BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 347|
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                                 THIRD READING


          Bill No:  AB 347
          Author:   Bass (D), et al
          Amended:  2/16/10 in Senate
          Vote:     21

           
           SENATE REVENUE & TAXATION COMMITTEE :  5-0, 2/11/10
          AYES:  Wolk, Walters, Alquist, Ashburn, Padilla

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 2/12/10
          AYES:  Kehoe, Alquist, Corbett, Leno, Price, Walters, Yee
          NO VOTE RECORDED:  Cox, Denham, Liu, Wyland

           ASSEMBLY FLOOR  :  64-3, 1/27/10 - See last page for vote


           SUBJECT  :    Income and corporation taxes:  charitable tax  
          deductions: 
                      Haiti earthquake victims

           SOURCE  :     Author


           DIGEST  :    This bill allows an individual or a corporate  
          taxpayer to deduct a charitable contribution made for the  
          relief of victims of the earthquake in Haiti on the  
          taxpayer's 2009 tax return, instead of the 2010 tax return.

           ANALYSIS  :    

          Existing federal law: 

          1. Allows taxpayers to claim an income tax deduction for  
                                                           CONTINUED





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             charitable contributions.  The deduction is generally  
             available for the taxable year in which the contribution  
             is made.  Thus, for taxpayers whose taxable year is the  
             calendar year, the tax benefit of a charitable  
             contribution made in January or February will not be  
             realized until the following calendar year when the tax  
             return is filed. 

          2. Requires taxpayers who claim a charitable deduction to  
             maintain a record of the contribution in the form of a  
             bank record or a written communication from the donee  
             organization showing the name of the organization, the  
             date of the contribution, and the contribution amount.   
             In addition to these recordkeeping requirements,  
             substantiation requirements apply in the case of  
             charitable contributions with a value of $250 or more.   
             Specifically, no charitable deduction is allowed for any  
             contribution of $250 or more unless the taxpayer  
             substantiates the contribution through a contemporaneous  
             written acknowledgement of the contribution by the  
             donee. 

          3. Allows individual and corporate taxpayers who make  
             qualified charitable contributions in support of the  
             Haiti earthquake relief between January 12, 2010, and  
             March 1, 2010, the choice of deducting those  
             contributions in either the 2009 tax year or the 2010  
             tax year.  [Public Law (P.L.) 111-126].  Provides that,  
             in the case of those contributions, a telephone bill  
             showing the name of the donee organization, the date of  
             the contribution, and the amount of the contribution  
             shall be treated as meeting the prescribed recordkeeping  
             requirements of Internal Revenue Code (IRC) Section  
             170(f)(17). 

          Existing state law: 

          1. Conforms partially Person Income Tax (PIT) law to IRC  
             Section 170, as amended as of January 1, 2005, relating  
             to charitable contributions. 

          2. Provides that corporate charitable contributions are  
             limited to 10 percent of the corporation's net income. 








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          This bill:

          1. Provides that, for purposes of the PIT law and the  
             Corporation Tax (CT) law, a taxpayer may treat a cash  
             contribution made after January 11, 2010, and before  
             March 1, 2010, for the relief of victims in areas  
             affected by the earthquake in Haiti on January 12, 2010,  
             as if the contribution was made on December 31, 2009,  
             and not in 2010. 

          2. Specifies that a deduction for those charitable  
             contributions must be, otherwise, allowable under  
             existing PIT or CT law. 

          3. Provides that a telephone bill that shows the name of  
             the donee organization, the date of the contribution,  
             and the amount of the contribution meets the  
             recordkeeping requirements of the PIT and CT laws. 

          4. Is repealed on December 1, 2011. 

           Comment  

          The author states that, "Last Friday, January 22, 2010,  
          President Obama signed into law, HR 4462, a bipartisan  
          measure that allows certain charitable contributions made  
          to earthquake relief efforts in Haiti to be deducted in the  
          2009 tax year, instead of waiting until the 2010 tax year  
          as provided by existing law.  The outpouring of generosity  
          on the part of all Americans and Californians, in  
          particular, to the Haitian earthquake relief efforts has  
          been overwhelming, especially in these tough economic  
          times.  The steps taken by the Congress and the President  
          will allow these charitable contributions to be deducted  
          from the 2009 federal income taxes. 

          "I have introduced AB 347, along with Principal co-authors,  
          Assembly Members Block and Calderon, to conform state law  
          to the recently enacted federal provisions, Public Law  
          111-126. Specifically, AB 347 will allow individual and  
          corporate taxpayers who make cash contributions to eligible  
          charitable organizations for earthquake relief efforts in  
          Haiti to take a tax deduction in the 2009 tax year. AB 347  
          makes it easier for more Californians to give and  







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          participate in the relief effort that our neighbors in  
          Haiti desperately need." 

           Purpose of this bill  .  This bill conforms California law to  
          the provisions of P.L. 111-126.  Specifically, this bill  
          will give taxpayers the option of treating charitable cash  
          contributions to the Haiti relief effort made after January  
          11, 2010, and before March 1, 2010, as having been made on  
          December 31, 2009.  Thus, taxpayers will have the ability,  
          if they so choose, to take a deduction in this tax season  
          on their 2009 returns. 

           Background  

           The Haiti Earthquake  .  On January 12, 2010, a 7.0 magnitude  
          earthquake struck the island nation of Haiti approximately  
          16 miles from the capital city of Port-au-Prince causing  
          widespread destruction and loss of life.  The International  
          Federation of the Red Cross estimates that up to three  
          million people have been affected by the disaster, and  
          while numbers are still preliminary, the country's Interior  
          Minister has stated that the death toll could reach  
          200,000. 

           Prior legislation  .  This bill is similar to legislation  
          enacted following the Indian Ocean tsunami of December 26,  
          2004.  Specifically, SB 50 (Campbell), Chapter 5, Statutes  
          of 2005, conformed to federal law by allowing individual  
          and corporate taxpayers that made qualified charitable  
          contributions in January 2005 to deduct those contributions  
          in either the 2004 or 2005 tax year. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          The Franchise Tax Board staff estimates that this bill will  
          result in a revenue loss of $80,000 in fiscal year 2009-10  
          and a gain of $80,000 in fiscal year 2010-11.

           SUPPORT  :   (Verified  2/16/10)

          California Society of Enrolled Agents
          Spidell Publishing, Inc.








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           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Arambula, Beall, Tom Berryhill,  
            Blakeslee, Block, Blumenfield, Bradford, Brownley,  
            Buchanan, Caballero, Charles Calderon, Chesbro, Conway,  
            Cook, Coto, De La Torre, Emmerson, Eng, Evans, Feuer,  
            Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,  
            Galgiani, Garrick, Gilmore, Hagman, Harkey, Hayashi,  
            Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,  
            Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,  
            Monning, Nava, Nestande, Niello, John A. Perez,  
            Portantino, Ruskin, Silva, Smyth, Solorio, Audra  
            Strickland, Swanson, Torres, Torrico, Tran, Villines,  
            Yamada
          NOES:  Anderson, Bill Berryhill, Nielsen
          NO VOTE RECORDED:  Carter, Davis, De Leon, DeVore, Hall, V.  
            Manuel Perez, Salas, Saldana, Skinner, Torlakson, Bass


          DLW:mw  2/16/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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