California Legislature—2013–14 Regular Session

Assembly Bill No. 1143

Introduced by Assembly Member Skinner

February 22, 2013

An act to amend Sections 23304.1 and 23305.5 of the Revenue and Taxation Code, relating to taxation, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1143, as introduced, Skinner. Tax administration: suspension or forfeiture: limited liability companies.

Existing law provides that specified limited liability companies and corporations that are suspended or forfeited for failure to file a tax return or for failure to pay delinquent taxes, penalties, or interest are subject to specified consequences, including contract voidability for the period in which the entity is suspended or forfeited.

This bill would subject foreign nonregistered limited liability companies to contract voidability where the foreign nonregistered limited liability company is subject to suspension or forfeiture for failure to file a tax return or for failure to pay delinquent taxes, penalties, or interest.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 23304.1 of the Revenue and Taxation
Code is amended to read:

23304.1.  

(a) Every contract made in this state by a taxpayer
during the time that the taxpayer’s begin delete corporate end delete powers, rights, and
privileges are suspended or forfeited pursuant to Section 23301,
23301.5, or 23775 shall, subject to Section 23304.5, be voidable
at the instance of any party to the contract other than the taxpayer.

(b) If a foreign taxpayer that neither is qualified to do business
nor has begin delete a corporate end delete begin insert an end insert account number from the Franchise Tax
Board, fails to file a tax return required under this part, any contract
made in this state by that taxpayer during the applicable period
specified in subdivision (c) shall, subject to Section 23304.5, be
voidable at the instance of any party to the contract other than the
taxpayer.

(c)  begin insert (1) end insert begin insert   end insert For purposes of subdivision (b), the applicable period
shall be the period beginning on January 1, 1991, or the first day
of the taxable year for which the taxpayer has failed to file a return,
whichever is later, and ending on the earlier of the date the taxpayer
qualified to do business in this state or the date the taxpayer
obtained begin delete a corporate end delete begin insert an end insert account number from the Franchise Tax
Board.

begin insert

(2) With regard to a limited liability company, the applicable
period shall be the period beginning on January 1, 2014, or the
first day of the taxable year for which the taxpayer has failed to
file a return, whichever is later.

end insert

(d) If a taxpayer fails to file a tax return required under this part,
to pay any tax or other amount owing to the Franchise Tax Board
under this part or to file any statement or return required under
Section 23772 or 23774, within 60 days after the Franchise Tax
Board mails a written demand therefor, any contract made in this
state by the taxpayer during the period beginning at the end of the
60-day demand period and ending on the date relief is granted
under Section 23305.1, or the date the taxpayer qualifies to do
business in this state, whichever is earlier, shall be voidable at the
instance of any party to the contract other than the taxpayer. This
subdivision shall apply only to a taxpayer if the taxpayer has begin delete a
corporate end delete begin insert an end insert account number from the Franchise Tax Board, but
has not qualified to do business under begin delete Section 2105 of end delete the
Corporations Code. In the case of a taxpayer that has not complied
with the 60-day demand, the taxpayer’s name, Franchise Tax Board
begin delete corporate end delete account number, date of the demand, date of the first
day after the end of the 60-day demand period, and the fact that
the taxpayer did not within that period pay the tax or other amount
or file the statement or return, as the case may be, shall be a matter
of public record.

SEC. 2.  

Section 23305.5 of the Revenue and Taxation Code
is amended to read:

23305.5.  

begin delete (a) end delete begin delete   end delete For begin delete the end delete purposes of this begin delete article, “taxpayer” shall
include any limited liability company, foreign or domestic, that is
organized in this state or registered with the Secretary of State. end delete
begin insert article: end insert

begin insert

(a) “Taxpayer” means either:

end insert begin insert

(1) A corporation subject to tax under this chapter.

end insert begin insert

(2) A business entity organized under a statute or law, or a state
or a federally recognized Indian Tribe, or another jurisdiction, if
the statute or law describes or refers to the entity as a limited
liability company or if regulations of the Franchise Tax Board
identify a business entity organized under the laws of a foreign
country as a limited liability company.

end insert

(b)  begin delete For purposes of this article, in the case of end delete begin insert With regard to end insert a
limited liability company:

(1) “Articles of incorporation” shall include a limited liability
company’s articles of organization.

(2) “Tax” shall include the tax and fee imposed by Sections
17941 and 17942, or former Sections 23091 and 23092,
respectively.

SEC. 3.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to ensure that all entities doing business in California
are treated equally under the Rev and Tax Code, it is necessary
that this act take effect immediately.