BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2754| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2754 Author: Assembly Revenue and Taxation Committee Amended: 6/16/14 in Senate Vote: 21 SENATE GOVERNANCE & FINANCE COMMITTEE : 4-2, 6/25/14 AYES: Wolk, DeSaulnier, Hernandez, Liu NOES: Knight, Walters NO VOTE RECORDED: Beall SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 55-20, 5/29/14 - See last page for vote SUBJECT : Franchise Tax Board: credits: electronic filing SOURCE : Author DIGEST : This bill requires that the dependents tax identification number be included on a return when claiming a Dependent Exemption Credit, requires a business entity that prepares a return using tax preparation software to file the return electronically, and allows taxpayers to use specified tax credits to reduce tentative minimum tax. ANALYSIS : In 2013, Governor Brown signed the Governor's Office of Business and Economic Development (GO-Biz) California Competes Tax Credit as a part of the 2013 Budget plan to grant a hiring credit under the Personal Income Tax (PIT) and Corporation Tax (CT) for employment in specified geographic CONTINUED AB 2754 Page 2 are-as. GO-Biz allocates the tax credit. Existing law does not require that the Taxpayer Identification Number (TIN) of dependents be included on state tax returns to take advantage of the dependent exemption. Existing law prohibits the disallowance of the Dependent Exemption Credit if the return lacks a TIN. The Legislature added this provision in 1997 following the Internal Revenue Code change that required the TIN of dependents on the PIT return in response to concerns about obtaining a TIN for newborns in time to include the TIN on the return. Federal law requires that the TIN of the dependent be included on the federal return to take advantage of the dependent exemption. Existing law requires income tax preparers who prepare more than 100 California individual income tax returns annually or prepare one or more using tax preparation software to e-file all PIT. If the return is filed on paper that should have been e-filed, there is a failure to e-file penalty of $50 per return, unless it is shown that the failure to e-file is due to reasonable cause and not due to willful neglect. This bill makes the following changes to the tax law: 1. Allows taxpayers to use GO-Biz California Competes tax credits to reduce tentative minimum tax. 2. Requires that the dependent's tax identification number be included on a return when claiming a Dependent Exemption Credit. 3. Requires a business entity that prepares a return using tax preparation software to file the return electronically. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/1/14) CONTINUED AB 2754 Page 3 Franchise Tax Board ASSEMBLY FLOOR : 55-20, 5/29/14 AYES: Achadjian, Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley, Dababneh, Daly, Dickinson, Eggman, Fong, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hall, Roger Hernández, Holden, Jones-Sawyer, Levine, Lowenthal, Medina, Mullin, Muratsuchi, Nazarian, Pan, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada, Atkins NOES: Allen, Bigelow, Chávez, Dahle, Donnelly, Fox, Beth Gaines, Grove, Jones, Linder, Logue, Maienschein, Mansoor, Melendez, Nestande, Olsen, Patterson, Wagner, Waldron, Wilk NO VOTE RECORDED: Conway, Gorell, Hagman, Harkey, Vacancy AB:d 8/6/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED