California Legislature—2015–16 Regular Session

Assembly Bill No. 2338

Introduced by Assembly Member Chávez

February 18, 2016

An act to amend Sections 17941, 18601, 18633, 19021, 23224, and 23281 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 2338, as introduced, Chávez. Income taxes: returns: due dates.

The Personal Income Tax Law requires a partnership to file an informational return on the 15th day of the 4th month following the close of its taxable year, and a limited liability company to file a return of the taxes due and payable on the 15th day of the 4th month following the close of its taxable year. The Corporate Tax Law requires “C” corporation and “S” corporation taxpayers to file returns on the 15th day of the third month following the close of its taxable year. These tax return due dates conform to federal income tax return due dates for taxable years beginning before January 1, 2016.

This bill would require, instead, for taxable years beginning on or after January 1, 2016, partnerships and limited liability companies to file a return on the 15th day of the 3rd month, and “C” Corporations to file a return on the 15th day of the 4th month of the year, except “C” corporations with fiscal years ending on June 30 would use the new filing date for taxable years beginning on or after January 1, 2026. These tax return due dates would conform to federal income tax return due dates for taxable years beginning on and after January 1, 2016.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 17941 of the Revenue and Taxation Code
is amended to read:

17941.  

(a) For each taxable year beginning on or after January
1, 1997, a limited liability company doing business in this state
(as defined in Section 23101) shall pay annually to this state a tax
for the privilege of doing business in this state in an amount equal
to the applicable amount specified in subdivision (d) of Section
23153 for the taxable year.

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

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

(c)  begin delete The end delete begin insert (1) end insert begin insert   end insert begin insert For taxable years beginning before January 1, 2016,
the end insert tax assessed under this section shall be due and payable on or
before the 15th day of the fourth month of the taxable year.

begin insert

(2) For taxable years beginning on or after January 1, 2016,
the tax assessed under this section shall be due and payable on or
before the 15th day of the third month of the taxable year.

end insert

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

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

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

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

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

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

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

(ii) A permanent change of station.

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

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

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

SEC. 2.  

Section 18601 of the Revenue and Taxation Code is
amended to read:

18601.  

(a)  begin delete Except end delete begin insert (1) end insert begin insert   end insert begin insert For taxable years beginning before
January 1, 2016, end insert as provided in subdivision (b) or (c), every
taxpayer subject to the tax imposed by Part 11 (commencing with
Section 23001) shall, on or before the 15th day of the third month
following the close of its taxable year, transmit to the Franchise
Tax Board a return in a form prescribed by it, specifying for the
taxable year, all the facts as it may by rule, or otherwise, require
in order to carry out this part. A tax return, disclosing net income
for any taxable year, filed pursuant to Chapter 2 (commencing
with Section 23101) or Chapter 3 (commencing with Section
23501) of Part 11 shall be deemed filed pursuant to the proper
chapter of Part 11 for the same taxable period, if the chapter under
which the return is filed is determined erroneous.

begin insert

(2) (A) (i) For taxable years beginning on or after January 1,
2016, as provided in subdivision (b) or (c), every taxpayer subject
to the tax imposed by Part 11 (commencing with Section 23001)
that is a “C” corporation shall, on or before the 15th day of the
fourth month following the close of its taxable year, transmit to
the Franchise Tax Board a return in a form prescribed by it,
specifying for the taxable year, all the facts as it may by rule, or
otherwise, require in order to carry out this part. A tax return,
disclosing net income for any taxable year, filed pursuant to
Chapter 2 (commencing with Section 23101) or Chapter 3
(commencing with Section 23501) of Part 11 shall be deemed filed
pursuant to the proper chapter of Part 11 for the same taxable
period, if the chapter under which the return is filed is determined
erroneous.

end insert begin insert

(ii) In the case of a “C” corporation with a fiscal year ending
on June 30, the amendments made by clause (i) shall apply to
returns for taxable years beginning on or after January 1, 2026.

end insert begin insert

(B) For taxable years beginning on or after January 1, 2016,
as provided in subdivision (b) or (c), every taxpayer subject to the
tax imposed by Part 11 (commencing with Section 23001) that is
an “S” corporation shall, on or before the 15th day of the third
month following the close of its taxable year, transmit to the
Franchise Tax Board a return in a form prescribed by it, specifying
for the taxable year, all the facts as it may by rule, or otherwise,
require in order to carry out this part. A tax return, disclosing net
income for any taxable year, filed pursuant to Chapter 2
(commencing with Section 23101) or Chapter 3 (commencing with
Section 23501) of Part 11 shall be deemed filed pursuant to the
proper chapter of Part 11 for the same taxable period, if the
chapter under which the return is filed is determined erroneous.

end insert

(b) In the case of cooperative associations described in Section
24404, returns shall be filed on or before the 15th day of the ninth
month following the close of its taxable year.

(c) In the case of taxpayers required to file a return for a short
period under Section 24634, the due date for the short period return
shall be the same as the due date of the federal tax return that
includes the net income of the taxpayer for that short period, or
the due date specified in subdivision (a) if no federal return is
required to be filed that would include the net income for that short
period.

(d) For taxable years beginning on or after January 1, 1997,
each begin delete “S corporation” end delete begin insert “S” corporation end insert required to file a return
under subdivision (a) for any taxable year shall, on or before the
day on which the return for the taxable year was filed, furnish each
person who is a shareholder at any time during the taxable year a
copy of the information shown on the return.

(e) For taxable years beginning on or after January 1, 1997:

(1) A shareholder of an begin delete “S corporation” end delete begin insert “S” corporation end insert shall,
on the shareholder’s return, treat a Subchapter S item in a manner
that is consistent with the treatment of the item on the corporate
return.

(2) (A) In the case of any Subchapter S item, paragraph (1)
shall not apply to that item if both of the following occur:

(i) Either of the following occurs:

(I) The corporation has filed a return, but the shareholder’s
treatment of the item on the shareholder’s return is, or may be,
inconsistent with the treatment of the item on the corporate return.

(II) The corporation has not filed a return.

(ii) The shareholder files with the Franchise Tax Board a
statement identifying the inconsistency.

(B) A shareholder shall be treated as having complied with
clause (ii) of subparagraph (A) with respect to a Subchapter S item
if the shareholder does both of the following:

(i) Demonstrates to the satisfaction of the Franchise Tax Board
that the treatment of the Subchapter S item on the shareholder’s
return is consistent with the treatment of the item on the schedule
furnished to the shareholder by the corporation.

(ii) Elects to have this paragraph apply with respect to that item.

(3) In any case described in subclause (I) of clause (i) of
subparagraph (A) of paragraph (2), and in which the shareholder
does not comply with clause (ii) of subparagraph (A) of paragraph
(2), any adjustment required to make the treatment of the items by
the shareholder consistent with the treatment of the items on the
corporate return shall be treated as arising out of a mathematical
error and assessed and collected under Section 19051.

(4) For purposes of this subdivision, “Subchapter S item” means
any item of an begin delete “S corporation” end delete begin insert “S” corporation end insert to the extent
provided by regulations that, for purposes of Part 10 (commencing
with Section 17001) or this part, the item is more appropriately
determined at the corporation level than at the shareholder level.

(5) The penalties imposed under Article 7 (commencing with
Section 19131) of Chapter 4 shall apply in the case of a
shareholder’s negligence in connection with, or disregard of, the
requirements of this section.

SEC. 3.  

Section 18633 of the Revenue and Taxation Code is
amended to read:

18633.  

(a) (1)  begin delete Every end delete begin insert (A) end insert begin insert   end insert begin insert For taxable years beginning before
January 1, 2016, every end insert partnership, on or before the 15th day of
the fourth month following the close of its taxable year, shall make
a return for that taxable year, stating specifically the items of gross
income and the deductions allowed by Part 10 (commencing with
Section 17001). Except as otherwise provided in Section 18621.5,
the return shall include the names, addresses, and taxpayer
identification numbers of the persons, whether residents or
nonresidents, who would be entitled to share in the net income if
distributed and the amount of the distributive share of each person.
The return shall contain or be verified by a written declaration that
it is made under penalty of perjury, signed by one of the partners.

begin delete

(2)

end delete

begin insert (B) end insert  In addition to returns required by begin delete paragraph (1), end delete
begin insert subparagraph (A), end insert every limited partnership subject to the tax
imposed by subdivision (b) of Section 17935, on or before the 15th
day of the fourth month following the close of its taxable year,
shall make a return for that taxable year, containing the information
identified in begin delete paragraph (1). end delete begin insert subparagraph (A). end insert In the case of a
limited partnership not doing business in this state, the Franchise
Tax Board shall prescribe the manner and extent to which the
information identified in begin delete paragraph (1) end delete begin insert subparagraph (A) end insert shall be
included with the return required by this begin delete paragraph. end delete begin insert subparagraph. end insert

begin insert

(2) (A) For taxable years beginning on or after January 1,
2016, every partnership, on or before the 15th day of the third
month following the close of its taxable year, shall make a return
for that taxable year, stating specifically the items of gross income
and the deductions allowed by Part 10 (commencing with Section
17001). Except as otherwise provided in Section 18621.5, the
return shall include the names, addresses, and taxpayer
identification numbers of the persons, whether residents or
nonresidents, who would be entitled to share in the net income if
distributed and the amount of the distributive share of each person.
The return shall contain or be verified by a written declaration
that it is made under penalty of perjury, signed by one of the
partners.

end insert begin insert

(B) In addition to returns required by subparagraph (A), every
limited partnership subject to the tax imposed by subdivision (b)
of Section 17935, on or before the 15th day of the third month
following the close of its taxable year, shall make a return for that
taxable year, containing the information identified in subparagraph
(A). In the case of a limited partnership not doing business in this
state, the Franchise Tax Board shall prescribe the manner and
extent to which the information identified in subparagraph (A)
shall be included with the return required by this subparagraph.

end insert

(b) Each partnership required to file a return under subdivision
(a) for any taxable year shall (on or before the day on which the
return for that taxable year was required to be filed) furnish to each
person who is a partner or who holds an interest in that partnership
as a nominee for another person at any time during that taxable
year a copy of the information required to be shown on that return
as may be required by regulations.

(c) Any person who holds an interest in a partnership as a
nominee for another person shall do both of the following:

(1) Furnish to the partnership, in the manner prescribed by the
Franchise Tax Board, the name, address, and taxpayer identification
number of that other person, and any other information for that
taxable year as the Franchise Tax Board may by form and
regulation prescribe.

(2) Furnish to that other person, in the manner prescribed by
the Franchise Tax Board, the information provided by that
partnership under subdivision (b).

(d) The provisions of Section 6031(d) of the Internal Revenue
Code, relating to the separate statement of items of unrelated
business taxable income, shall apply.

(e) The provisions of Section 6031(f) of the Internal Revenue
Code, relating to electing investment partnerships, shall apply,
except as otherwise provided.

SEC. 4.  

Section 19021 of the Revenue and Taxation Code is
amended to read:

19021.  

begin delete In end delete begin insert (a) end insert begin insert   end insert begin insert For taxable years beginning before January 1,
2016, end insert the case of taxpayers subject to the tax imposed by Article
3 (commencing with Section 23181) of Chapter 2 of Part 11, there
shall be due and payable on or before the 15th day of the third
month following the close of the preceding year from each taxpayer
a percentage of its net income as disclosed by its return which is
equal to the rate applicable to corporations subject to the tax
imposed by Article 2 (commencing with Section 23151) of Chapter
2 of Part 11 plus the personal property tax rate equivalent included
in the bank and financial corporation tax rate determination by the
Franchise Tax Board pursuant to Sections 23186 and 23186.1. The
payment required by this section shall not be less than the minimum
tax specified in Section 23153.

begin insert

(b) (1) (A) For taxable years beginning on or after January 1,
2016, in the case of taxpayers that are “C” corporations subject
to the tax imposed by Article 3 (commencing with Section 23181)
of Chapter 2 of Part 11, there shall be due and payable on or
before the 15th day of the fourth month following the close of the
preceding year from each taxpayer a percentage of its net income
as disclosed by its return which is equal to the rate applicable to
corporations subject to the tax imposed by Article 2 (commencing
with Section 23151) of Chapter 2 of Part 11 plus the personal
property tax rate equivalent included in the bank and financial
corporation tax rate determination by the Franchise Tax Board
pursuant to Section 23186. The payment required by this section
shall not be less than the minimum tax specified in Section 23153.

end insert begin insert

(B) In the case of a “C” corporation with a fiscal year ending
on June 30, the amendments made by subparagraph (A) shall apply
to returns for taxable years beginning on or after January 1, 2026.

end insert begin insert

(2) For taxable years beginning on or after January 1, 2016,
in the case of taxpayers that are “S” corporations subject to the
tax imposed by Article 3 (commencing with Section 23181) of
Chapter 2 of Part 11, there shall be due and payable on or before
the 15th day of the fourth month following the close of the
preceding year from each taxpayer a percentage of its net income
as disclosed by its return which is equal to the rate applicable to
corporations subject to the tax imposed by Article 2 (commencing
with Section 23151) of Chapter 2 of Part 11 plus the personal
property tax rate equivalent included in the bank and financial
corporation tax rate determination by the Franchise Tax Board
pursuant to Section 23186. The payment required by this section
shall not be less than the minimum tax specified in Section 23153.

end insert

SEC. 5.  

Section 23224 of the Revenue and Taxation Code is
amended to read:

23224.  

(a) Notwithstanding the provisions of Section 23222
and Section 23223, if a corporation, which has been subject to the
provisions of Chapter 3 begin insert (commencing with Section 23501) end insert
commences to do business in this state, its tax shall be computed
as follows:

(1) Such corporation shall pay a tax under Chapter 3
begin insert (commencing with Section 23501) end insert for the whole of the year it
commences to do such business;

(2) Such corporation shall, for the taxable year succeeding the
year it commences to do business in this state, pay a tax under this
chapter measured by its income for that taxable year;

(3) Such corporation shall, for its third taxable year, pay a tax,
under this chapter, measured by its income for its second taxable
year;

(4)  begin insert (A) end insert begin insert   end insert Notwithstanding any other provisions of this part, begin insert for
taxable years beginning before January 1, 2016, end insert such corporation
shall file its return for such second and third taxable years on or
before the 15th day of the third month following the close of its
second taxable year.

begin insert

(B) (i) (I) Notwithstanding any other provisions of this part,
for taxable years beginning on or after January 1, 2016, such
corporation that is a “C” corporation shall file its return for such
second and third taxable years on or before the 15th day of the
fourth month following the close of its second taxable year.

end insert begin insert

(II) In the case of a “C” corporation with a fiscal year ending
on June 30, the amendments made by subclause (I) shall apply to
returns for taxable years beginning on or after January 1, 2026.

end insert begin insert

(ii) Notwithstanding any other provisions of this part, for taxable
years beginning on or after January 1, 2016, such corporation
that is a “S” corporation shall file its return for such second and
third taxable years on or before the 15th day of the third month
following the close of its second taxable year.

end insert

(b) The provisions of subdivision (a) shall be applicable only
if a taxpayer commenced doing business in this state before January
1, 1972.

SEC. 6.  

Section 23281 of the Revenue and Taxation Code is
amended to read:

23281.  

(a) (1) When a taxpayer ceases to do business within
the state during any taxable year and does not dissolve or withdraw
from the state during that year, and does not resume doing business
during the succeeding taxable year, its tax for the taxable year in
which it resumes doing business prior to January 1, 2000, shall be
the greater of the following:

(A) The tax computed upon the basis of the net income of the
income year in which it ceased doing business, except where the
income has already been included in the measure of a tax imposed
by this chapter.

(B) The minimum tax prescribed in Section 23153.

(2) When a taxpayer ceases to do business within the state during
any taxable year and does not dissolve or withdraw from the state
during that year, and does not resume doing business during the
succeeding taxable year, its tax for the taxable year in which it
resumes doing business, on or after January 1, 2000, shall be
according to or measured by its net income for the taxable year in
which it resumes doing business.

(b)  begin delete The end delete begin insert (1) end insert begin insert   end insert begin insert For taxable years beginning before January 1,
2016, the end insert tax shall be due and payable at the time the corporation
resumes doing business, or on or before the 15th day of the third
month following the close of its taxable year, whichever is later.
All the provisions of this part relating to delinquent taxes shall be
applicable to the tax if it is not paid on or before its due date.

begin insert

(2) (A) (i) For taxable years beginning on or after January 1,
2016, the tax shall be due and payable at the time the “C”
corporation resumes doing business, or on or before the 15th day
of the fourth month following the close of its taxable year,
whichever is later. All the provisions of this part relating to
delinquent taxes shall be applicable to the tax if it is not paid on
or before its due date.

end insert begin insert

(ii) In the case of a “C” corporation with a fiscal year ending
on June 30, the amendments made by clause (i) shall apply to
returns for taxable years beginning on or after January 1, 2026.

end insert begin insert

(B) For taxable years beginning on or after January 1, 2016,
the tax shall be due and payable at the time the “S” corporation
resumes doing business, or on or before the 15th day of the third
month following the close of its taxable year, whichever is later.
All the provisions of this part relating to delinquent taxes shall be
applicable to the tax if it is not paid on or before its due date.

end insert

(c) This section does not apply to a corporation which became
subject to Chapter 3 (commencing with Section 23501) after it
discontinued doing business in this state (see Section 23224.5).