BILL ANALYSIS �
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THIRD READING
Bill No: AB 318
Author: Skinner (D)
Amended: 8/14/12 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 8-0, 6/13/12
AYES: Wolk, Dutton, DeSaulnier, Fuller, Hernandez, Kehoe,
La Malfa, Liu
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 1/26/12 (Consent) - See last page
for vote
SUBJECT : Franchise Tax Board: administration
SOURCE : Franchise Tax Board
DIGEST : This bill conforms Californias income tax laws
to the federal income tax law regarding the definition of a
legal holiday for tax purposes.
Senate Floor Amendments of 8/14/12 subject limited
liability company's (LLC) to the same filing penalties
currently imposed on other corporations.
ANALYSIS : 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.
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AB 318
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"Legal holiday" means a legal holiday in the District of
Columbia or in a state where an Internal Revenue Service
(IRS) office is located.
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
years.
Existing law also provides that a foreign corporation that
fails to qualify to do business in California, or any
corporation whose powers, rights or privileges have been
forfeited or suspended, and which is doing business in
California, may be subject to a $2,000 penalty for failure
to file a return (unless the failure to file is due to
reasonable cause). This penalty only applies to
corporations, including S corporations and domestic
corporations, but not LLCs.
This bill expands the definition of a legal holiday to
include legal holidays recognized by the IRS for personal
income and corporate income tax purposes.
This bill makes the existing $2,000 corporate failure
penalty apply to foreign LLCs and domestic LLCs unless
there is reasonable cause and not willful neglect. This
bill provides that the penalty shall be imposed if the
return is not filed within 60 days after FTB sends the LLC
a notice and demand to file the required return.
Comments
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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/17/12)
Franchise Tax Board (source)
AFSCME
ASSEMBLY FLOOR : 75-0, 1/26/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Hall, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Davis, Gorell, Halderman, Harkey, Smyth
AGB:d 8/17/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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