Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 799


Introduced by Assembly Member Travis Allen

February 26, 2015


An act to amend Sectionbegin delete 17941end deletebegin insert 23102end insert of the Revenue and Taxation Code, relating tobegin delete taxationend deletebegin insert taxation, to take effect immediately, tax levyend insert.

LEGISLATIVE COUNSEL’S DIGEST

AB 799, as amended, Travis Allen. begin deleteCorporation taxes: end deletebegin insertIncome taxes: end insertannual tax: limited liability company.

Existing law, imposes a minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or doing businessbegin insert, as defined,end insert in this state, and an annual tax in an amount equal to the minimum franchise tax on everybegin delete limited partnership, limited liability partnership, andend delete limited liability company registered, qualified to transact business, or doing business in this state, as specified.begin insert Existing law provides that certain corporations, the activities of which are limited to the receipt and disbursement of dividends and interest on securities, are not considered as doing business in this state.end insert

begin delete

This bill would make nonsubstantive changes to the provision imposing an annual tax on limited liability companies.

end delete
begin insert

This bill, under those same circumstances related to the receipt and disbursement of dividends and interest on securities, would additionally provide that such a limited liability company is not considered as doing business in this state.

end insert
begin insert

This bill would take effect immediately as a tax levy.

end insert

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

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

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 23102 of the end insertbegin insertRevenue and Taxation Codeend insert
2begin insert is amended to read:end insert

3

23102.  

Any corporationbegin insert or limited liability companyend insert holding
4or organized to hold stock or bonds of any other corporation or
5corporations, and not trading in stock or bonds or other securities
6held, and engaging in no activities other than the receipt and
7disbursement of dividends from stock or interest from bonds,begin insert and
8no activities other than those exempted under subdivision (c) of
9Section 191 of the Corporations Code,end insert
is not a corporationbegin insert or
10limited liability companyend insert
doing business in this State for the
11purposes of this chapterbegin insert or Chapter 10.6end insert.

12begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

This act provides for a tax levy within the meaning of
13Article IV of the Constitution and shall go into immediate effect.

end insert
begin delete
14

SECTION 1.  

Section 17941 of the Revenue and Taxation Code,
15as amended by Section 26 of Chapter 419 of the Statutes of 2012,
16is amended to read:

17

17941.  

(a) For each taxable year beginning on or after January
181, 1997, a limited liability company doing business in this state,
19as defined in Section 23101, shall pay annually to this state a tax
20for the privilege of doing business in this state in an amount equal
21to the applicable amount specified in subdivision (d) of Section
2223153 for the taxable year.

23(b) (1) In addition to any limited liability company that is doing
24business in this state and is therefore subject to the tax imposed
25by subdivision (a), for each taxable year beginning on or after
26January 1, 1997, a limited liability company shall pay annually
27the tax prescribed in subdivision (a) if articles of organization have
28been accepted, or a certificate of registration has been issued, by
29the office of the Secretary of State. The tax shall be paid for each
30taxable year, or part thereof, until a certificate of cancellation of
31registration or of articles of organization is filed on behalf of the
32limited liability company with the office of the Secretary of State.

33(2) If a taxpayer files a return with the Franchise Tax Board that
34is designated as its final return, the Franchise Tax Board shall
35notify the taxpayer that the annual tax shall continue to be due
P3    1annually until a certificate of dissolution is filed with the Secretary
2 of State pursuant to Section 17707.08 of the Corporations Code
3or a certificate of cancellation is filed with the Secretary of State
4pursuant to Section 17708.06 of the Corporations Code.

5(c) The tax assessed under this section shall be due and payable
6on or before the 15th day of the fourth month of the taxable year.

7(d) For purposes of this section, “limited liability company”
8means an organization, other than a limited liability company that
9is exempt from the tax and fees imposed under this chapter
10pursuant to Section 23701h or Section 23701x, that is formed by
11one or more persons under the law of this state, any other country,
12or any other state, as a “limited liability company” and that is not
13taxable as a corporation for California tax purposes.

14(e) Notwithstanding anything in this section to the contrary, if
15 the office of the Secretary of State files a certificate of cancellation
16pursuant to Section 17707.02 of the Corporations Code for any
17limited liability company, then paragraph (1) of subdivision (f) of
18Section 23153 shall apply to that limited liability company as if
19the limited liability company were properly treated as a corporation
20for that limited purpose only, and paragraph (2) of subdivision (f)
21of Section 23153 shall not apply. Nothing in this subdivision
22entitles a limited liability company to receive a reimbursement for
23any annual taxes or fees already paid.

24(f) (1) Notwithstanding any provision of this section to the
25contrary, a limited liability company that is a small business solely
26owned by a deployed member of the United States Armed Forces
27shall not be subject to the tax imposed under this section for any
28taxable year the owner is deployed and the limited liability
29company operates at a loss or ceases operation.

30(2) The Franchise Tax Board may promulgate regulations as
31necessary or appropriate to carry out the purposes of this
32subdivision, including a definition for “ceases operation.”

33(3) For the purposes of this subdivision, all of the following
34definitions apply:

35(A) “Deployed” means being called to active duty or active
36service during a period when a Presidential Executive order
37specifies that the United States is engaged in combat or homeland
38defense. “Deployed” does not include either of the following:

39(i) Temporary duty for the sole purpose of training or processing.

40(ii) A permanent change of station.

P4    1(B) “Operates at a loss” means a limited liability company’s
2expenses exceed its receipts.

3(C) “Small business” means a limited liability company with
4total income from all sources derived from, or attributable, to the
5state of two hundred fifty thousand dollars ($250,000) or less.

6(4) This subdivision shall become inoperative for taxable years
7beginning on or after January 1, 2018.

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