BILL NUMBER: SB 1113 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 5, 2010
INTRODUCED BY Senator Wolk
FEBRUARY 17, 2010
An act to amend Section 23036 Sections
19048, 19334, and 19346 of the Revenue and Taxation Code,
relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 1113, as amended, Wolk. Taxation: corporation taxes.
Franchise Tax Board: tax administration: tax appeals.
Under existing law the State Board of Equalization serves as a
quasi-judicial body for deciding appeals from actions of both the
Franchise Tax Board and the State Board of Equalization. If a
taxpayer disagrees with the decision of the State Board of
Equalization, that taxpayer may, after payment of the disputed tax
liability, appeal the final decision of the board by filing a claim
for refund with the superior court in any city or city and county in
which the Attorney General has an office. Existing law does not
specifically authorize the Franchise Tax Board to appeal a final
decision of the State Board of Equalization.
This bill would, for determinations issued by the State Board of
Equalization on or after January 1, 2011, authorize the Franchise Tax
Board to bring an action for a trial de novo in superior court to
determine the deficiency amount, the amount of refund or credit, or
allowance of interest that was the subject of the determination of
the State Board of Equalization. This bill would also authorize a
taxpayer to file a motion to change the venue to a venue closer to
the taxpayer's principal residence or principal place of business.
The Corporation Tax Law imposes a tax according to, or measured
by, income derived from or attributable to sources within this state.
This bill would make technical, nonsubstantive changes to those
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 19048 of the Revenue
and Taxation Code is amended to read:
19048. (a) The board's determination
becomes final upon the expiration of 30 days from the time of the
determination unless within the 30-day period the taxpayer or the
Franchise Tax Board files a petition for rehearing with the board. In
that event the determination becomes final upon the expiration of 30
days from the time the board issues its opinion on the petition.
(b) (1) Notwithstanding any other provision of law, within 90 days
after the determination of the board becomes final, the Franchise
Tax Board may file a suit in superior court to determine the
deficiency. A suit in superior court to determine a deficiency shall
be a trial de novo by the court as to law and facts, there shall be a
rebuttable presumption that the notice of action of the Franchise
Tax Board with respect to the protest of a proposed deficiency
assessment is correct, and the taxpayer shall have the burden of
proof that the notice of action of the Franchise Tax Board is
incorrect.
(2) Any action filed by the Franchise Tax Board under this
subdivision shall be commenced and tried in any city or city and
county in which the Attorney General maintains an office. A taxpayer
may file a motion to change the venue of any suit filed under this
subdivision to a venue closer to the taxpayer's principal residence
or principal place of business and the motion shall not be opposed by
the Attorney General or the counsel for the Franchise Tax Board.
(3) The amendments made to this section by the act adding this
paragraph shall apply to determinations of the board issued on or
after January 1, 2011.
SEC. 2. Section 19334 of the Revenue
and Taxation Code is amended to read:
19334. (a) The determination of the board
is final upon the expiration of 30 days from the date of the
determination unless within the 30-day period, the taxpayer or
Franchise Tax Board files a petition for rehearing with the board. In
that event the determination becomes final upon the expiration of 30
days from the date the board issues its opinion on the petition.
(b) (1) Notwithstanding any other provision of law, within 90 days
after the determination of the board becomes final, the Franchise
Tax Board may file a suit in superior court to determine the
overpayment. A suit in superior court to determine an overpayment
shall be a trial de novo by the court as to law and facts, there
shall be a rebuttable presumption that the notice of action of the
Franchise Tax Board with respect to the refund claim is correct, and
the taxpayer shall have the burden of proof that the notice of action
of the Franchise Tax Board is incorrect.
(2) Any action filed by the Franchise Tax Board under this
subdivision shall be commenced and tried in any city or city and
county in which the Attorney General maintains an office. A taxpayer
may file a motion to change the venue of any suit filed under this
subdivision to a venue closer to the taxpayer's principal residence
or principal place of business and the motion shall not be opposed by
the Attorney General or the counsel for the Franchise Tax Board.
(3) The amendments made to this section by the act adding this
paragraph shall apply to determinations of the board issued on or
after January 1, 2011.
SEC. 3. Section 19346 of the Revenue
and Taxation Code is amended to read:
19346. (a) The determination of the
board is final upon the expiration of 30 days from the date of
the determination unless within the 30-day period, the taxpayer or
Franchise Tax Board files a petition for rehearing with the board. In
that event the determination becomes final upon the expiration of 30
days from the date the board issues its opinion upon the petition.
(b) (1) Notwithstanding any other provision of law, within 90 days
after the determination of the board becomes final, the Franchise
Tax Board may file a suit in superior court to determine the
disallowance of interest. A suit in superior court to determine a
disallowance of interest shall be a trial de novo by the court as to
law and facts, there shall be a rebuttable presumption that the
notice of action of the Franchise Tax Board with respect to the
disallowance of interest is correct, and the taxpayer shall have the
burden of proof that the notice of action of the Franchise Tax Board
is incorrect.
(2) Any action filed by the Franchise Tax Board under this
subdivision shall be commenced and tried in any city or city and
county in which the Attorney General maintains an office. A taxpayer
may file a motion to change the venue of any suit filed under this
subdivision to a venue closer to the taxpayer's principal residence
or principal place of business and the motion shall not be opposed by
the Attorney General or the counsel for the Franchise Tax Board.
(3) The amendments made to this section by the act adding this
paragraph shall apply to determinations of the board issued on or
after January 1, 2011.
SECTION 1. Section 23036 of the Revenue and
Taxation Code is amended to read:
23036. (a) (1) The term "tax" includes any of the following:
(A) The tax imposed under Chapter 2 (commencing with Section
23101).
(B) The tax imposed under Chapter 3 (commencing with Section
23501).
(C) The tax on unrelated business taxable income, imposed under
Section 23731.
(D) The tax on an "S" corporation imposed under Section 23802.
(2) The term "tax" does not include any amount imposed under
paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of
subdivision (f) of Section 24667.
(b) For purposes of Article 5 (commencing with Section 18661) of
Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4,
Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7
(commencing with Section 19501) of Part 10.2, and for purposes of
Sections 18601, 19001, and 19005, the term "tax" also includes all of
the following:
(1) The tax on limited partnerships, imposed under Section 17935,
the tax on limited liability companies, imposed under Section 17941,
and the tax on registered limited liability partnerships and foreign
limited liability partnerships imposed under Section 17948.
(2) The alternative minimum tax imposed under Chapter 2.5
(commencing with Section 23400).
(3) The tax on built-in gains of an "S" corporation, imposed under
Section 23809.
(4) The tax on excess passive investment income of an "S"
corporation, imposed under Section 23811.
(c) Notwithstanding any other provision of this part, credits are
allowed against the "tax" in the following order:
(1) Credits that do not contain carryover provisions.
(2) Credits that, when the credit exceeds the "tax," allow the
excess to be carried over to offset the "tax" in succeeding taxable
years, except for those credits that are allowed to reduce the "tax"
below the tentative minimum tax, as defined by Section 23455. The
order of credits within this paragraph shall be determined by the
Franchise Tax Board.
(3) The minimum tax credit allowed by Section 23453.
(4) Credits that are allowed to reduce the "tax" below the
tentative minimum tax, as defined by Section 23455.
(5) Credits for taxes withheld under Section 18662.
(d) Notwithstanding any other provision of this part, each of the
following applies:
(1) No credit may reduce the "tax" below the tentative minimum tax
(as defined by paragraph (1) of subdivision (a) of Section 23455),
except the following credits:
(A) The credit allowed by former Section 23601 (relating to solar
energy).
(B) The credit allowed by former Section 23601.4 (relating to
solar energy).
(C) The credit allowed by former Section 23601.5 (relating to
solar energy).
(D) The credit allowed by Section 23609 (relating to research
expenditures).
(E) The credit allowed by former Section 23609.5 (relating to
clinical testing expenses).
(F) The credit allowed by Section 23610.5 (relating to low-income
housing).
(G) The credit allowed by former Section 23612 (relating to sales
and use tax credit).
(H) The credit allowed by Section 23612.2 (relating to enterprise
zone sales or use tax credit).
(I) The credit allowed by former Section 23612.6 (relating to Los
Angeles Revitalization Zone sales tax credit).
(J) The credit allowed by former Section 23622 (relating to
enterprise zone hiring credit).
(K) The credit allowed by Section 23622.7 (relating to enterprise
zone hiring credit).
(L) The credit allowed by former Section 23623 (relating to
program area hiring credit).
(M) The credit allowed by former Section 23623.5 (relating to Los
Angeles Revitalization Zone hiring credit).
(N) The credit allowed by former Section 23625 (relating to Los
Angeles Revitalization Zone hiring credit).
(O) The credit allowed by Section 23633 (relating to targeted tax
area sales or use tax credit).
(P) The credit allowed by Section 23634 (relating to targeted tax
area hiring credit).
(Q) The credit allowed by Section 23649 (relating to qualified
property).
(2) No credit against the tax may reduce the minimum franchise tax
imposed under Chapter 2 (commencing with Section 23101).
(e) Any credit which is partially or totally denied under
subdivision (d) is allowed to be carried over to reduce the "tax" in
the following year, and succeeding years if necessary, if the
provisions relating to that credit include a provision to allow a
carryover of the unused portion of that credit.
(f) Unless otherwise provided, any remaining carryover from a
credit that has been repealed or made inoperative is allowed to be
carried over under the provisions of that section as it read
immediately prior to being repealed or becoming inoperative.
(g) Unless otherwise provided, if two or more taxpayers share in
costs that would be eligible for a tax credit allowed under this
part, each taxpayer is eligible to receive the tax credit in
proportion to his or her respective share of the costs paid or
incurred.
(h) Unless otherwise provided, in the case of an "S" corporation,
any credit allowed by this part is computed at the "S" corporation
level, and any limitation on the expenses qualifying for the credit
or limitation upon the amount of the credit applies to the "S"
corporation and to each shareholder.
(i) (1) With respect to any taxpayer that directly or indirectly
owns an interest in a business entity that is disregarded for tax
purposes pursuant to Section 23038 and any regulations thereunder,
the amount of any credit or credit carryforward allowable for any
taxable year attributable to the disregarded business entity is
limited in accordance with paragraphs (2) and (3).
(2) The amount of any credit otherwise allowed under this part,
including any credit carryover from prior years, that may be applied
to reduce the taxpayer's "tax," as defined in subdivision (a), for
the taxable year is limited to an amount equal to the excess of the
taxpayer's regular tax (as defined in Section 23455), determined by
including income attributable to the disregarded business entity that
generated the credit or credit carryover, over the taxpayer's
regular tax (as defined in Section 23455), determined by excluding
the income attributable to that disregarded business entity. No
credit is allowed if the taxpayer's regular tax (as defined in
Section 23455), determined by including the income attributable to
the disregarded business entity is less than the taxpayer's regular
tax (as defined in Section 23455), determined by excluding the income
attributable to the disregarded business entity.
(3) If the amount of a credit allowed pursuant to the section
establishing the credit exceeds the amount allowable under this
subdivision in any taxable year, the excess amount may be carried
over to subsequent taxable years pursuant to subdivisions (d), (e),
and (f).
(j) (1) Unless otherwise specifically provided, in the case of a
taxpayer that is a partner or shareholder of an eligible passthrough
entity described in paragraph (2), any credit passed through to the
taxpayer in the taxpayer's first taxable year beginning on or after
the date the credit is no longer operative may be claimed by the
taxpayer in that taxable year, notwithstanding the repeal of the
statute authorizing the credit prior to the close of that taxable
year.
(2) For purposes of this subdivision, "eligible passthrough entity"
means any partnership or "S" corporation that files its return on a
fiscal year basis pursuant to Section 18566, and that is entitled to
a credit pursuant to this part for the taxable year that begins
during the last year a credit is operative.
(3) This subdivision applies to credits that become inoperative on
or after the operative date of the act adding this subdivision.