BILL NUMBER: SBX6 6	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hollingsworth

                        FEBRUARY 24, 2010

   An act to repeal Section 19138 of the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 6, as introduced, Hollingsworth. Tax amnesty: penalty.
   Existing law imposes a penalty on a taxpayer subject to the
Corporation Tax Law with a specified understatement of tax, as
defined, in an amount equal to 20% of that understatement, except as
specified.
   This bill would delete the provisions imposing that penalty.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 19138 of the Revenue and Taxation Code is
repealed. 
   19138.  (a) (1) A taxpayer subject to the tax imposed under Part
11 (commencing with Section 23001) with an understatement of tax in
excess of one million dollars ($1,000,000) for any taxable year shall
be subject to the penalty imposed under this section.
   (2) For taxpayers that are required to be included in a combined
report under Section 25101 or authorized to be included in a combined
report under Section 25101.15, the threshold amount prescribed in
paragraph (1) shall apply to the aggregate amount of tax liability
under Part 11 (commencing with Section 23001) for all taxpayers that
are required to be or authorized to be included in a combined report.

   (b) The penalty under this section shall be an amount equal to 20
percent of any understatement of tax. For purposes of this section,
"understatement of tax" means the amount by which the tax imposed by
Part 11 (commencing with Section 23001) exceeds the amount of tax
shown on an original return or shown on an amended return filed on or
before the original or extended due date of the return for the
taxable year. For any taxable year beginning before January 1, 2008,
the amount of tax paid on or before May 31, 2009, and shown on an
amended return filed on or before May 31, 2009, shall be treated as
the amount of tax shown on an original return for purposes of this
section.
   (c) The penalty imposed by this section shall be in addition to
any other penalty imposed under Part 11 (commencing with Section
23001) or this part.
   (d) Article 3 (commencing with Section 19031), relating to
deficiency assessments, shall not apply with respect to the
assessment or collection of any penalty imposed by subdivision (a).
   (e) A refund or credit for any amounts paid to satisfy a penalty
imposed under this section may be allowed only on the grounds that
the amount of the penalty was not properly computed by the Franchise
Tax Board.
   (f) (1) No penalty shall be imposed under this section on any
understatement to the extent that the understatement is attributable
to a change in law that is enacted, promulgated, issued, or becomes
final after the earlier of either of the following dates:
   (A) The date the taxpayer files the return for the taxable year
for which the change is operative.
   (B) The extended due date for the return of the taxpayer for the
taxable year for which the change is operative.
   (2) For purposes of this subdivision, a "change of law" means a
statutory change or an interpretation of law or rule of law by
regulation, legal ruling of counsel, within the meaning of
subdivision (b) of Section 11340.9 of the Government Code, or a
published federal or California court decision.
   (3) The Franchise Tax Board shall implement this subdivision in a
reasonable manner.
   (g) No penalty shall be imposed under this section to the extent
that a taxpayer's understatement is attributable to the taxpayer's
reasonable reliance on written advice of the Franchise Tax Board, but
only if the written advice was a legal ruling by the Chief Counsel,
within the meaning of paragraph (1) of subdivision (a) of Section
21012.
   (h) This section shall apply to each taxable year beginning on or
after January 1, 2003, for which the statute of limitations on
assessment has not expired.