BILL ANALYSIS
AB 1580
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1580 (Charles Calderon)
As Amended September 1, 2009
Majority vote. Tax levy.
-----------------------------------------------------------------
|ASSEMBLY: | |(May 28, 2009) |SENATE: |21-17|(September 4, |
| | | | | |2009) |
-----------------------------------------------------------------
(vote not relevant)
Original Committee Reference: REV. & TAX.
SUMMARY : Conforms specified provisions of the California
Personal Income Tax (PIT) Law, Corporation Tax (CT) Law, and
administration of franchise and income tax laws to federal
income tax laws as set forth in the Internal Revenue Code (IRC)
as of January 1, 2009.
The Senate amendments delete the current provisions of this
bill, and instead, conform specified provisions of the PIT Law,
CT Law, and administration of franchise and income tax laws to
federal income tax laws as set forth in the IRC as of January 1,
2009.
AS PASSED BY THE ASSEMBLY , this bill:
1)Clarified the operative date for the provision related to the
temporarily reduced amount of the dependent exemption credit.
2)Required the Franchise Tax Board (FTB) to apply wage
withholding toward a taxpayer's estimated tax payment
obligation using the recently modified percentages.
3)Corrected an erroneous cross-reference in Revenue and Taxation
Code (R&TC) Section 19136.8 relating to a penalty for the
underpayment of estimated tax.
4)Clarified that an annual election to use the single sales
factor apportionment formula may be made by an apportioning
trade or business only for taxable years beginning on or after
January 1, 2011.
5)Made technical, non-substantive changes to R&TC Code Sections
25128 and 25128.5.
AB 1580
Page 2
FISCAL EFFECT : The Franchise Tax Board (FTB) staff estimates
that the tax provisions of this bill will result in an annual
revenue loss of $9.5 million in fiscal year (FY) 2009-10, $4.6
million in FY 2010-11, and $0.6 million in FY 2011-12. The
provisions conforming to the federal penalties and interest will
result in an annual gain of $14 million in FY 2009-10, $18
million in FY 2010-11, and $21 million in FY 2011-12.
COMMENTS :
1)The purpose of this bill is to conform to numerous changes in
federal law to simplify the preparation of California income
tax returns.
2)The last California-federal conformity bill was enacted in
2005 [AB 115 (Klehs), Chapter 691, Statutes of 2005]. Since
then, the Legislature has not conformed state tax law to
federal law for several reasons. The benefits of conforming
state tax laws to certain federal tax provisions may be
outweighed by the costs associated with that conformity. In
other instances, certain federal changes have undesirable
policy outcomes which the state tax code should not encourage.
Last year, the conformity bill resulted in a net tax
increase, triggering the 2/3 vote requirement, and the measure
did not advance from the Senate Floor because it failed to
secure 27 Senate votes [AB 1561 (Calderon)]. The Legislature
continues to struggle with tax conformity, despite repeated
and loud calls from tax practitioners, who find preparing
returns and dispensing advice more and more complex as federal
and state tax laws drift further apart over time. AB 1580 is
the most recent attempt to ease the hardship on taxpayers and
practitioners by bringing the two tax codes closer together.
3)AB 1561 (Calderon), introduced in the 2007-08 legislative
session, was similar to this bill. AB 1561 failed passage on
the Senate floor.
4)AB 1580 was substantially amended in the Senate and the
Assembly-approved provisions of this bill were deleted. This
bill is inconsistent with Assembly action and the provisions
of this bill have not been heard in an Assembly policy
committee this legislative session.
AB 1580
Page 3
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0003052