BILL NUMBER: SB 1552 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 17, 2012
INTRODUCED BY Senator Gaines
FEBRUARY 24, 2012
An act to amend Section Sections
17020.6 , 17085, 18631, and 23045 of , and to repeal
Secti ons 18037.5 and 24950.5 of, the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1552, as amended, Gaines. Taxation: qualified long-term care
insurance.
The Personal Income Tax Law conforms to the federal Internal
Revenue Code with regard to qualified long-term care insurance, with
certain exceptions.
This bill would remove the exceptions, and would conform the
Personal Income Tax Law to the federal income tax law with regard to
qualified long-term care insurance, as provided.
This bill would take effect immediately as a tax levy.
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 17020.6 of the Revenue and Taxation Code is
amended to read:
17020.6. For purposes of this part:
(a) Section 7702 of the Internal Revenue Code, relating to life
insurance contracts, shall apply , except as otherwise provided
.
(b) Section 7702A of the Internal Revenue Code, relating to
modified endowment contract defined, shall apply , except as
otherwise provided .
(c) Section 7702B of the Internal Revenue Code, relating to
treatment of qualified long-term care insurance, shall apply ,
except as otherwise provided .
(d) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 2012.
SEC. 2. Section 17085 of the Revenue
and Taxation Code is amended to read:
17085. Section 72 of the Internal Revenue Code, relating to
annuities; certain proceeds of endowment and life insurance
contracts, is modified as follows:
(a) The amendments and transitional rules made by Public Law
99-514 shall be applicable to this part for the same transactions and
the same years as they are applicable for federal purposes, except
that the repeal of Section 72(d) of the Internal Revenue Code,
relating to repeal of special rule for employees' annuities, shall
apply only to the following:
(1) Any individual whose annuity starting date is after December
31, 1986.
(2) At the election of the taxpayer, any individual whose annuity
starting date is after July 1, 1986, and before January 1, 1987.
(b) The amount of a distribution from an individual retirement
account or annuity or employee trust or employee annuity that is
includable in gross income for federal purposes shall be reduced for
purposes of this part by the lesser of either of the following:
(1) An amount equal to the amount includable in federal gross
income for the taxable year.
(2) An amount equal to the basis in the account or annuity allowed
by Section 17507 (relating to individual retirement accounts and
simplified employee pensions), the increased basis allowed by
Sections 17504 and 17506 (relating to plans of self-employed
individuals), the increased basis allowed by Section 17501, or the
increased basis allowed by Section 17551 that is remaining after
adjustment for reductions in gross income under this provision in
prior taxable years.
(c) (1) Except as provided in paragraph (2), the amount of the
penalty imposed under this part shall be computed in accordance with
Sections 72(m), (q), (t), and (v) of the Internal Revenue Code, as
applicable for federal income tax purposes for the same taxable year,
using a rate of 21/2 percent, in lieu of the rate provided in those
sections.
(2) In the case where Section 72(t)(6) of the Internal Revenue
Code, relating to special rules for simple retirement accounts, as
applicable for federal income tax purposes for the same taxable year,
applies, the rate in paragraph (1) shall be 6 percent in lieu of the
21/2 percent rate specified therein.
(d) Section 72(f)(2) of the Internal Revenue Code shall be
applicable without applying the exceptions which immediately follow
that paragraph.
(e) The amendments made by Section 844 of the Pension Protection
Act of 2006 (Public Law 109-280) to Section 72(e) of the Internal
Revenue Code, shall not apply.
(e) The amendments made to this section by the act amending this
subdivision shall apply to taxable years beginning on or after
January 1, 2012.
SEC. 3. Section 18037.5 of the Revenue
and Taxation Code is repealed.
18037.5. The amendments made by Section 844 of the Pension
Protection Act of 2006 (Public Law 109-280) to Section 1035 of the
Internal Revenue Code, shall not apply.
SEC. 4. Section 18631 of the Revenue
and Taxation Code is amended to read:
18631. (a) This article does not apply to any payment of interest
obligations not taxable under Part 10 (commencing with Section
17001) or Part 11 (commencing with Section 23001).
(b) Except as otherwise provided, every person required to file an
information return with the Secretary of the Treasury under any of
the federal sections listed in subdivision (c) may be required to
file a copy of the federal information return with the Franchise Tax
Board at the time and in the manner as it may, by forms and
instructions, require.
(c) Subdivision (b) shall apply to each of the following:
(1) Section 6034A of the Internal Revenue Code, relating to
information to beneficiaries of estates and trusts.
(2) Section 6039 of the Internal Revenue Code, relating to returns
required in connection with certain options.
(3) Section 6039C of the Internal Revenue Code, relating to
returns with respect to foreign persons holding direct investments in
United States real property interests, if that person holds a direct
investment in a California real property as defined in Section
18662.
(4) Section 6041 of the Internal Revenue Code, relating to
information at source.
(5) Section 6041A of the Internal Revenue Code, relating to
returns regarding payments of remuneration for services and direct
sales, except that no return or statement shall be required with
respect to direct sales pursuant to Section 6041A(b) of the Internal
Revenue Code.
(6) Section 6042 of the Internal Revenue Code, relating to returns
regarding payments of dividends and corporate earnings and profits.
(7) Section 6045 of the Internal Revenue Code, relating to returns
of brokers.
(8) Section 6049 of the Internal Revenue Code, relating to returns
regarding payments of interest.
(9) Section 6050H of the Internal Revenue Code, relating to
returns relating to mortgage interest received in trade or business
from individuals.
(10) (A) Section 6050I of the Internal Revenue Code, relating to
returns relating to cash received in trade or business, etc., except
that Section 6050I(g) of the Internal Revenue Code, relating to cash
received by criminal court, shall not apply.
(B) (i) The Attorney General shall, upon court order following a
showing ex parte to a magistrate of an articulable suspicion that an
individual or entity has committed a felony offense to which a
federal information return is related, be provided a copy of a
federal information return filed with the Franchise Tax Board under
this paragraph. The Attorney General may make a return or information
therefrom available to a district attorney subject to regulations
promulgated by the Attorney General. The regulations shall require
the district attorney seeking the return or information to specify in
writing the specific reasons for believing that a felony offense has
been committed to which the return or information is related.
(ii) Any information or return obtained by the Attorney General or
a district attorney pursuant to this subparagraph shall be
confidential and used only for investigative or prosecutorial
purposes.
(11) Section 6050J of the Internal Revenue Code, relating to
returns relating to foreclosures and abandonments of security.
(12) (A) Section 6050K of the Internal Revenue Code, relating to
returns relating to exchanges of certain partnership interests.
(B) In addition to the general requirement under subparagraph (A),
a transferor of a partnership interest shall be required to notify
the partnership of that exchange in accordance with Section 6050K(c)
of the Internal Revenue Code.
(13) Section 6050L of the Internal Revenue Code, relating to
returns relating to certain donated property.
(14) Section 6050N of the Internal Revenue Code, relating to
returns regarding payments of royalties.
(15) Section 6050P of the Internal Revenue Code, relating to
returns relating to the cancellation of indebtedness by certain
entities.
(16) Section 6050Q of the Internal Revenue Code, relating to
certain long-term care benefits.
(17) Section 6050R of the Internal Revenue Code, relating to
returns relating to certain purchases of fish.
(18) Section 6050S of the Internal Revenue Code, relating to
returns relating to higher education tuition and related expenses.
(19) Section 6052 of the Internal Revenue Code, relating to
returns regarding payment of wages in the form of group-term life
insurance.
(20) Section 6034(a) of the Internal Revenue Code, relating to
returns of split-interest trusts.
(21) Section 6039I of the Internal Revenue Code, relating to
returns and records with respect to employer-owned life insurance
contracts.
(22) Section 6039J of the Internal Revenue Code, relating to
information reporting with respect to commodity credit corporation
transactions.
(23) Section 6050U of the Internal Revenue Code, relating to
charges or payments for qualified long-term care insurance contracts
under combined arrangements.
(23)
(24) Section 6050V of the Internal Revenue Code,
relating to returns relating to applicable insurance contracts in
which certain exempt organizations hold interests.
(24)
(25) Section 6050W of the Internal Revenue Code,
relating to returns relating to payments made in settlement of
payment card and third party network transactions.
(25)
(26) Any information return that is required to be
filed with the Secretary of the Treasury pursuant to a provision of
Part III of Subchapter A of Chapter 61 of Subtitle F (commencing with
Section 6031) of the Internal Revenue Code that is added to the
Internal Revenue Code by a public law enacted on or after January 1,
2009.
(d) Every person required to make a return under subdivision (b)
shall also furnish a statement to each person whose name is required
to be set forth in the return, as required to do so by the Internal
Revenue Code.
SEC. 5. Section 23045 of the Revenue
and Taxation Code is amended to read:
23045. For purposes of this part:
(a) Section 7702 of the Internal Revenue Code, relating to life
insurance contract defined, shall apply, except as otherwise
provided.
(b) Section 7702A of the Internal Revenue Code, relating to
modified endowment contract defined, shall apply, except as otherwise
provided.
(c) (1) Section 7702B of the
Internal Revenue Code, relating to treatment of qualified long-term
care insurance, shall apply, except as otherwise provided.
(2) The amendments made by Section 844 of the Pension Protection
Act of 2006 (Public Law 109-280) to Section 7702B of the Internal
Revenue Code shall not apply.
(d) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 2012.
SEC. 6. Section 24950.5 of the Revenue
and Taxation Code is repealed.
24950.5. The amendments made by Section 844 of the Pension
Protection Act of 2006 (Public Law 109-280) to Section 1035 of the
Internal Revenue Code shall not apply.
SEC. 2. SEC. 7. This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.