BILL ANALYSIS �
AB 318
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Date of Hearing: January 9, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 318 (Skinner) - As Amended: January 4, 2012
Majority vote. Fiscal committee.
SUBJECT : Administration of income taxes: definition of "legal
holiday."
SUMMARY : Conforms California's income tax laws to the federal
income tax law regarding the definition of a "legal holiday" and
the due dates for filing income tax returns and making payments.
Specifically, this bill :
1)Codifies the Franchise Tax Board's (FTB) authority, by
reference to Internal Revenue Code (IRC) Section 7503, to
extend the due date for filing tax returns and making
payments, for purposes of the Personal Income Tax (PIT) and
the Corporation Tax (CT) laws, if the last day to file or make
a payment falls on a Saturday, Sunday, or a legal holiday.
2)Defines the term "legal holiday" to include legal holidays
recognized by the federal government for filing federal tax
returns and making payments, including legal holidays in the
District of Columbia.
EXISTING FEDERAL LAW :
1)Requires taxpayers that file on a calendar basis to file their
income tax return on or before April 15th.
2)Provides that, when April 15th falls on a Saturday, Sunday, or
legal holiday, a return is considered timely filed and
payments are considered timely made if filed or made on the
next succeeding day that is not a Saturday, Sunday, or legal
holiday.
3)Defines a "legal holiday" to include a legal holiday in the
District of Columbia. Under District of Columbia law,
Emancipation Day, which is celebrated on April 16th, is a
legal holiday.
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EXISTING STATE LAW:
1)Prescribes specified due dates of for filing income tax
returns and making payments.
2)Does not recognize Emancipation Day as a legal holiday.
FISCAL EFFECT : According to the FTB staff, this bill will not
impact state income tax revenues and will not significantly
impact the FTB's programs and operations.
COMMENTS :
1)The Author's Statement. "Under current law, when the federal
Emancipation Day holiday falls on the same date that income
tax returns and payments are due, the Internal Revenue Code
provides for extending the filing deadline for federal income
taxes - California law does not. Each time the federal
Emancipation Day holiday falls on the same date that income
tax returns and payments are due, the Franchise Tax Board must
administratively change the due date for California income tax
documents and payments to ensure that penalties are not
assessed for taxpayers who file on the IRS extended deadline.
AB 318 adds language to the Revenue and Taxation Code to
define a legal holiday for California income tax purposes to
include those legal holidays recognized by the Internal
Revenue Service for federal returns."
2)The Purpose of this Bill . This bill is sponsored by the FTB
to modify the filing and payment due dates to mirror federal
holiday due date extensions. According to the FTB, AB 318 is
needed to codify the filing and payment due dates in order "to
eliminate taxpayer confusion when the FTB changes the due
dates on forms and instructions, without statutory authority,
when there is a federally recognized holiday that changes the
due date for federal income tax returns."
3)Background . Under the federal tax law, the Internal Revenue
Service (IRS) is statutorily authorized to extend the due
dates for filing returns and making payments when a due date
falls on a Saturday, Sunday, or a legal holiday. The
definition of a "legal holiday" includes a legal holiday in
the District of Columbia as well as a statewide legal holiday
in the state where an IRS office is located. The District of
Columbia celebrates Emancipation Day on April 16th, which
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falls close to the April 15th statutory due date for filing
most personal income tax returns and for making certain
tax-related payments.
Under California's income tax laws, a calendar-year individual,
partnership, or limited liability company must file the income
tax returns and make payments on or before April 15 following
the close of the calendar year. (R&TC Section 18566).
Fiscal-year filers must file their tax returns and make
payments on or before the 15th day of the 4th month following
the close of the fiscal year. The FTB has implemented
regulations providing for an extension of time to file returns
in the case where the last day for filing those returns falls
on a Saturday, Sunday, or other legal holiday. (California
Income Tax Regulation 18566). In that case, Regulation 18566
authorizes taxpayers to file returns on the day following the
Saturday, Sunday, or the legal holiday.
In California, Emancipation Day is not recognized as a legal
holiday. Consequently, if Emancipation Day or any other
federal holiday that is not recognized in California falls on
the due date for filing a tax return, California and federal
income tax returns may have different due dates. As noted by
the FTB, in the case of the April 16th Emancipation Day
holiday, California and the federal due dates will be
different eight times in the next 19 years.
Generally, a taxpayer needs a completed federal income return in
order to prepare a California income tax return. Therefore,
the FTB administratively extended the due dates for filing
California income tax returns and making related payments to
correspond to the federal extended due dates. This bill is
necessary to provide the FTB with the statutory authority to
extend those due dates, in conformity with the federal holiday
due date extensions. AB 318 would provide that, if the last
day for filing returns falls on a Saturday, Sunday, or other
legal holiday, returns may be filed and payments may be made
on the following day without penalty. AB 318 would allow
those extensions not only for filing of returns or making
payments, but also for making elections that are required to
be made, under both the PIT and CT laws, on a timely-filed
original return otherwise due on April 15th.
REGISTERED SUPPORT / OPPOSITION :
AB 318
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Support
Franchise Tax Board (sponsor)
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098