BILL ANALYSIS Ó
AB 1173
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1173 (Bocanegra)
As Amended September 6, 2013
Majority vote
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|ASSEMBLY: |78-0 |(May 29, 2013) |SENATE: |35-0 |(September 12, |
| | | | | |2013) |
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Original Committee Reference: REV. & TAX.
SUMMARY : Reduces the excise tax penalty from 20% to 5% for
payments that do not comply with Section 409A of the Internal
Revenue Code, clarifies the scope of the California Motion
Picture Tax Credit and its utilization by taxpayers, and
simplifies the process by which certain nonprofit organizations
may obtain tax-exempt status in California.
The Senate amendments :
1)Clarify that taxpayers may use the film tax credit to offset
their "regular" income tax beyond the tentative minimum tax.
2)Allow organizations that are tax-exempt for federal tax
purposes to be treated as tax-exempt for California tax
purposes, without approval by the Franchise Tax Board.
AS PASSED BY THE ASSEMBLY , this bill reduced the excise tax
penalty from 20% to 5% on an amount deferred under a
nonqualified deferred compensation plan that is not subject to a
substantial risk of forfeiture and does not meet the
requirements of Internal Revenue Code Section 409A.
Fiscal Effect : The Franchise Tax Board (FTB) estimates that the
reduction in excise tax penalty will result in a revenue losses
of $4.7 million in fiscal year (FY) 2013-14, $3.2 million in FY
2014-15, and $3.4 million in FY 2015-16.
Although the FTB has not analyzed the latest version of this
bill, the FTB has provided revenue estimates for the two
provisions added in the Senate, which are identical to the
contents of AB 1413 (Revenue and Taxation Committee) of the
AB 1173
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current legislative session. According to the FTB, the
provision clarifying the scope of the film tax credit
utilization would result in an annual general fund (GF) revenue
loss of $9.3 million in FY 2012-13, $800,000 in FY 2013-14, $1.3
million in FY 2014-15, and $600,000 in FY 2016-17, and would
result in a GF revenue gain of $10,000 in FY 2015-16.
The FTB staff also estimates that the provision simplifying the
process by which certain nonprofit organizations may obtain
tax-exempt status in California would result in an annual GF
revenue loss of $9,000 in fiscal year (FY) 2014-15, $20,000 in
FY 2015-16, $20,000 in FY 2015-16, and $20,000 in every FY
thereafter.
Comments : The provisions added in the Senate are identical to
the provisions found in AB 1413, which were heard by the
Assembly Arts, Entertainment, Sports, Tourism, and Internet
Media Committee, and by the Assembly Revenue and Taxation
Committee. The Senate amendments also provided that the
reduction in excise tax penalty would apply beginning on or
after January 1, 2013. Because the Senate amendments eliminated
the tax levy designation, the "January 1, 2013" amendment was
necessary to ensure that the reduction in the excise tax penalty
would apply to taxable year 2013.
Analysis Prepared by : Carlos Anguiano / REV. & TAX. / (916)
319-2098
FN: 0002729