BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    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  
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                                                                    AB 2754
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          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)


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                                                                    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

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