BILL ANALYSIS                                                                                                                                                                                                    �




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 318                      HEARING:  6/13/12
          AUTHOR:  Skinner                      FISCAL:  Yes
          VERSION:  1/4/12                      TAX LEVY:  No
          CONSULTANT:  Phan                     

                               FTB ADMINISTRATION
          

          Expands the definition of a legal holiday for tax purposes.


                           Background and Existing Law  

          Federal law requires calendar year tax filers to file their 
          taxes by April 15th.  If the deadline falls on a Saturday, 
          Sunday, or legal holiday, returns and payments may be filed 
          or mailed on the next succeeding day.  "Legal holiday" 
          means a legal holiday in the District of Columbia or in a 
          state where an Internal Revenue Service (IRS) office is 
          located. 

          Unlike California law, Washington D.C. recognizes 
          Emancipation Day as a legal holiday on April 16th of each 
          year.  For federal tax filings, when Emancipation Day falls 
          on a:

                 Saturday: This holiday is observed on Friday, April 
               15, and the filing deadline for all tax forms and 
               payments required to be filed or completed on or 
               before April 15, is Monday, April 18. 
                 Sunday: This holiday is observed on Monday, April 
               17, and the filing deadline for all tax forms and 
               payments required to be filed or completed on or 
               before April 15, is Tuesday, April 18. 
                 Monday: This holiday is observed on Monday, April 
               16, and the filing deadline for all forms and payments 
               required to be filed or completed on or before April 
               15, is Tuesday, April 17. 

          State law sets due dates for income tax returns and 
          payments.  The Franchise Tax Board (FTB) is required to 
          design tax forms that build on federal income tax returns.  
          In California, taxes are still due on April 15th, resulting 
          in different state and federal tax filing days in some 




          SB 318 - 1/4/12 - Page 2



          years.





                                   Proposed Law 

          Assembly Bill 318 expands the definition of a legal holiday 
          to include legal holidays recognized by the IRS for 
          personal income and corporate income tax purposes. 


                               State Revenue Impact
           
          No estimate. 


                                     Comments  

           Purpose of the bill  .  California tax filers are sometimes 
          confused when the FTB's forms and instructions require 
          taxpayers to use federal tax return information, but the 
          due date for federal returns is later than the due date for 
          California returns.  To avoid confusion, the FTB 
          administratively changes the due date for each affected 
          year to match the IRS's due date.  However, this process is 
          time-consuming and cumbersome, requiring the FTB's forms 
          staff to get approval from its internal departments to 
          change the due date each year this is necessary.  By 
          codifying the IRS's definition of a legal holiday in 
          California's statutes, the FTB will: (1) have statutory 
          authority to automatically change the due date for each 
          affected tax year, thereby streamlining what is a 
          multi-step administrative process; and (2) eliminate 
          taxpayers' confusion when there is a federally recognized 
          holiday. 


                                 Assembly Actions  

          Assembly Revenue and Taxation:       9-0
          Assembly Appropriations:            17-0
          Assembly Floor:                     75-0







          SB 318 - 1/4/12 - Page 3



                         Support and Opposition  (6/7/12)

           Support  :  Franchise Tax Board (Sponsor); California 
          Taxpayers Association; The American Federation of State, 
          County and Municipal Employees. 

           Opposition  :  Unknown.