California Legislature—2013–14 Regular Session

Assembly Bill No. 2080

Introduced by Assembly Member Donnelly

February 20, 2014

An act to amend Sections 17215.1, 17551, 18631, 18663, and 19183 of, and to add Sections 17131.8 and 17131.15 to, the Revenue and Taxation Code, and to amend Sections 940, 13009, and 13009.5 of, and to amend and repeal Sections 927, 987.7, 13027, and 13055 of, the Unemployment Insurance Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 2080, as introduced, Donnelly. Personal income taxes: unemployment insurance: tips.

The Personal Income Tax Law, in modified conformity with federal law, provides various exclusions from gross income in computing tax liability. Existing law requires employers to make specified payments and withholdings from wages paid for employment to, and to file reports of wages and make contributions for unemployment insurance and the employment training tax with, the Employment Development Department, which is charged with administering the state’s payroll taxes.

This bill would, for taxable years beginning on or after January 1, 2015, exclude tips, as defined, from gross income for the purposes of the Personal Income Tax Law. This bill also would exclude tips from the definition of wages paid for employment for the purposes of income tax withholding and for purposes of unemployment insurance and the employment training tax. This bill would also make related changes to other provisions.

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 17131.8 is added to the Revenue and
Taxation Code, to read:

17131.8.  

Section 102(a) of the Internal Revenue Code is
modified to treat tips as property transferred by gift.

SEC. 2.  

Section 17131.15 is added to the Revenue and Taxation
Code, to read:

17131.15.  

(a) For taxable years beginning on or after January
1, 2015, gross income does not include tips.

(b) “Tips” includes any gratuity provided by a customer or client
of the employer’s business.

SEC. 3.  

Section 17215.1 of the Revenue and Taxation Code
is amended to read:

17215.1.  

begin insert (a) end insert begin insert   end insert Section 220(f)(5) of the Internal Revenue Code,
relating to rollover contributions, shall not apply.

begin insert

(b) For taxable years on or after January 1, 2015, Section
220(b)(4)(A) of the Internal Revenue Code is modified to strike
out “tips.”

end insert

SEC. 4.  

Section 17551 of the Revenue and Taxation Code is
amended to read:

17551.  

(a) Subchapter E of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to accounting periods and methods
of accounting, shall apply, except as otherwise provided.

(b) Section 444(c)(1) of the Internal Revenue Code, relating to
effect of election, shall not apply.

(c) (1) Notwithstanding the specified date contained in
paragraph (1) of subdivision (a) of Section 17024.5, Section 457
of the Internal Revenue Code, relating to deferred compensation
plans of state and local governments and tax-exempt organizations,
shall apply, except as otherwise provided, without regard to taxable
year to the same extent as applicable for federal income tax
purposes.

(2) The maximum deferred compensation for the taxable year
that may be excluded from gross income under Section 457 of the
Internal Revenue Code, as applicable for state purposes, shall not
exceed the amount of deferred compensation that may be excluded
from gross income under Section 457 of the Internal Revenue
Code, as in effect on January 1, 2010, including additional elective
deferrals under Section 414(v) of the Internal Revenue Code, as
in effect on January 1, 2010.

(d) (1) For taxable years beginning on or after January 1, 2002,
the basis of any person in the plan shall be increased by the amount
of compensation not allowed to be excluded under subdivision (a).

(2) Any basis described in paragraph (1) shall be recovered in
the manner specified in Section 17085.

(e) Notwithstanding the limitations provided in subdivision (a),
any income attributable to compensation deferred in a plan in
taxable years beginning on or after January 1, 2002, in conformance
with Section 457 of the Internal Revenue Code, as applicable for
federal and state purposes, shall not be includable in the gross
income of the individual for whose benefit the plan was established
until distributed pursuant to the provisions of the plan or by
operation of law.

(f)  begin insert (1) end insert begin insert   end insert Section 451(i) of the Internal Revenue Code, relating
to special rule for sales or dispositions to implement Federal Energy
Regulatory Commission or state electric restructuring policy, shall
not apply.

begin insert

(2) For taxable years beginning on or after January 1, 2015,
Section 451(c) of the Internal Revenue Code, relating to special
rule for employee tips, shall not apply.

end insert

(g) Section 457A of the Internal Revenue Code, relating to
nonqualified deferred compensation from certain tax indifferent
parties, shall not apply.

SEC. 5.  

Section 18631 of the Revenue and Taxation Code is
amended to read:

18631.  

(a) This article does not apply to any payment of
interest obligations not taxable under Part 10 (commencing with
Section 17001) or Part 11 (commencing with Section 23001).

(b) Except as otherwise provided, every person required to file
an information return with the Secretary of the Treasury under any
of the federal sections listed in subdivision (c) may be required to
file a copy of the federal information return with the Franchise
Tax Board at the time and in the manner as it may, by forms and
instructions, require.

(c) Subdivision (b) shall apply to each of the following:

(1) Section 6034A of the Internal Revenue Code, relating to
information to beneficiaries of estates and trusts.

(2) Section 6039 of the Internal Revenue Code, relating to
returns required in connection with certain options.

(3) Section 6039C of the Internal Revenue Code, relating to
returns with respect to foreign persons holding direct investments
in United States real property interests, if that person holds a direct
investment in a California real property as defined in Section
18662.

(4) Section 6041 of the Internal Revenue Code, relating to
information at source.

(5) Section 6041A of the Internal Revenue Code, relating to
returns regarding payments of remuneration for services and direct
sales, except that no return or statement shall be required with
respect to direct sales pursuant to Section 6041A(b) of the Internal
Revenue Code.

(6) Section 6042 of the Internal Revenue Code, relating to
returns regarding payments of dividends and corporate earnings
and profits.

(7) Section 6045 of the Internal Revenue Code, relating to
returns of brokers.

(8) Section 6049 of the Internal Revenue Code, relating to
returns regarding payments of interest.

(9) Section 6050H of the Internal Revenue Code, relating to
returns relating to mortgage interest received in trade or business
from individuals.

(10) (A) Section 6050I of the Internal Revenue Code, relating
to returns relating to cash received in trade or business, etc., except
that Section 6050I(g) of the Internal Revenue Code, relating to
cash received by criminal court, shall not apply.

(B) (i) The Attorney General shall, upon court order following
a showing ex parte to a magistrate of an articulable suspicion that
an individual or entity has committed a felony offense to which a
federal information return is related, be provided a copy of a federal
information return filed with the Franchise Tax Board under this
paragraph. The Attorney General may make a return or information
therefrom available to a district attorney subject to regulations
promulgated by the Attorney General. The regulations shall require
the district attorney seeking the return or information to specify
in writing the specific reasons for believing that a felony offense
has been committed to which the return or information is related.

(ii) Any information or return obtained by the Attorney General
or a district attorney pursuant to this subparagraph shall be
confidential and used only for investigative or prosecutorial
purposes.

(11) Section 6050J of the Internal Revenue Code, relating to
returns relating to foreclosures and abandonments of security.

(12) (A) Section 6050K of the Internal Revenue Code, relating
to returns relating to exchanges of certain partnership interests.

(B) In addition to the general requirement under subparagraph
(A), a transferor of a partnership interest shall be required to notify
the partnership of that exchange in accordance with Section
6050K(c) of the Internal Revenue Code.

(13) Section 6050L of the Internal Revenue Code, relating to
returns relating to certain donated property.

(14) Section 6050N of the Internal Revenue Code, relating to
returns regarding payments of royalties.

(15) Section 6050P of the Internal Revenue Code, relating to
returns relating to the cancellation of indebtedness by certain
entities.

(16) Section 6050Q of the Internal Revenue Code, relating to
certain long-term care benefits.

(17) Section 6050R of the Internal Revenue Code, relating to
returns relating to certain purchases of fish.

(18) Section 6050S of the Internal Revenue Code, relating to
returns relating to higher education tuition and related expenses.

(19) Section 6052 of the Internal Revenue Code, relating to
returns regarding payment of wages in the form of group-term life
insurance.

(20) Section 6034(a) of the Internal Revenue Code, relating to
returns of split-interest trusts.

(21) Section 6039I of the Internal Revenue Code, relating to
returns and records with respect to employer-owned life insurance
contracts.

(22) Section 6039J of the Internal Revenue Code, relating to
information reporting with respect to commodity credit corporation
transactions.

(23) Section 6050V of the Internal Revenue Code, relating to
returns relating to applicable insurance contracts in which certain
exempt organizations hold interests.

(24) Section 6050W of the Internal Revenue Code, relating to
returns relating to payments made in settlement of payment card
and third party network transactions.

(25) Any information return that is required to be filed with the
Secretary of the Treasury pursuant to a provision of Part III of
Subchapter A of Chapter 61 of Subtitle F (commencing with
Section 6031) of the Internal Revenue Code that is added to the
Internal Revenue Code by a public law enacted on or after January
1, 2009.

(d) Every person required to make a return under subdivision
(b) shall also furnish a statement to each person whose name is
required to be set forth in the return, as required to do so by the
Internal Revenue Code.

begin insert

(e) For taxable years beginning on or after January 1, 2015,
Section 6041(e) of the Internal Revenue Code shall not apply.

end insert

SEC. 6.  

Section 18663 of the Revenue and Taxation Code is
amended to read:

18663.  

(a) (1) The Franchise Tax Board shall annually (or
more often if necessary) prepare and make available to the
Employment Development Department, wage withholding tables
that shall be used by every employer making payment of any wages
to a resident employee for services performed either within or
without this state; or to a nonresident employee for services
performed in this state, to deduct and withhold from those wages
for each payroll period, a tax computed in a manner as to produce,
so far as practicable, with due regard to the credits for personal
exemptions allowable under Section 17054, a sum that is
substantially equivalent to the amount of tax reasonably estimated
to be due under Part 10 (commencing with Section 17001) resulting
from the inclusion in the gross income of the employee the wages
which were subject to withholding.

(2) For wages paid on or after November 1, 2009, wage
withholding tables prepared by the Franchise Tax Board pursuant
to this subdivision shall produce, so far as practicable, with due
regard to the credits for personal exemptions allowable under
Section 17054, a sum that will significantly prevent
underwithholding by using an amount equal to 10 percent more
than the sum described in paragraph (1).

(b) (1) (A) For supplemental wages paid on or after January
1, 1992, the rate of withholding that may be applied to
supplemental wages in lieu of the wage withholding tables
specified in subdivision (a) shall be 6 percent.

(B) For supplemental wages paid on or after November 1, 2009,
the rate of withholding shall be 6.6 percent.

(2) For purposes of this begin delete subdivision, “supplemental wages” end delete
begin insert subdivision: end insert

begin insert end insert begin delete end delete
begin insert (A) end insert begin insert   end insert begin insert “Supplemental wages” end insert includes, but is not limited to, bonus
payments, overtime payments, commissions, sales awards, back
pay including retroactive wage increases, and reimbursements for
nondeductible moving expenses that are paid for the same or a
different period, or without regard to a particular period.

begin insert

(B) For taxable years beginning on or after January 1, 2015,
“supplemental wages” does not include tips, which includes any
gratuity provided by a customer or client of the employer’s
business.

end insert

(c) (1) For stock options and bonus payments that constitute
wages paid on or after January 1, 2002, the rate of withholding
that may be applied to those stock options and bonus payments in
lieu of the wage withholding tables specified in subdivision (a)
shall, notwithstanding subdivision (b), be 9.3 percent.

(2) For stock options and bonus payments that constitute wages
paid on or after November 1, 2009, the rate of withholding shall
be 10.23 percent.

SEC. 7.  

Section 19183 of the Revenue and Taxation Code is
amended to read:

19183.  

(a) (1) A penalty shall be imposed for failure to file
correct information returns, as required by this part, and that
penalty shall be determined in accordance with Section 6721 of
the Internal Revenue Code.

(2) Section 6721(e) of the Internal Revenue Code is modified
to the extent that the reference to Section 6041A(b) of the Internal
Revenue Code shall not apply.

(b) (1) A penalty shall be imposed for failure to furnish correct
payee statements as required by this part, and that penalty shall be
determined in accordance with Section 6722 of the Internal
Revenue Code.

(2) Section 6722(c) of the Internal Revenue Code is modified
to the extent that the references to Sections 6041A(b) and 6041A(e)
of the Internal Revenue Code shall not apply.

(c) A penalty shall be imposed for failure to comply with other
information reporting requirements under this part, and that penalty
shall be determined in accordance with Section 6723 of the Internal
Revenue Code.

(d) (1) The provisions of Section 6724 of the Internal Revenue
Code relating to waiver, definitions, and special rules, shall apply,
except as otherwise provided.

(2) Section 6724(d)(1) of the Internal Revenue Code is modified
as follows:

(A) The following references are substituted:

(i) Subdivision (a) of Section 18640, in lieu of Section
6044(a)(1) of the Internal Revenue Code.

(ii) Subdivision (a) of Section 18644, in lieu of Section 6050A(a)
of the Internal Revenue Code.

(B) References to Sections 4093(c)(4), 4093(e), 4101(d),
6041(b), 6041A(b), 6045(d), 6051(d), and 6053(c)(1) of the Internal
Revenue Code shall not apply.

(C) The term “information return” shall also include both of the
following:

(i) The return required by paragraph (1) of subdivision (i) of
Section 18662.

(ii) The return required by subdivision (a) of Section 18631.7.

begin insert

(D) For taxable years beginning on or after January 1, 2015,
Section 6724(d)(1)(B)(xvi) of the Internal Revenue Code shall not
apply.

end insert

(3) Section 6724(d)(2) of the Internal Revenue Code is modified
as follows:

(A) The following references are substituted:

(i) Subdivision (b) of Section 18640, in lieu of Section 6044(e)
of the Internal Revenue Code.

(ii) Subdivision (b) of Section 18644, in lieu of Section
6050A(b) of the Internal Revenue Code.

(B) References to Sections 4093(c)(4)(B), 6031(b), 6037(b),
6041A(e), 6045(d), 6051(d), 6053(b), and 6053(c) of the Internal
Revenue Code shall not apply.

(C) The term “payee statement” shall also include the statement
required by paragraph (2) of subdivision (i) of Section 18662.

begin insert

(D) Section 6724(d)(2)(X) of the Internal Revenue Code shall
not apply.

end insert

(e) In the case of each failure to provide a written explanation
as required by Section 402(f) of the Internal Revenue Code, at the
time prescribed therefor, unless it is shown that the failure is due
to reasonable cause and not to willful neglect, there shall be paid,
on notice and demand of the Franchise Tax Board and in the same
manner as tax, by the person failing to provide that written
explanation, an amount equal to ten dollars ($10) for each failure,
but the total amount imposed on that person for all those failures
during any calendar year shall not exceed five thousand dollars
($5,000).

(f) Any penalty imposed by this part shall be paid on notice and
demand by the Franchise Tax Board and in the same manner as
tax.

SEC. 8.  

Section 927 of the Unemployment Insurance Code is
amended to read:

927.  

begin insert (a) end insert begin insert   end insert “Wages” also means all tips which are received while
performing services which constitute employment and included
in a written statement furnished to the employer pursuant to Section
6053(a) of the Internal Revenue Code.

begin insert (b) end insert begin insert   end insert The changes in law made in this section by Chapter 1461
of the Statutes of 1985 shall apply with respect to wages earned
on and after January 1, 1986, in conformity with the provisions of
federal law.

begin insert

(c) This section is repealed on January 1, 2015.

end insert

SEC. 9.  

Section 940 of the Unemployment Insurance Code is
amended to read:

940.  

begin insert (1) end insert begin insert   end insert For the purposes of this section, of Sections 977 and
977.5 to the extent specified by those sections, and of Sections
1026, 1088, 1280, 1281, 1282, 2652, 2654, 2655, and 2657,
“wages” means taxable wages as well as wages which would be
taxable except for the limitations on taxable wages provided under
Sections 930 and 985.

begin insert

(2) On and after January 1, 2015, “wages” shall not include
tips, which includes any gratuity provided by a customer or client
of the employer’s business.

end insert

SEC. 10.  

Section 987.7 of the Unemployment Insurance Code
is amended to read:

987.7.  

(a) If the worker contributions required in any one
month to be made because of the receipt of cash tips and cash
gratuities exceed the wages of the worker under the control of the
employer, the worker may furnish the employer, on or before the
10th day of the following month, or, if the amounts are estimated,
on or before the last day of the month following the calendar
quarter, an amount equal to the excess.

(b) If the worker contributions required by Section 984 with
respect to cash tips and cash gratuities exceed the amount of worker
contributions that can be collected by the employer from the wages
of the worker, the excess shall be paid by the worker, except as
provided by Section 1088.6. The worker shall pay the excess to
the department within 30 days from his or her receipt of the written
statement furnished by his or her employer pursuant to Section
1088.6. If the worker fails to pay the excess within the time
required by this subdivision, the director may make an assessment
for the excess and shall give the worker a written notice of the
assessment. Article 8 (commencing with Section 1126) with respect
to the assessment of contributions and Chapter 7 (commencing
with Section 1701) with respect to the collection of contributions
shall apply to the recovery of amounts under this subdivision.

(c) The director may offset amounts assessed pursuant to
subdivision (b) against any refund payable to the worker under
Section 1176.5 or against any amount of disability benefits to
which he or she may become entitled under Part 2 (commencing
with Section 2601) within any of the following periods:

(1) The current disability benefit period.

(2) One year from the beginning date of any disability benefit
period that begins during the three-year period next succeeding
the service of notice of the assessment.

begin insert

(d) This section is repealed on January 1,2015.

end insert

SEC. 11.  

Section 13009 of the Unemployment Insurance Code
is amended to read:

13009.  

“Wages” means all remuneration, other than fees paid
to a public official, for services performed by an employee for his
or her employer, including all remuneration paid to a nonresident
employee for services performed in this state, and the cash value
of all remuneration paid in any medium other than cash, except as
provided by this section. begin delete “Wages” includes tips received by an
employee in the course of his or her employment. The wages shall
be deemed to be paid at the time a written statement including tips
is furnished to the employer pursuant to Section 13055 or, if no
statement including those tips is so furnished, at the time received. end delete
“Wages” includes begin delete compensation, end delete begin insert compensation end insert that is deductible
under Section 162 of the Internal Revenue begin delete Code, end delete begin insert Code end insert paid to a
member of a limited liability company filing a federal corporate
income tax return.

“Wages” shall not include remuneration paid under any of the
following conditions:

(a) For agricultural labor, as defined in subdivision (g) of Section
3121 of the Internal Revenue Code.

(b) For domestic service in a private home, local college club,
or local chapter of a college fraternity or sorority.

(c) For service not in the course of the employer’s trade or
business performed in any calendar quarter by an employee, unless
the cash remuneration paid for that service is fifty dollars ($50) or
more and the service is performed by an individual who is regularly
employed by the employer to perform the service. For purposes
of this subdivision, an individual shall be deemed to be regularly
employed by an employer during a calendar quarter only if either
of the following conditions is met:

(1) On each of some 24 days during the quarter, the individual
performs for the employer for some portion of the day service not
in the course of the employer’s trade or business.

(2) The individual was regularly employed, as determined under
paragraph (1), by the employer in the performance of the service
during the preceding calendar quarter.

(d) For services by a citizen or resident of the United States for
a foreign government or an international organization.

(e) For services performed by a nonresident alien individual as
designated by regulations prescribed by the department.

(f) For services performed by a duly ordained, commissioned,
or licensed minister of a church in the exercise of his or her
ministry or by a member of a religious order in the exercise of
duties required by the order.

(g) (1) For services performed by an individual under the age
of 18 years in delivery or distribution of newspapers or shopping
news, not including delivery or distribution to any point for
subsequent delivery or distribution.

(2) For services performed by an individual in, and at the time
of, the sale of newspapers or magazines to ultimate consumers,
under an arrangement under which the newspapers or magazines
are to be sold by him or her at a fixed price, his or her
compensation being based on the retention of the excess of the
price over the amount at which the newspapers or magazines are
charged to him or her whether or not he or she is guaranteed a
minimum amount of compensation for the services, or is entitled
to be credited with the unsold newspapers or magazines turned
back.

(h) For services not in the course of the employer’s trade or
business, to the extent paid in any medium other than cash.

(i) To, or on behalf of, an employee or his or her beneficiary
under any of the following situations:

(1) From or to a trust which is exempt from tax under Section
17631 of the Revenue and Taxation Code at the time of payment,
unless the payment is made to an employee of the trust as
remuneration for services rendered as an employee and not as a
beneficiary of the trust.

(2) Under or to an annuity plan which, at the time of payment,
is a plan qualified pursuant to Chapter 5 (commencing with Section
17501) of Part 10 of Division 2 of the Revenue and Taxation Code.

(3) Under or to a bond purchase plan which, at the time of
payment, is a bond purchase plan qualified pursuant to Chapter 5
(commencing with Section 17501) of Part 10 of Division 2 of the
Revenue and Taxation Code.

(4) For a payment which qualifies for deduction by an employee
pursuant to Section 219 of the Internal Revenue Code if, at the
time of payment, it is reasonable to believe that the employee will
be entitled to a deduction under that section for payment.

(5) Under a cafeteria plan (within the meaning of Section 125
of the Internal Revenue Code).

(j) To a master, officer, or any other seaman who is a member
of a crew on a vessel engaged in foreign, coastwise, intercoastal,
interstate, or noncontiguous trade.

(k) Pursuant to any provision of law other than Section 5(c) or
6(l) of the Peace Corps Act, for service performed as a volunteer
or volunteer leader within the meaning of that act.

(l) In the form of group-term life insurance on the life of an
employee.

(m) To or on behalf of an employee, and to the extent that, at
the time of the payment of remuneration it is reasonable to believe
that a corresponding deduction is allowable for moving expenses
pursuant to Article 6 (commencing with Section 17201) of Chapter
3 of Part 10 of Division 2 of the Revenue and Taxation Code.

(n) (1) As tips in any begin delete medium other than cash. end delete begin insert medium. end insert

(2) As cash tips to an employee in any calendar month in the
course of his or her employment by an begin delete employer, unless the amount
of the cash tips is twenty dollars ($20) or more. end delete begin insert employer. end insert

begin insert

(3) As tips, including any gratuity provided by a customer or
client of the employer’s business.

end insert

(o) For service performed by an individual on a boat engaged
in catching fish or other forms of aquatic animal life under an
arrangement with the owner or operator of the boat pursuant to
which all of the following apply:

(1) The individual does not receive any cash remuneration, other
than as provided in paragraph (2).

(2) The individual receives a share of the boat’s (or the boats’
in the case of a fishing operation involving more than one boat)
catch of fish or other forms of aquatic animal life or a share of the
proceeds from the sale of the catch.

(3) The amount of the individual’s share depends on the amount
of the boat’s (or the boats’ in the case of a fishing operation
involving more than one boat) catch of fish or other forms of
aquatic animal life.

This subdivision shall apply only where the operating crew of
the boat (or each boat from which the individual receives a share
in the case of a fishing operation involving more than one boat) is
normally made up of fewer than 10 individuals.

(p) For any medical care reimbursement made to, or for the
benefit of, an employee under a self-insured medical reimbursement
plan pursuant to Section 105(h)(6) of the Internal Revenue Code.

(q) To, or on behalf of, an employee to the extent not includable
in gross income pursuant to Section 13006.

(r) For services to which Section 633 applies.

begin insert

(s) The changes made to this section by the act adding this
subdivision shall apply on and after January 1, 2015.

end insert

SEC. 12.  

Section 13009.5 of the Unemployment Insurance
Code is amended to read:

13009.5.  

(a) For purposes of the report required by subdivision
(a) of Section 1088 and the statement required by Section 13050,
“wages subject to personal income tax” means all of the following:

(1) Remuneration defined as wages by Section begin delete 13009, except
that in the case of tips received by an employee in the course of
his or her employment, the amounts shall include only those tips
included in statements furnished to the employer, pursuant to
Section 13055. end delete begin insert 13009. end insert

(2) Remuneration described in subdivisions (a), (b), (f), and (l)
of Section 13009, to the extent included in gross income.

(3) Payments made by a third party for sick pay as specified in
Section 931.5.

(A) Any employer who receives a report of wages from a
third-party payer as provided for in subdivisions (a) and (b) of
Section 931.5 shall report those wages to the department as
required under paragraph (2) of subdivision (a) of Section 1088.

(B) Any third-party payer described in Section 931.5 who fails
to report wages to an employer as provided for in that section shall
report those wages to the department as required under paragraph
(2) of subdivision (a) of Section 1088.

(b) (1) A person or entity shall not be required to register with
the Employment Development Department solely for the purpose
of reporting wages subject to personal income tax pursuant to
Section 1088 unless that registration is otherwise required by this
code.

(2) A person or entity shall not be required to withhold any tax
under Section 13020 for wages, as defined by this section, unless
that person or entity is required to withhold tax for those wages
as defined by Section 13009.

SEC. 13.  

Section 13027 of the Unemployment Insurance Code
is amended to read:

13027.  

begin insert (a) end insert begin insert   end insert In the case of tips which constitute wages,
subdivision (a) of Section 13020 shall be applicable only to such
tips as are included in a written statement furnished to the employer
pursuant to Section 13055, and only to the extent that the tax can
be deducted and withheld by the employer, at or after the time
such statement is so furnished and before the close of the calendar
year in which such statement is furnished, from such wages of the
employee (excluding tips, but including funds turned over by the
employee to the employer for the purpose of such deduction and
withholding) as are under the control of the employer. An employer
who is furnished by an employee a written statement of tips
(received in a calendar month) pursuant to Section 13055 to which
paragraph (2) of subdivision (n) of Section 13009 is applicable
may deduct and withhold the tax with respect to such tips from
any wages of the employee (excluding tips) under his or her
control, even though at the time such statement is furnished the
total amount of the tips included in statements furnished to the
employer as having been received by the employee in such calendar
month in the course of his or her employment by the employer is
less than twenty dollars ($20). Such tax shall not at any time be
deducted and withheld in any amount which exceeds the aggregate
of such wages and funds.

begin insert

(b) This section is repealed on January 1, 2015.

end insert

SEC. 14.  

Section 13055 of the Unemployment Insurance Code
is amended to read:

13055.  

begin insert (a) end insert begin insert   end insert Every employee who, in the course of his or her
employment by an employer, receives in any calendar month tips
which are wages shall report all such tips in one or more written
statements furnished to his or her employer on or before the 10th
day following such month. Such statements shall be furnished by
the employee under such authorized regulations, at such other
times before such 10th day, and in such form and manner as may
be prescribed by the department.

begin insert

(b) This section is repealed on January 1, 2015.

end insert