BILL NUMBER: SB 1035 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 24, 2014
INTRODUCED BY Senator Huff
FEBRUARY 18, 2014
An act to amend Section 17001 of Sections
17072 and 19184 of, to amend and repeal Sections 17131.4, 17131.5,
17215.1, and 17215.4 of, and to add Sections 17138.5 and 17216 to,
the Revenue and Taxation Code, relating to taxation , to
take effect immediately, tax levy .
LEGISLATIVE COUNSEL'S DIGEST
SB 1035, as amended, Huff. Personal income tax.
taxes: health savings accounts.
The Personal Income Tax Law authorizes various deductions in
computing income that is subject to tax under that law.
This bill would, for taxable years beginning on and after January
1, 2015, allow a deduction in connection with health savings accounts
in conformity with federal law. In general, the deduction would be
an amount equal to the aggregate amount paid in cash during the
taxable year by, or on behalf of, an eligible individual, as defined,
to a health savings account of that individual, as provided. This
bill would, for taxable years beginning on and after January 1, 2015,
also provide related conformity to that federal law with respect to
the allowance of rollovers from Archer Medical Savings Accounts,
health flexible spending arrangements, or health reimbursement
accounts to a health savings account, and penalties in connection
therewith.
This bill would take effect immediately as a tax levy.
The Personal Income Tax Law imposes tax upon the taxable income of
California residents and on the taxable income of nonresidents
derived from sources within the state.
This bill would make technical, nonsubstantive changes to those
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17072 of the Revenue
and Taxation Code is amended to read:
17072. (a) Section 62 of the Internal Revenue Code, relating to
adjusted gross income defined, shall apply, except as otherwise
provided.
(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to
certain expenses of elementary and secondary school teachers, shall
not apply.
(c) Section 62(a)(21) of the Internal Revenue Code, relating to
attorneys fees relating to awards to whistleblowers, shall not apply.
(d) For taxable years beginning on or after January 1, 2015,
Section 62(a)(19) of the Internal Revenue Code, relating to health
savings accounts, shall apply, as modified by Section 17216.
SEC. 2. Section 17131.4 of the Revenue
and Taxation Code is amended to read:
17131.4. (a) Section 106(d) of the Internal
Revenue Code, relating to contributions to health savings accounts,
shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2015.
(c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed.
SEC. 3. Section 17131.5 of the Revenue
and Taxation Code is amended to read:
17131.5. (a) Section 125(d)(2)(D) of the
Internal Revenue Code, relating to the exception for health savings
accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2015.
(c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed.
SEC. 4. Section 17138.5 is added to the
Revenue and Taxation Code , to read:
17138.5. For taxable years beginning on or after January 1, 2015,
Section 106 of the Internal Revenue Code, as amended by Section 302
of the Tax Relief and Health Care Act of 2006 (Public Law 109-432),
relating to health savings accounts, shall apply, except as otherwise
provided.
SEC. 5. Section 17215.1 of the Revenue
and Taxation Code is amended to read:
17215.1. (a) Section 220(f)(5) of the
Internal Revenue Code, relating to rollover contributions, shall not
apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2015.
(c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed.
SEC. 6. Section 17215.4 of the Revenue
and Taxation Code is amended to read:
17215.4. (a) Section 223 of the Internal
Revenue Code, relating to health savings accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2005, and before January 1, 2015.
(c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed.
SEC. 7. Section 17216 is added to the
Revenue and Taxation Code , to read:
17216. For taxable years beginning on or after January 1, 2015,
all of the following apply:
(a) Section 223 of the Internal Revenue Code, relating to health
savings accounts, shall apply, except as otherwise provided.
(b) Section 223(e)(1) of the Internal Revenue Code shall be
modified by substituting the phrase "Section 17651" for the phrase
"Section 511 (relating to imposition of tax of unrelated business
income of charitable, etc., organizations)," contained therein.
(c) Section 223(f)(4)(A) of the Internal Revenue Code shall be
modified by substituting "2 1/2 percent" for "20 percent," contained
therein.
SEC. 8. Section 19184 of the Revenue
and Taxation Code is amended to read:
19184. (a) A penalty of fifty dollars ($50) shall be imposed for
each failure, unless it is shown that the failure is due to
reasonable cause, by any person required to file who fails to file a
report at the time and in the manner required by any of the following
provisions:
(1) Subdivision (c) of Section 17507, relating to individual
retirement accounts.
(2) Section 220(h) of the Internal Revenue Code, relating to
medical savings accounts for taxable years beginning on or after
January 1, 1997.
(3) For taxable years beginning on or after January 1, 2015,
Section 223(h) of the Internal Revenue Code, relating to reports.
(3)
(4) Subdivision (b) of Section 17140.3 or subdivision
(b) of Section 23711 , relating to qualified tuition
programs.
(4)
(5) Subdivision (e) of Section 23712, relating to
Coverdell education savings accounts.
(b) (1) Any individual who:
(A) Is required to furnish information under Section 17508 as to
the amount designated nondeductible contributions made for any
taxable year, and
(B) Overstates the amount of those contributions made for that
taxable year, shall pay a penalty of one hundred dollars ($100) for
each overstatement unless it is shown that the overstatement is due
to reasonable cause.
(2) Any individual who fails to file a form required to be filed
by the Franchise Tax Board under Section 17508 shall pay a penalty of
fifty dollars ($50) for each failure unless it is shown that the
failure is due to reasonable cause.
(c) Article 3 (commencing with Section 19031) of this chapter
(relating to deficiency assessments) shall not apply in respect of
the assessment or collection of any penalty imposed under this
section.
SEC. 9. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. Section 17001 of the Revenue and
Taxation Code is amended to read:
17001. This part shall be known and may be cited as the "Personal
Income Tax Law."