BILL ANALYSIS
AB 347
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CONCURRENCE IN SENATE AMENDMENTS
AB 347 (Bass)
As Amended February 16, 2010
Majority vote. Tax levy
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|ASSEMBLY: |64-3 |(January 27, |SENATE: |39-0 |(February 22, |
| | |2010) | | |2010) |
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Original Committee Reference: REV. & TAX.
SUMMARY : 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.
The Senate amendments add coauthors.
EXISTING FEDERAL LAW :
1)Allows taxpayers to claim an income tax deduction for
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
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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 Personal 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% of the corporation's net income.
AS PASSED BY THE ASSEMBLY , this bill:
1)Provided 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)Specified that a deduction for those charitable contributions
must be otherwise allowable under existing PIT or CT law.
3)Provided 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)Took effect immediately as a tax levy.
5)Would be repealed on December 1, 2011.
FISCAL EFFECT : The Franchise Tax Board staff estimates that
this bill will result in a revenue loss of $80,000 in fiscal
year (FY) 2009-10 and a gain of $80,000 in FY 2010-11.
COMMENTS :
1)Author's statement . The author states that, "Last Friday,
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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 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 participate in the relief
effort that our neighbors in Haiti desperately need."
2)The 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.
3)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.
4)An outpouring of support : Since the earthquake, hundreds of
millions of dollars have been donated to organizations
providing humanitarian aid to the people of Haiti. The
American Red Cross' record-setting text message campaign is
just one example of how people have come together to help.
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Through this program, customers of participating wireless
carriers can text message the word "HAITI" to a specified
number to make a $10 donation to the American Red Cross Haiti
Relief and Development Fund.
5)Federal legislation : On January 22, 2010, President Obama
signed legislation allowing taxpayers to receive the tax
benefit from donations made to the Haiti relief effort in the
current tax season, rather than having to wait until they file
their 2010 tax returns next year. Specifically, P.L. 111-126
(House Resolution 4462 by Representative Rangel), allows
taxpayers to treat cash contributions made after January 11,
2010, and before March 1, 2010, as if the contribution was
made on December 31 of last year so that the contribution can
be deducted on 2009 returns.
P.L. 111-126 also allows taxpayers to satisfy their
recordkeeping requirements with a telephone bill showing the
name of the donee organization, the date of the contribution,
and the contribution amount. Thus, in the case of a
charitable contribution made by text message and chargeable to
a telephone account, a bill from the telecommunications
company containing the relevant information will satisfy the
taxpayer's recordkeeping requirements.
6)Itemized deductions . It should be noted that individuals only
receive a tax benefit from charitable contributions if they
elect to itemize their deductions, instead of taking the
standard deduction. Roughly, two-thirds of individuals elect
to take the standard deduction.
7)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.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
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FN: 0003678