BILL ANALYSIS Ó AB 1775 Page 1 Date of Hearing: April 27, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1775 (Obernolte) - As Amended April 13, 2016 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill modifies tax return dates, for taxable years beginning on or after January 1, 2016, for partnerships, limited liability companies (LLCs), "C" corporations, and "S" corporations under the Personal Income Tax (PIT) Law and Corporation Tax (CT) Law. Specifically, this bill: 1)Changes the tax return due date for a "C" corporation or an AB 1775 Page 2 LLC classified as a corporation to be the fifteenth day of the fourth month instead of the fifteenth day of the third month. 2)Changes the tax return due date for a partnership or a LLC classified as a partnership to be the fifteenth day of the third month instead of the fifteenth day of the fourth month. 3)Provides that an "S" corporation must file a return by the fifteenth day of the third month following the close of its taxable year. FISCAL EFFECT: Minor and absorbable administrative costs to the Franchise Tax Board (FTB). COMMENTS: 1)Background and purpose. In 2015, Congress enacted legislation to shorten the tax return due date for partnerships by one month, and extend the due date for "C" corporations by one month so that the filing deadline for partnerships would precede the due dates of their individual and corporate investors. These new federal due dates are intended to alleviate timing pressure and provide a more logical flow of information for a more efficient preparation process. As a result of these federal changes, California's due dates for similar tax filings are no longer aligned. Because California does not automatically conform to federal law, the author argues that AB 1775 is needed to streamline the preparation process and reduce complexity for taxpayers and AB 1775 Page 3 businesses. 2)Similar legislation. AB 2338 (Chavez) similarly conforms state tax return due dates with federal law, but also make other changes regarding due date for certain taxes. That bill is pending in the Assembly Committee on Revenue and Taxation. Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081