Amended in Assembly March 15, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2497

Introduced by Assembly Member Wagner

February 19, 2016

An act to amend Section begin delete 23701 of end delete begin insert 18729 of, and to add and repeal Article 3.6 (commencing with Section 18730) of Chapter 3 of Part 10.2 of Division 2 of, end insert the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 2497, as amended, Wagner. begin delete Corporation Tax Law. end delete begin insert Voluntary contributions: California Senior Legislature Fund: California Senior Citizen Advocacy Fund. end insert

begin insert

Under existing law, taxpayers are allowed to contribute amounts in excess of their personal income tax liability for the support of the California Senior Legislature Fund until the year in which the minimum contribution is not received, or January 1, 2019, whichever occurs first. Existing law also contains administrative provisions that are generally applicable to voluntary contributions.

end insert begin insert

This bill would repeal these provisions regarding contributions for the support of the California Senior Legislature Fund and would instead allow a taxpayer, for taxable years beginning on or after January 1, 2016, to designate an amount in excess of personal income tax liability to be deposited to the California Senior Citizen Advocacy Fund, which the bill would create. This bill would require moneys transferred to the California Senior Citizen Advocacy Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller, as provided, and to the California Senior Legislature for the purpose of funding the activities of the California Senior Legislature, as provided.

end insert begin insert

This bill would repeal these voluntary contribution provisions by a specified date or, if contributions made on returns would be less than a specified amount, by an earlier date as provided.

end insert begin delete

The Corporation Tax Law exempts various types of organizations from taxes imposed by that law. Existing law establishes a method by which an organization that has obtained a ruling or determination from the Internal Revenue Service that it is exempt from federal income taxes as an organization described in Section 501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code may obtain exemption from state taxes, as provided.

end delete begin delete

This bill would make nonsubstantive changes to that provision.

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 18729 of the end insert begin insert Revenue and Taxation Code end insert
begin insert is amended to read: end insert

18729.  

(a)  begin delete Except as otherwise provided in subdivision (b),
this end delete begin insert This end insert article shall remain in effect only for taxable years
beginning before January 1, begin delete 2019, end delete begin insert 2016, end insert and as of begin delete December 1,
2019, end delete begin insert January 1, 2017, end insert is repealed.

begin delete

(b) (1) By September 1, 2015, and by September 1 of each
subsequent calendar year that the California Senior Legislature
Fund appears on the tax return, the Franchise Tax Board shall do
all of the following:

(A) Determine the minimum contribution amount required to
be received during the next calendar year for the fund to appear
on the tax return for the taxable year that includes that next calendar
year.

(B) Provide written notification to the California Senior
Legislature of the amount determined in subparagraph (A).

(C) Determine whether the amount of contributions estimated
to be received during the calendar year will equal or exceed the
minimum contribution amount determined by the Franchise Tax
Board for the calendar year pursuant to subparagraph (A). The
Franchise Tax Board shall estimate the amount of contributions
to be received by using the actual amounts received and an estimate
of the contributions that will be received by the end of that calendar
year.

(2) If the Franchise Tax Board determines that the amount of
the contributions estimated to be received during a calendar year
will not at least equal the minimum contribution amount for the
calendar year, this article shall be inoperative with respect to
taxable years beginning on or after January 1 of that calendar year
and shall be repealed on December 1 of that year.

(3) For purposes of this section, the minimum contribution
amount for a calendar year means two hundred fifty thousand
dollars ($250,000) for the second calendar year after the first
appearance of the California Senior Legislature Fund on the
personal income tax return or the minimum contribution amount
as adjusted pursuant to subdivision (c).

(c) For each calendar year, beginning with the third calendar
year after the first appearance of the California Senior Legislature
Fund on the personal income tax return, the Franchise Tax Board
shall adjust, on or before September 1 of that calendar year, the
minimum contribution amount specified in subdivision (b) as
follows:

(1) The minimum estimated contribution amount for the calendar
year shall be an amount equal to the product of the minimum
estimated contribution amount for the calendar year multiplied by
the inflation factor adjustment as specified in subparagraph (A) of
paragraph (2) of subdivision (h) of Section 17041, rounded off to
the nearest dollar.

(2) The inflation factor adjustment used for the calendar year
shall be based on the figures for the percentage change in the
California Consumer Price Index for all items received on or before
August 1 of the calendar year pursuant to paragraph (1) of
subdivision (h) of Section 17041.

end delete begin delete

(d)

end delete

begin insert (b) end insert  Notwithstanding the repeal of this article, any contribution
amounts designated pursuant to this article prior to its repeal shall
continue to be transferred and disbursed in accordance with this
article as in effect immediately prior to that repeal.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Article 3.6 (commencing with Section 18730) is added
to Chapter 3 of Part 10.2 of Division 2 of the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 3.6. end insert   California Senior Citizen Advocacy Fund

 

begin insert 18730. end insert   

(a) For taxable years beginning on or after January
1, 2016, any individual may designate on the tax return that a
contribution in excess of the tax liability, if any, be made to the
California Senior Citizen Advocacy Fund established by Section
18731 to be used to conduct the sessions of the California Senior
Legislature and to support its ongoing activities on behalf of older
persons.

(b) The contribution shall be in full dollar amounts and may be
made individually by each signatory on the joint return.

(c) A designation under subdivision (a) shall be made for any
taxable year on the initial return for that taxable year, and once
made shall be irrevocable. If payments and credits reported on
the return, together with any other credits associated with the
individual’s account, do not exceed the individual’s tax liability,
the return shall be treated as though no designation has been
made.

(d) The Franchise Tax Board shall revise the form of the return
to include a space labeled “California Senior Citizen Advocacy
Fund” to allow for the designation permitted under subdivision
(a). The form shall also include in the instructions information
that the contribution may be in the amount of one dollar ($1) or
more and that the contribution shall be used to conduct the sessions
of the California Senior Legislature and to support its ongoing
activities on behalf of older persons.

(e) A deduction shall be allowed under Article 6 (commencing
with Section 17201) of Chapter 3 of Part 10 for any contribution
made pursuant to subdivision (a).

begin insert 18731. end insert   

(a) There is hereby established in the State Treasury
the California Senior Citizen Advocacy Fund to receive
contributions made pursuant to Section 18730. The Franchise Tax
Board shall notify the Controller of both the amount of money paid
by taxpayers in excess of their tax liability and the amount of refund
money that taxpayers have designated pursuant to Section 18730
to be transferred to the California Senior Citizen Advocacy Fund.
The Controller shall transfer from the Personal Income Tax Fund
to the California Senior Citizen Advocacy Fund an amount not in
excess of the sum of the amounts designated by individuals
pursuant to Section 18730 for payment into that fund.

(b) The California Senior Citizen Advocacy Fund is the
successor fund of the California Senior Legislature Fund. All
assets, liabilities, revenues, and expenditures of the California
Senior Legislature Fund shall be transferred to, and become a
part of, the California Senior Citizen Advocacy Fund, as provided
in Section 16346 of the Government Code. Any references in state
law to the California Senior Legislature Fund shall be construed
to refer to the California Senior Citizen Advocacy Fund.

begin insert 18732. end insert   

(a) All moneys transferred to the California Senior
Citizen Advocacy Fund pursuant to Section 18731, upon
appropriation by the Legislature, shall be allocated as follows:

(1) To the Franchise Tax Board and the Controller for
reimbursement of all costs incurred by the Franchise Tax Board
and the Controller in connection with their duties under this article.

(2) The balance to the California Senior Legislature, for its
ongoing activities on behalf of older persons.

(b) All moneys allocated pursuant to paragraph (2) of
subdivision (a) may be carried over from the year in which they
were received and encumbered in any following year.

(c) The funds allocated to the California Senior Legislature for
the purpose of funding the activities of the California Senior
Legislature shall be spent pursuant to the purview of the Joint
Rules Committee of the California Senior Legislature in a manner
consistent with the bylaws of the California Senior Legislature,
established through a majority vote of the California Senior
Legislature.

begin insert 18733. end insert   

(a) Except as otherwise provided in subdivision (b),
this article shall remain in effect only for taxable years beginning
before January 1, 2021, and as of December 1, 2021, is repealed.

(b) (1) By September 1, 2017, and by September 1 of each
subsequent calendar year that the California Senior Citizen
Advocacy Fund appears on the tax return, the Franchise Tax Board
shall do all of the following:

(A) Determine the minimum contribution amount required to
be received during the next calendar year for the fund to appear
on the tax return for the taxable year that includes that next
calendar year.

(B) Provide written notification to the California Senior
Legislature of the amount determined in subparagraph (A).

(C) Determine whether the amount of contributions estimated
to be received during the calendar year will equal or exceed the
minimum contribution amount determined by the Franchise Tax
Board for the calendar year pursuant to subparagraph (A). The
Franchise Tax Board shall estimate the amount of contributions
to be received by using the actual amounts received and an
estimate of the contributions that will be received by the end of
that calendar year.

(2) If the Franchise Tax Board determines that the amount of
the contributions estimated to be received during a calendar year
will not at least equal the minimum contribution amount for the
calendar year, this article shall be inoperative with respect to
taxable years beginning on or after January 1 of that calendar
year and shall be repealed on December 1 of that year.

(3) For purposes of this section, the minimum contribution
amount for a calendar year means two hundred fifty thousand
dollars ($250,000) for the second calendar year after the first
appearance of the California Senior Legislature Fund on the
personal income tax return or the minimum contribution amount
as adjusted pursuant to subdivision (c).

(c) For each calendar year, beginning with the third calendar
year after the first appearance of the California Senior Citizen
Advocacy Fund on the personal income tax return, the Franchise
Tax Board shall adjust, on or before September 1 of that calendar
year, the minimum contribution amount specified in subdivision
(b) as follows:

(1) The minimum estimated contribution amount for the calendar
year shall be an amount equal to the product of the minimum
estimated contribution amount for the calendar year multiplied
by the inflation factor adjustment as specified in subparagraph
(A) of paragraph (2) of subdivision (h) of Section 17041, rounded
off to the nearest dollar.

(2) The inflation factor adjustment used for the calendar year
shall be based on the figures for the percentage change in the
California Consumer Price Index for all items received on or
before August 1 of the calendar year pursuant to paragraph (1)
of subdivision (h) of Section 17041.

(d) Notwithstanding the repeal of this article, any contribution
amounts designated pursuant to this article prior to its repeal shall
continue to be transferred and disbursed in accordance with this
article as in effect immediately prior to that repeal.

end insert

begin delete

SECTION 1.  

Section 23701 of the Revenue and Taxation Code
is amended to read:

23701.  

(a) Organizations that are organized and operated for
nonprofit purposes within the provisions of a specific section of
this article, or are defined in Section 23701h, relating to certain
title-holding companies, or Section 23701x, relating to certain
title-holding companies, are exempt from taxes imposed under
this part, except as provided in this article or in Article 2
(commencing with Section 23731) of this chapter, if all of the
following occur:

(1) An application for exemption is submitted in the form
prescribed by the Franchise Tax Board.

(2) A filing fee of twenty-five dollars ($25) is paid with each
application for exemption filed with the Franchise Tax Board after
December 31, 1969.

(3) The Franchise Tax Board issues a determination exempting
the organization from tax.

(b) (1) Notwithstanding subdivision (a), an organization
organized and operated for nonprofit purposes in accordance with
Section 23701a, 23701d, 23701e, 23701f, or 23701g shall be
exempt from taxes imposed by this part, except as provided in this
article or in Article 2 (commencing with Section 23731), upon its
submission to the Franchise Tax Board of one of the following:

(A) A copy of the determination letter or ruling issued by the
Internal Revenue Service recognizing the organization’s exemption
from federal income tax under Section 501(a) of the Internal
Revenue Code, as an organization described in Section 501(c)(3),
(c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code.

(B) A copy of the group exemption letter issued by the Internal
Revenue Service that states that both the central organization and
all of its subordinates are tax-exempt under Section 501(c)(3),
(c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue Code and
substantiation that the organization is included in the federal group
exemption letter as a subordinate organization.

(2) (A) Upon receipt of the documents required in subparagraph
(A) or (B) of paragraph (1), the Franchise Tax Board shall issue
an acknowledgment that the organization is exempt from taxes
imposed by this part, except as provided in this article or in Article
2 (commencing with Section 23731). The acknowledgment may
refer to the organization’s recognition by the Internal Revenue
Service of exemption from federal income tax as an organization
described in Section 501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7) of
the Internal Revenue Code and, if applicable, the organization’s
subordinate organization status under a federal group exemption
letter. The effective date of an organization’s exemption from state
income tax pursuant to this subdivision shall be no later than the
effective date of the organization’s recognition of exemption from
federal income tax as an organization described in Section
501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue
Code, or its status as a subordinate organization under a federal
group exemption letter, as applicable.

(B) Notwithstanding any other provision of this subdivision, an
organization formed as a California corporation or qualified to do
business in California that, as of the date of receipt by the Franchise
Tax Board of the documents required under paragraph (1), is listed
by the Secretary of the State or Franchise Tax Board as
“suspended” or “forfeited” may not establish its exemption under
paragraph (1) and shall not receive an acknowledgment referred
to under subparagraph (A) from the Franchise Tax Board until that
corporation is listed by the Secretary of State and the Franchise
Tax Board as an “active” corporation.

(3) If, for federal income tax purposes, an organization’s
exemption from tax as an organization described in Section
501(c)(3), (c)(4), (c)(5), (c)(6), or (c)(7) of the Internal Revenue
Code is suspended or revoked, the organization shall notify the
Franchise Tax Board of the suspension or revocation, in the form
and manner prescribed by the Franchise Tax Board. Upon
notification, the board shall suspend or revoke, whichever is
applicable, for state income tax purposes, the organization’s
exemption under paragraph (1).

(4) This subdivision shall not be construed to prevent the
Franchise Tax Board from revoking the exemption of an
organization that is not organized or operated in accordance with
California law, this chapter, or Section 501(c)(3), (c)(4), (c)(5),
(c)(6), or (c)(7) of the Internal Revenue Code.

(5) If the Franchise Tax Board suspends or revokes the
exemption of an organization pursuant to paragraph (3) or (4), the
exemption shall be reinstated only upon compliance with this
section, regardless of whether the organization can establish
exemption under paragraph (1).

(c) This section shall not prevent a determination from having
retroactive effect and does not prevent the issuance of a
determination with respect to a domestic organization which was
in existence prior to January 1, 1970, and exempt under prior law
without the submission of a formal application or payment of a
filing fee. For the purpose of this section, the term “domestic”
means created or organized under the laws of this state.

(d) The Franchise Tax Board may prescribe rules and regulations
to implement the provisions of this article.

end delete