BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 132|
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THIRD READING
Bill No: AB 132
Author: Chavez (D)
Amended: 4/21/03 in Assembly
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 4-0, 6/11/03
AYES: Cedillo, Poochigian, Alpert, Knight
ABSENT/NO VOTE RECORDED: Ashburn, Bowen, Burton
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/15/03 (Passed on Consent) - See
last page for vote
SUBJECT : Income taxes: designated contributions
SOURCE : Author
DIGEST : This bill provides ordering rules to be used by
the Franchise Tax Board (FTB) when adding income tax
checkoffs to the personal income tax return.
ANALYSIS : 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.
CONTINUED
AB 132
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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 FTB determines that space is
available to do so.
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, the Assembly Revenue and Taxation
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. 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
AB 132
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3
another checkoff to be removed from the return before a
contingent checkoff may be added. This bill provides FTB
with needed flexibility. 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.
This bill is sponsored by the author. It is intended to do
two things: (1) 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 (2) clarify the ordering rules that
should be used by FTB when adding contingent checkoffs to
the return.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR :
AYES: Aghazarian, Bates, Benoit, Berg, Bermudez, Bogh,
Calderon, Canciamilla, Chan, Chavez, Chu, Cogdill, Cohn,
Corbett, Correa, Cox, Diaz, Dutra, Dutton, Dymally,
Firebaugh, Frommer, Garcia, Goldberg, Hancock, Harman,
Haynes, Jerome Horton, Shirley Horton, Houston, Jackson,
Keene, Kehoe, Koretz, La Malfa, La Suer, Laird, Leno,
Leslie, Levine, Lieber, Liu, Longville, Lowenthal,
Maddox, Maldonado, Matthews, Maze, McCarthy, Montanez,
Mountjoy, Mullin, Nakanishi, Nation, Negrete McLeod,
Nunez, Oropeza, Pacheco, Parra, Pavley, Plescia, Reyes,
Richman, Ridley-Thomas, Runner, Salinas, Samuelian,
Simitian, Spitzer, Steinberg, Strickland, Vargas,
Wiggins, Wolk, Wyland, Yee
DLW:sl 7/15/03 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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