Amended in Assembly April 11, 2016

Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2490

Introduced by Assembly Member Gatto

February 19, 2016

begin delete An act to amend Section 19522 of the Revenue and Taxation Code, relating to taxation. end delete begin insert An act to add Section 23714 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2490, as amended, Gatto. begin delete Franchise Tax Board: federal tax law changes: report. end delete begin insert Corporation Tax Law: exemption: regulated investment company. end insert

begin insert

Existing law, the Corporation Tax Law, generally conforms to the federal income tax laws that apply to a regulated investment company and further provides that for purposes of the Corporation Tax Law, its “net income” is equal to its “investment company income.” Existing law exempts from tax under the Corporation Tax Law, various organizations including credit unions, fraternal societies, social welfare organizations, and labor organizations.

end insert begin insert

This bill would exempt from tax under the Corporation Tax Law, a regulated investment company that is a mutual fund investment management company owned by investors in the mutual funds that it serves.

end insert begin insert

This bill would take effect immediately as a tax levy.

end insert begin delete

Existing law requires the Franchise Tax Board to submit to the Legislature, and to make available to the public, on or before January 10 of each year, a report on all of the changes to the Internal Revenue Code enacted into law in the prior year, as provided.

end delete begin delete

This bill would instead require that report to be submitted and made available on or before January 31 of each year. The bill would make other nonsubstantive changes.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 23714 is added to the end insert begin insert Revenue and
Taxation Code end insert begin insert , to read: end insert

begin insert

begin insert 23714. end insert   

Notwithstanding any other law, a regulated investment
company, as defined in Section 851 of the Internal Revenue Code,
relating to definition of regulated investment company, that is a
mutual fund investment management company owned by the
investors of mutual fund that it serves.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert begin insert

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

end insert

begin delete

SECTION 1.  

Section 19522 of the Revenue and Taxation Code
is amended to read:

19522.  

(a) (1) (A) On or before January 31 of each year, the
Franchise Tax Board shall submit to the Legislature a report on
all changes to the Internal Revenue Code enacted into law in the
prior year. To the extent possible, the report shall contain an
estimate of the revenue effect of conforming California law to
each of those changes.

(B) In the event that changes to the Internal Revenue Code are
enacted after September 15 of any year, the report described in
subparagraph (A) shall be submitted to the Legislature within 120
days after signature by the President of the United States, rather
than January 31.

(2) The report required by this section shall be made available
to the public.

(3) It is the intent of the Legislature that the policy committee
of each house of the Legislature hold at least one public hearing
on the report required by this section.

(b) For any introduced bill that proposes changes in any of the
dates in Section 17024.5, the Franchise Tax Board shall prepare
a complete analysis of the bill that describes all changes to state
law that will automatically occur by reference to federal law as of
the changed date. The Franchise Tax Board shall immediately
update and supplement that analysis upon any amendment to the
bill. That analysis shall be made available to the public and shall
be submitted to the Legislature for publication in the daily journal
of each house of the Legislature. The digest of the Legislative
Counsel shall indicate that an analysis of the bill shall be prepared
by the Franchise Tax Board and printed in the daily journal of each
house of the Legislature.

end delete