apply, except as otherwise
provided.
(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to
certain expenses of elementary and secondary school teachers, shall
not apply.
(c) The deduction allowed by Section 17216, relating to health
savings accounts, is allowed in computing adjusted gross income.
(d) The amendments made to this section by the act adding this
subdivision shall apply only to each taxable year
to taxable years beginning on or after January 1, 2008.
SEC. 2. Section 17131.4 of the Revenue
and Taxation Code is amended to read:
17131.4. (a) Section 106(d) of the Internal
Revenue Code, relating to contributions to health savings accounts,
shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2008. This section shall
remain in effect only until January 1, 2013, and as of that date is
repealed.
SEC. 3. Section 17131.5 of the Revenue
and Taxation Code is amended to read:
17131.5. (a) Section 125(d)(2)(D) of the
Internal Revenue Code, relating to the exception for health savings
accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2008. This section shall
remain in effect only until January 1, 2013, and as of that date is
repealed.
SEC. 2. SEC. 4. Section 17138.5 is
added to the Revenue and Taxation Code, to read:
17138.5. For each taxable year taxable
years beginning on or after January 1, 2008, Section 106 of the
Internal Revenue Code, as amended by Section 1201 of the
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Public Law 108-173), relating to by Section 302
of the Tax Relief and Health Care Act (TRHCA) of 2006 (Public Law
109-432), relating to health savings accounts, shall apply,
except as otherwise provided.
SEC. 3. SEC. 5. Section 17138.6 is
added to the Revenue and Taxation Code, to read:
17138.6. For each taxable year taxable
years beginning on or after January 1, 2008, Section 125 of the
Internal Revenue Code, as amended by Section 1201 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (Public
Law 108-173), relating to health savings accounts, shall apply,
except as otherwise provided.
SEC. 4. SEC. 6. Section 17215 of the
Revenue and Taxation Code is amended to read:
17215. (a) Section 220(a) of the Internal Revenue Code, relating
to deduction allowed, is modified to provide that the amount allowed
as a deduction shall be an amount equal to the amount allowed to that
individual as a deduction under Section 220 of the Internal Revenue
Code, relating to medical savings accounts, on the federal income tax
return filed for the same taxable year by that individual.
(b) Section 220(f)(4) of the Internal Revenue Code, relating to
additional tax on distributions not used for qualified medical
expenses, is modified by substituting "10 percent" in lieu of "15
percent."
(c) Section 220(f)(5) of the Internal Revenue Code, as amended by
Section 1201(c) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), relating to permitted
rollovers from Archer Medical Savings Accounts, shall apply, except
as otherwise provided.
(d) The amendments made to this section by the act adding this
subdivision shall apply only to each taxable year
to taxable years beginning on or after January 1, 2008.
SEC. 7. Section 17215.1 of the Revenue
and Taxation Code is amended to read:
17215.1. (a) Section 220(f)(5) of the
Internal Revenue Code, relating to rollover contributions, shall not
apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2008. This section shall
remain in effect only until January 1, 2013, and as of that date is
repealed.
SEC. 8. Section 17215.4 of the Revenue
and Taxation Code is amended to read:
17215.4. (a) Section 223 of the Internal
Revenue Code, relating to health savings accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2008. This section shall
remain in effect only until January 1, 2013, and as of that date is
repealed.
SEC. 5. SEC. 9. Section 17216 is
added to the Revenue and Taxation Code, to read:
17216. For each taxable year taxable
years beginning on or after January 1, 2008, all of the
following apply:
(a) Section 223 of the Internal Revenue Code, as added by Section
1201 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), and as amended
by Title III of the Tax Relief and Health Care Act (TRHCA) of 2006
(Public Law 109-432), relating to health savings accounts,
shall apply, except as otherwise provided.
(b) Section 223(e)(1) of the Internal Revenue Code, as added by
Section 1201 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), shall be modified by
substituting the phrase "Section 17651" for the phrase "Section 511
(relating to imposition of tax of unrelated business income of
charitable, etc., organizations)," contained therein.
(c) Section 223(f)(4)(A) of the Internal Revenue Code, as added by
Section 1201 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), shall be modified by
substituting "21/2 percent" for "10 percent," contained therein.
SEC. 6. SEC. 10. Section 19184 of
the Revenue and Taxation Code is amended to read:
19184. (a) A penalty of fifty dollars ($50) shall be imposed for
each failure, unless it is shown that the failure is due to
reasonable cause, by any person required to file who fails to file a
report at the time and in the manner required by any of the following
provisions:
(1) Subdivision (c) of Section 17507, relating to individual
retirement accounts.
(2) Section 220(h) of the Internal Revenue Code, relating to
medical savings accounts, for taxable years beginning on or after
January 1, 1997.
(3) Section 223(h) of the Internal Revenue Code, as added by
Section 1201 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), relating to health
savings accounts.
(4) Subdivision (b) of Section 17140.3 or subdivision (b) of
Section 23711 relating to qualified tuition programs.
(5) Subdivision (e) of Section 23712, relating to Coverdell
education savings accounts.
(b) (1) Any individual who:
(A) Is required to furnish information under Section 17508 as to
the amount designated nondeductible contributions made for any
taxable year, and
(B) Overstates the amount of those contributions made for that
taxable year, shall pay a penalty of one hundred dollars ($100) for
each overstatement unless it is shown that the overstatement is due
to reasonable cause.
(2) Any individual who fails to file a form required to be filed
by the Franchise Tax Board under Section 17508 shall pay a penalty of
fifty dollars ($50) for each failure unless it is shown that the
failure is due to reasonable cause.
(c) Article 3 (commencing with Section 19031) of this chapter
(relating to deficiency assessments) shall not apply in respect of
the assessment or collection of any penalty imposed under this
section.
(d) The amendments made to this section by the act adding this
subdivision shall apply only to each taxable year
to taxable years beginning on or after January 1, 2008.
SEC. 7. SEC. 11. This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.