BILL NUMBER: AB 1963 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Huber
FEBRUARY 23, 2012
An act to amend Section 1656.1 of the Civil Code, to amend
Sections 6051, 6201, 17041, and 17073.5 of, and to add Chapter 3.8
(commencing with Section 6301) to Part 1 of Division 2 of, the
Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1963, as introduced, Huber. Personal income tax: Sales and use
tax: services tax.
(1) The Personal Income Tax Law imposes taxes based upon taxable
income, at specified rates, and allows a taxpayer to elect to take a
standard deduction, as provided.
This bill would revise the rates of tax imposed under the Personal
Income Tax Law and would revise the standard deduction, as
specified.
(2) Existing law imposes state sales and use taxes on retailers
and on the storage, use, or other consumption of tangible personal
property in this state at the rate of 61/4% of the gross receipts
from the retail sale of tangible personal property in this state and
of the sales price of tangible personal property purchased from any
retailer for storage, use, or other consumption in this state.
This bill would, on and after January 1, 2013, reduce the rate of
state sales and use tax to 4% of the gross receipts from the retail
sale of tangible personal property in this state and of the sales
price of tangible personal property purchased from any retailer for
storage, use, or other consumption in this state. This bill would
also, on and after January 1, 2013, impose a state sales and use tax
on the privilege of selling services at retail and on the storage,
use, or other consumption of services in this state, except as
specified, at the rate of 4% of the sales price of the services.
(3) This bill would include a change in state taxes for the
purpose of increasing state revenues within the meaning of Section 3
of Article XIII A of the California Constitution, and thus would
require for passage the approval of 2/3 of the membership of each
house of the Legislature.
(4) This bill would take effect immediately as a tax levy.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1656.1 of the Civil Code is amended to read:
1656.1. (a) Whether a retailer may add sales tax reimbursement to
the sales price of the tangible personal property or service
sold at retail to a purchaser depends solely upon the terms of
the agreement of sale. It shall be presumed that the parties agreed
to the addition of sales tax reimbursement to the sales price of
tangible personal property or specified sold at retail to
a purchaser if:
(1) The agreement of sale expressly provides for such addition of
sales tax reimbursement;
(2) Sales tax reimbursement is shown on the sales check or other
proof of sale; or
(3) The retailer posts in his or her premises in a location
visible to purchasers, or includes on a price tag or in an
advertisement or other printed material directed to purchasers, a
notice to the effect that reimbursement for sales tax will be added
to the sales price of all items or certain items, whichever is
applicable.
(b) It shall be presumed that the property or service ,
the gross receipts from the sale of which is subject to the sales
tax, is sold at a price which includes tax reimbursement if the
retailer posts in his or her premises, or includes on a price tag or
in an advertisement (whichever is applicable) one of the following
notices:
(1) "All prices of taxable items include sales tax reimbursement
computed to the nearest mill."
(2) "The price of this item includes sales tax reimbursement
computed to the nearest mill."
(c) (1) The State Board of Equalization shall prepare and make
available for inspection and duplication or reproduction a sales tax
reimbursement schedule which shall be identical with the following
tables up to the amounts specified therein:
4 3/4 percent
Price Tax
.01- .10 .................................. .00
.11- .31 .................................. .01
.32- .52 .................................. .02
.53- .73 .................................. .03
.74- .94 .................................. .04
.95-1.15 .................................. .05
5 percent
Price Tax
.01- .09 .................................. .00
.10- .29 .................................. .01
.30- .49 .................................. .02
.50- .69 .................................. .03
.70- .89 .................................. .04
.90-1.09 .................................. .05
5 1/4 percent
Price Tax
.01- .09 .................................. .00
.10- .28 .................................. .01
.29- .47 .................................. .02
.48- .66 .................................. .03
.67- .85 .................................. .04
.86-1.04 .................................. .05
5 1/2 percent
Price Tax
.01- .09 .................................. .00
.10- .27 .................................. .01
.28- .45 .................................. .02
.46- .63 .................................. .03
.64- .81 .................................. .04
.82- .99 .................................. .05
1.00-1.18 ................................ .06
5 3/4 percent
Price Tax
.01- .08 .................................. .00
.09- .26 .................................. .01
.27- .43 .................................. .02
.44- .60 .................................. .03
.61- .78 .................................. .04
.79- .95 .................................. .05
.96-1.13 .................................. .06
6 percent
Price Tax
.01- .08 .................................. .00
.09- .24 .................................. .01
.25- .41 .................................. .02
.42- .58 .................................. .03
.59- .74 .................................. .04
.75- .91 .................................. .05
.92-1.08 .................................. .06
6 1/4 percent
Price Tax
.01- .07 .................................. .00
.08- .23 .................................. .01
.24- .39 .................................. .02
.40- .55 .................................. .03
.56- .71 .................................. .04
.72- .87 .................................. .05
.88-1.03 .................................. .06
6 1/2 percent
Price Tax
.01- .07 .................................. .00
.08- .23 .................................. .01
.24- .38 .................................. .02
.39- .53 .................................. .03
.54- .69 .................................. .04
.70- .84 .................................. .05
.85- .99 .................................. .06
1.00-1.15 ................................ .07
6 3/4 percent
Price Tax
.01- .07 .................................. .00
.08- .22 .................................. .01
.23- .3 7.................................. .02
.38- .5 1.................................. .03
.52- .66 .................................. .04
.67- .81 .................................. .05
.82- .96 .................................. .06
.97-1.11 .................................. .07
7 percent
Price Tax
.01- .07 .................................. .00
.08- .21 .................................. .01
.22- .35 .................................. .02
.36- .49 .................................. .03
.50- .64 .................................. .04
.65- .78 .................................. .05
.79- .92 .................................. .06
.93-1.07 .................................. .07
7 1/4 percent
Price Tax
.01- .06 .................................. .00
.07- .20 .................................. .01
.21- .34 .................................. .02
.35- .48 .................................. .03
.49- .62 .................................. .04
.63- .75 .................................. .05
.76- .89 .................................. .06
.90-1.03 .................................. .07
7 1/2 percent
Price Tax
.01- .06 .................................. .00
.07- .19 .................................. .01
.20- .33 .................................. .02
.34- .46 .................................. .03
.47- .59 .................................. .04
.60- .73 .................................. .05
.74- .86 .................................. .06
.87- .99 .................................. .07
1.00-1.13 ................................ .08
(2) Reimbursement on sales prices in excess of those shown in the
schedules may be computed by applying the applicable tax rate to the
sales price, rounded off to the nearest cent by eliminating any
fraction less than one-half cent and increasing any fraction of
one-half cent or over to the next higher cent.
(3) If sales tax reimbursement is added to the sales price of
tangible personal property or service sold at retail, the
retailer shall use a schedule provided by the board, or a schedule
approved by the board.
(d) The presumptions created by this section are rebuttable
presumptions.
(e) "Service" means a service as specified in Section 6301 of the
Revenue and Taxation Code.
SEC. 2. Section 6051 of the Revenue and Taxation Code is amended
to read:
6051. For the privilege of selling tangible personal property at
retail a tax is hereby imposed upon all retailers at the rate of 21/2
percent of the gross receipts of any retailer from the sale of all
tangible personal property sold at retail in this state on or after
August 1, 1933, and to and including June 30, 1935, and at the rate
of 3 percent thereafter, and at the rate of 21/2 percent on and after
July 1, 1943, and to and including June 30, 1949, and at the rate of
3 percent on and after July 1, 1949, and to and including July 31,
1967, and at the rate of 4 percent on and after August 1, 1967, and
to and including June 30, 1972, and at the rate of 33/4 percent on
and after July 1, 1972, and to and including June 30, 1973, and at
the rate of 43/4 percent on and after July 1, 1973, and to and
including September 30, 1973, and at the rate of 33/4 percent on and
after October 1, 1973, and to and including March 31, 1974, and at
the rate of 43/4 percent on and after March 31, 1974, and to and
including January 1, 2013, and at the rate of 2 1/2
percent thereafter.
SEC. 3. Section 6201 of the Revenue and Taxation Code is amended
to read:
6201. An excise tax is hereby imposed on the storage, use, or
other consumption in this state of tangible personal property
purchased from any retailer on or after July 1, 1935, for storage,
use, or other consumption in this state at the rate of 3 percent of
the sales price of the property, and at the rate of 21/2 percent on
and after July 1, 1943, and to and including June 30, 1949, and at
the rate of 3 percent on and after July 1, 1949, and to and including
July 31, 1967, and at the rate of 4 percent on and after August 1,
1967, and to and including June 30, 1972, and at the rate of 33/4
percent on and after July 1, 1972, and to and including June 30,
1973, and at the rate of 43/4 percent on and after July 1, 1973, and
to and including September 30, 1973, and at the rate of 33/4 percent
on and after October 1, 1973, and to and including March 31, 1974,
and at the rate of 43/4 percent on and after March 31, 1974, and
to and including January 1, 2013, and at the rate of 2
1/2 percent thereafter.
SEC. 4. Chapter 3.8 (commencing with Section 6301) is added to
Part 1 of Division 2 of the Revenue and Taxation Code, to read:
CHAPTER 3.8. SERVICES
Article 1. General Provisions and Definitions
6301. (a) Except where the context otherwise requires, the
definitions in Chapter 1 (commencing with Section 6001) govern this
chapter. For purposes of this chapter, the references to tangible
personal property in Chapter 1 (commencing with Section 6001) shall
include services.
(b) For purposes of this chapter, "services" shall not include any
of the following:
(1) Necessary medical services.
(2) Services related to education.
(3) Automotive repair services.
(4) Tax preparation and filing services.
(5) Licensed legal services.
(6) Services relating to agriculture and livestock.
Article 2. Imposition and Collection of Tax
6305. In addition to the taxes imposed by this part, for the
privilege of selling services at retail a tax is hereby imposed upon
all retailers at the rate of 4 percent of the sales price of the
services of any retailer from the sale of all services sold at retail
in this state on or after January 1, 2013.
6306. In addition to the taxes imposed by this part, an excise
tax is hereby imposed on the storage, use, or other consumption in
this state of services purchased from any retailer on or after July
1, 2013, for storage, use, or other consumption in this state at the
rate of 4 percent of the sales price of the services.
6307. (a) Section 6055, regarding worthless and charged off
accounts, shall apply to this chapter. Except where the context
otherwise requires, for purposes of this chapter the references in
that section to tangible personal property shall include services.
(b) Section 6203.5, regarding worthless and charged off accounts,
shall apply to this chapter. Except where the context otherwise
requires, for purposes of this chapter the references in that section
to tangible personal property shall include services.
6308. (a) Section 6204, regarding retailer debt, shall apply to
this chapter. Except where the context requires, for purposes of this
chapter the references in that section to tangible personal property
shall include services.
(b) Section 6205, regarding advertising that tax will be assumed,
shall apply to this chapter. Except where the context requires, for
purposes of this chapter the references in that section to tangible
personal property shall include services.
(c) Section 6206, regarding separate statement of price and tax,
shall apply to this chapter. Except where the context requires, for
purposes of this chapter the references in that section to tangible
personal property shall include services.
Article 3. Permits and Registration, Presumptions, and Resale
Certificates
6310. (a) Except where the context otherwise requires, Article 2
(commencing with Section 6066) of Chapter 2, regarding permits, shall
apply to this chapter. For purposes of this chapter, the references
to tangible personal property in Article 2 (commencing with Section
6066) of Chapter 2 shall include services.
(b) Except where the context otherwise requires, Article 2
(commencing with Section 6225) of Chapter 3, regarding registration,
shall apply to this chapter. For purposes of this chapter, the
references to tangible personal property in Article 2 (commencing
with Section 6225) of Chapter 3 shall include services.
6311. (a) Except where the context otherwise requires, Article 3
(commencing with Section 6091) of Chapter 2, regarding presumptions
and resale certificates, shall apply to this chapter. For purposes of
this chapter, the references to tangible personal property in
Article 3 (commencing with Section 6091) of Chapter 2 shall include
services.
(b) Except where the context otherwise requires, Article 3
(commencing with Section 6241) of Chapter 3, regarding presumptions
and resale certificates, shall apply to this chapter. For purposes of
this chapter, the references to tangible personal property in
Article 3 (commencing with Section 6241) of Chapter 3 shall include
services.
Article 4. Exemptions
6315. Unless otherwise specifically exempted, it is the intent of
this chapter that all sales of, and all storage, use, or other
consumption of, services be subject to tax as imposed by this
chapter.
6316. There are exempt from the taxes imposed by this chapter the
gross receipts from the sale of, or the storage, use, or other
consumption in this state of, all of the following:
(a) Services, the gross receipts from the sale of which, or the
storage, use or other consumption of which, this state is prohibited
from taxing under the Constitution or laws of the United States or
under the Constitution of this state.
(b) Services rendered, furnished, or performed by an individual
for an employer that pays the individual wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code.
(c) Services sold by a person engaged in a line of business
described in Subsector 611 of the North American Industry
Classification System (NAICS) published by the United States Office
of Management and Budget, 2012 edition.
(d) Services sold by a person engaged in those lines of business
described in Subsectors 621 to 623, inclusive, of the North American
Industry Classification System (NAICS) published by the United States
Office of Management and Budget, 2012 edition.
(e) Services subject to any tax imposed pursuant to Part 7
(commencing with Section 12001).
(f) Interest.
6317. There are exempted from the taxes imposed by this chapter
the gross receipts from occasional sales of services and the storage,
use, or other consumption in this state of services, the transfer of
which to the purchaser is an occasional sale.
6318. There are exempted from the taxes imposed by this chapter,
the gross receipts from the sale of, and the storage, use, or other
consumption of, services that:
(a) The retailer establishes to the satisfaction of the board that
the gross receipts were included in the measure of tax imposed by
Chapter 2 (commencing with Section 6051).
(b) That the retailer or purchaser establishes to the satisfaction
of the board that the sales price was included in the measure of tax
imposed by Chapter 3 (commencing with Section 6201).
6319. There are exempted from the computation of the amount of
the sales tax imposed by this chapter, the gross receipts from the
sale of services that, pursuant to the contract of sale, are required
to be delivered to a point outside this state by the retailer.
6320. There are exempted from the computation of the amount of
the sales tax imposed by this chapter, the gross receipts from the
sale of services to:
(a) The United States, its unincorporated agencies and
instrumentalities.
(b) Any incorporated agency or instrumentality of the United
States wholly owned by the United States or by a corporation wholly
owned by the United States.
(c) The American Red Cross, its chapters and branches.
6321. The storage, use, or other consumption in this state of
services, the gross receipts from the sale of which the purchaser
establishes to the satisfaction of the board were included in the
measure of the sales tax imposed by this chapter, is exempted from
the use tax; provided, however, that this exemption does not extend
to the possession of, or the exercise of any right or power over,
services by a lessee under a lease.
6322. (a) A credit shall be allowed against, but shall not
exceed, the taxes imposed on any person by this chapter by reason of
the storage, use, or other consumption of services in this state to
the extent that the person has paid a retail sales or use tax, or
reimbursement therefor, imposed with respect to that service by any
other state, political subdivision thereof, or the District of
Columbia prior to the storage, use, or other consumption of that
service in this state. The credit shall be apportioned to the taxes
against which it is allowed in proportion to the amounts of those
taxes.
(b) A credit, otherwise permitted by subdivision (a), shall not be
allowed against taxes which are measured by periodic payments made
under a lease, to the extent that the taxes imposed by any other
state, political subdivision thereof, or the District of Columbia
were also measured by periodic payments made under a lease for a
period prior to the storage, use, or other consumption of the service
in this state.
6323. If a purchaser certifies in writing to a seller that the
services purchased will be used in a manner or for a purpose
entitling the seller to regard the gross receipts, or a specified
portion of the gross receipts, from the sale as exempted by this
chapter from computation of the amount of sales tax, and uses the
service in some other manner or for some other purpose, the purchaser
shall be liable for payment of the sales tax as if the purchaser
were a retailer making a retail sale of the service at the time of
the use, and the cost of the service to the purchaser shall be deemed
the gross receipts, or a specified portion of the gross receipts,
from the retail sale.
Article 5. Determinations
6324. Except where the context otherwise requires, Chapter 5
(commencing with Section 6451), regarding determinations, shall apply
to this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 5 (commencing with Section
6451) shall include services.
Article 6. Collection of Tax
6325. Except where the context otherwise requires, Chapter 6
(commencing with Section 6701), regarding collection of tax, shall
apply to this chapter. For purposes of this chapter, any references
to tangible personal property in Chapter 6 (commencing with Section
6701) shall include services.
Article 7. Overpayments and Refunds
6330. Except where the context otherwise requires, Chapter 7
(commencing with Section 6901), regarding determinations, shall apply
to this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 7 (commencing with Section
6901) shall include services.
Article 8. Administration
6335. Except where the context otherwise requires, Chapter 8
(commencing with Section 7051), regarding administration, shall apply
to this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 8 (commencing with Section
7051) shall include a specified digital good.
Article 9. Disposition of Proceeds
6340. All fees, taxes, interest, and penalties imposed, and all
amounts of tax required to be paid to the state under this chapter,
shall be paid to the board in the form of remittances payable to the
State Board of Equalization of the State of California. The board
shall transmit the payments, less refunds and cost of administration,
to the Treasurer to be deposited in the General Fund.
Article 10. Violations
6345. Chapter 10 (commencing with Section 7152), regarding
violations, shall apply to this chapter. For purposes of this
chapter, any references to tangible personal property in Chapter 10
(commencing with Section 7152) shall include services.
Article 11. Res Judicata
6348. Chapter 11 (commencing with Section 7176), regarding res
judicata, shall apply to this chapter. For purposes of this chapter,
any references to tangible personal property in Chapter 11
(commencing with Section 7176) shall include services.
SEC. 5. Section 17041 of the Revenue and Taxation Code is amended
to read:
17041. (a) (1) There For taxable years
beginning before January 1, 2013, there shall be imposed for
each taxable year upon the entire taxable income of every resident of
this state who is not a part-year resident, except the head of a
household as defined in Section 17042, taxes in the following amounts
and at the following rates upon the amount of taxable income
computed for the taxable year as if the resident were a resident of
this state for the entire taxable year and for all prior taxable
years for any carryover items, deferred income, suspended losses, or
suspended deductions:
If the taxable income The tax is:
is:
Not over $3,650........ 1% of the taxable income
Over $3,650 but $36.50 plus 2% of the
not excess
over $8,650............ over $3,650
Over $8,650 but $136.50 plus 4% of the
not excess
over $13,650........... over $8,650
Over $13,650 but $336.50 plus 6% of the
not excess
over $18,950........... over $13,650
Over $18,950 but $654.50 plus 8% of the
not excess
over $23,950..... over $18,950
$1,054.50 plus 9.3% of
Over $23,950........... the
excess
over $23,950
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(3) For taxable years beginning on and after January 1, 2013,
there shall be imposed for each taxable year upon the entire taxable
income of every resident of this state who is not a part-year
resident, except the head of a household as defined in Section 17042,
taxes in the following amounts and at the following rates upon the
amount of taxable income computed for the taxable year as if the
resident were a resident of this state for the entire taxable year
and for all prior taxable years for any carryover items, deferred
income, suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $28,000........ 2.75% of the taxable
income
$770 plus 6.5% of the
Over $28,000............ excess
over $28,000
(b) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident, except the
head of a household as defined in Section 17042, a tax as calculated
in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(c) (1) There For taxable years beginning
before January 1, 2013, there shall be imposed for each taxable
year upon the entire taxable income of every resident of this state
who is not a part-year resident for that taxable year, when the
resident is the head of a household, as defined in Section 17042,
taxes in the following amounts and at the following rates upon the
amount of taxable income computed for the taxable year as if the
resident were a resident of the state for the entire taxable year and
for all prior taxable years for carryover items, deferred income,
suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $7,300......... 1% of the taxable income
Over $7,300 but $73 plus 2% of the
not excess
over $17,300............ over $7,300
Over $17,300 but $273 plus 4% of the
not excess
over $22,300............ over $17,300
Over $22,300 but $473 plus 6% of the
not excess
over $27,600............ over $22,300
Over $27,600 but $791 plus 8% of the
not excess
over $32,600............ over $27,600
$1,191 plus 9.3% of the
Over $32,600............ excess
over $32,600
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(3) For taxable years beginning on and after January 1, 2013,
there shall be imposed for each taxable year upon the entire taxable
income of every resident of this state who is not a part-year
resident, when the resident is the
head of a household, as defined in Section 17042, taxes in
the following amounts and at the following rates upon the amount of
taxable income computed for the taxable year as if the resident were
a resident of this state for the entire taxable year and for all
prior taxable years for any carryover items, deferred income,
suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $56,000........ 2.75% of the taxable
income
$1,540 plus 6.5% of the
Over $56,000............ excess
over $56,000
(d) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident when the
nonresident or part-year resident is the head of a household, as
defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (c) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual having
the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of children taxed as if parent's income,
shall apply, except as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is
modified, for purposes of this part, by substituting "1 percent" for
"10 percent."
(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in paragraph (1) of subdivisions (a) and (c)
and for each taxable year beginning on or after January 1, 2013,
the Franchise Tax Board shall recompute the income tax brackets
described in paragraph (3) of subdivisions (a) and (c) .
That computation Those computations
shall be made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the
inflation adjustment factor determined in subparagraph (A) and round
off the resulting products to the nearest one dollar ($1).
(i) (1) For purposes of this part, the term "taxable income of a
nonresident or part-year resident" includes each of the following:
(A) For any part of the taxable year during which the taxpayer was
a resident of this state (as defined by Section 17014), all items of
gross income and all deductions, regardless of source.
(B) For any part of the taxable year during which the taxpayer was
not a resident of this state, gross income and deductions derived
from sources within this state, determined in accordance with Article
9 of Chapter 3 (commencing with Section 17301) and Chapter 11
(commencing with Section 17951).
(2) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), the amount of any net
operating loss sustained in any taxable year during any part of which
the taxpayer was not a resident of this state shall be limited to
the sum of the following:
(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at taxable income
of a nonresident or part-year resident.
(3) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be includable or allowable to the extent that the carryover item,
deferred income, suspended loss, or suspended deduction was derived
from sources within this state, calculated as if the nonresident or
part-year resident, for the portion of the year he or she was a
nonresident, had been a nonresident for all prior years.
SEC. 6. Section 17073.5 of the Revenue and Taxation Code is
amended to read:
17073.5. (a) A taxpayer may elect to take a standard deduction as
follows:
(1) In the case of a taxpayer, other than a head of a household or
a surviving spouse (as defined in Section 17046) or a married couple
filing a joint return, the standard deduction shall be one
thousand eight hundred eighty dollars ($1,880) twenty
- two thousand five hundred dollars
($22,500) .
(2) In the case of a head of household or a surviving spouse (as
defined in Section 17046) or a married couple filing a joint return,
the standard deduction shall be three thousand seven hundred
sixty dollars ($3,760) forty -five
thousand dollars ($45,000) .
(b) The standard deduction provided for in subdivision (a) shall
be in lieu of all deductions other than those which are to be
subtracted from gross income in computing adjusted gross income under
Section 17072.
(c) (1) The provisions of this section shall be applied in lieu of
the provisions of Sections 63(c) and 63(f) of the Internal Revenue
Code, relating to standard deductions.
(2) Notwithstanding paragraph (1), Section 63(c)(5) of the
Internal Revenue Code, relating to limitations on the standard
deduction of certain dependents, and Section 63(c)(6)of
63(c)(6) of the Internal Revenue Code, relating
to certain individuals not eligible for the standard deduction, shall
apply, except as otherwise provided. For purposes of this paragraph,
the amount specified in Section 63(c)(5) of the Internal Revenue
Code shall be adjusted for inflation in accordance with the
provisions of Section 63(c)(4) of the Internal Revenue Code.
(d) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the standard deduction
amounts prescribed in subdivision (a). That computation shall be made
as follows:
(1) The California Department of Industrial
Relations shall transmit annually to the Franchise Tax Board the
percentage change in the California Consumer Price Index for all
items from June of the prior calendar year to June of the current
calendar year, no later than August 1 of the current calendar year.
(2) The Franchise Tax Board shall compute an inflation adjustment
factor by adding 100 percent to that portion of the percentage change
figure which is furnished pursuant to paragraph (1) and dividing the
result by 100.
(3) The Franchise Tax Board shall multiply the standard deduction
amounts in the preceding taxable year by the inflation adjustment
factor determined in paragraph (2), and round off the resulting
products to the nearest one dollar ($1).
(4) In computing the standard deduction amounts pursuant to this
subdivision, the amount provided in paragraph (2) of subdivision (a)
shall be twice the amount provided in paragraph (1) of subdivision
(a).
SEC. 7. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.