BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 922| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 922 Author: Maienschein (R) Amended: 6/25/14 in Senate Vote: 21 SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 6/18/14 AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Liu, Walters SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : Prior votes not relevant SUBJECT : Income taxes: deductions: disaster relief: County of San Diego SOURCE : Author DIGEST : This bill allows taxpayers affected by wildfires occurring in the County of San Diego in 2014 who incurred losses during the state of emergency declared by the Governor to carry back those losses to the 2013 taxable year. This bill also allows affected taxpayers to file an amended return on or before the extended due dates for the 2014 taxable year. ANALYSIS : Federal law, which California conforms to, allows disaster loss deductions for personal income taxes that exceed $100 per taxpayer and 10% of their adjusted gross income for the year. Current state and federal law allows taxpayers to deduct them in the year the loss occurs or in the preceding year by filing an amended return, but only when the President declares a CONTINUED AB 922 Page 2 disaster. Starting with the forest fires in 1985, and approximately 50 times thereafter for various disasters, the Legislature enacted measures that provide treatment identical to Presidentially declared disasters by allowing affected taxpayer to file amended returns, carry-forward 100% of excess disaster losses for fifteen years, and apply losses in the previous taxable year before applying them to taxes in the current taxable year. This bill allows taxpayers affected by wildfires occurring in the County of San Diego in 2014 who incurred losses during the state of emergency declared by the Governor to carry back those losses to the 2013 taxable year. This bill also allows affected taxpayers to file an amended return on or before the extended due dates for the 2014 taxable year. This bill allows San Diego taxpayers that incurred a net operating loss as a result of the San Diego fires in 2014 to elect to carry back 100% of the net operating loss to the preceding two taxable years. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/5/14) San Diego County Board of Supervisors San Diego Regional Chamber of Commerce ARGUMENTS IN SUPPORT : According to the author, "May 5, 2014 marks the beginning of what could possibly be one of the most devastating fire seasons in San Diego County. In nearly three weeks, roughly 29,000 acres burned across the county from 19 separate fires. Conditions were intensified by high temperatures and the Santa Ana winds. It has been estimated that these fires have cost nearly $30 million in damage and destruction to personal and private property and an-other $30 million to fight the fires. Homes, schools and businesses experienced evacuation, and residents had their lives turned upside down. On May 15, 2014 Governor Brown declared a State of Emergency in San Diego County in response to the disastrous string of fires that ripped through the county. This bill allows residents of San Diego County that suffered losses to their homes and AB 922 Page 3 businesses during the wildfires of May 2014 to elect to claim a deduction for those losses on the previous year's tax return by filing an amended return of that year's taxes resulting in an expedited payment for their losses. In addition, any losses in excess of the limits of that taxable year can be carried forward for a maximum of the following 20 years as loss deductions up to 100% of the disaster losses reported during the San Diego County fires started in May of 2014. This bill will help those individuals who have suffered a great loss during this state declared disaster to get back on their feet. It helps to ease the pain felt by those who have lost more than the state can ever replace and at least offer a small comfort." AB:d 8/6/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****