BILL ANALYSIS
AB 132
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Date of Hearing: April 28, 2003
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Ed Chavez, Chair
AB 132 (Chavez) - As Amended: April 21, 2003
Majority vote. Fiscal Committee.
SUBJECT : Personal Income Tax: Income Tax Checkoff Ordering
Rules
SUMMARY : Provides ordering rules to be used by the Franchise
Tax Board (FTB; the department) when adding income tax checkoffs
to the personal income tax return. Specifically, this bill :
1)Relates to income tax checkoffs that are approved for addition
to the personal income tax return upon the removal of another
income tax checkoff from the return. These checkoffs will be
called "contingent checkoffs" for the remainder of this
analysis.
2)States that if the number of contingent checkoffs approved for
addition to the tax return in a taxable year is greater than
the number of income tax checkoffs that are removed from the
return in that year, FTB shall add the contingent checkoffs in
the order in which they were enacted. If two or more
contingent checkoffs are enacted on the same date, FTB shall
add them in chapter number order.
3)Provides that notwithstanding the aforementioned rule, FTB may
add one or more approved contingent checkoffs to the income
tax return if the department determines that space is
available to do so.
EXISTING LAW allows taxpayers to contribute money to one or more
of 11 voluntary contribution funds by checking a box on their
state income tax return. California law requires contributions
made through checkoffs to be made from taxpayers' own resources
(not from their tax liability, as is possible on federal tax
returns). Checkoff amounts may be claimed as charitable
contributions on taxpayers' tax returns during the subsequent
year.
FISCAL EFFECT : None. This bill merely clarifies the ordering
AB 132
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rules to be used by FTB when adding income tax checkoffs to the
form.
COMMENTS :
1) This bill is sponsored by the author. It is intended to do
two things: a) allow FTB to add contingent income tax
checkoffs to the return if there is room to do so, regardless
of how many checkoffs were removed from the return that year,
and b) clarify the ordering rules that should be used by FTB
when adding contingent checkoffs to the return.
2) Background: Concerns arose in the late 1990s that
California was in danger of expanding to a three-page tax
form in order to accommodate a proliferation of income tax
checkoffs. Annually since 2000, this committee has adopted
an income tax checkoff policy to address these concerns.
Components of the checkoff policy include requirements that
all checkoff bills include sunset dates, $250,000 minimum
contribution requirements that are indexed for inflation,
language intended to ensure that any new checkoff is not
added to the tax form until an existing checkoff is removed
(so-called queuing language), and a requirement that
proponents of each new checkoff provide evidence justifying
why they believe their checkoff will meet the minimum
contribution requirements.
3) To date, FTB has been able to add each approved contingent
checkoff to the return in the first year the checkoffs have
been eligible to be added. However, existing law does not
provide FTB with flexibility to add a contingent checkoff if
there is room to do so; instead, the language requires
another checkoff to be removed from the return before a
contingent checkoff may be added. This bill provides FTB
with needed flexibility.
4) Furthermore, existing law is unclear regarding the ordering
rules to be used by FTB when adding contingent checkoffs to
the income tax return. This bill requires FTB to use chapter
order number when determining the order in which checkoffs
are added.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 132
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None on file
Opposition
None on file
Analysis Prepared by : Eileen Roush / REV. & TAX. / (916)
319-2098