CSEA Builds Bridges to the State Capitol

Posted on May 13, 2015 · Posted in Breaking News

CSEA Members have made a substantial impact at the State Capitol as the New Year marked the beginning of the two-year California legislative session. On January 9, 2015, 55 CSEA Members walked the halls of the State Capitol, meeting with key staff from legislator’s offices, promoting the interests of EAs, and advocating on key tax policy issues. The issues raised during these visits generated a lot of interest and support and have resulted in four important bills authored and introduced for this legislative session, one of which is a CSEA-sponsored bill. We are currently monitoring more than 50 bills and have issued support positions on four bills to this point.

AB 99 (Perea, D-Fresno) – Personal Income Tax: Income Exclusion: Mortgage Debt Forgiveness

This bill would extend the tax relief on forgiveness of mort-gage debt by conforming California law to federal law. The Personal Income Tax Law provides for modified conformity to specified provisions of federal income tax law relating to the exclusion of the discharge of qualified principal residence indebtedness, if that debt is discharged after January 1, 2007, and before January 1, 2014. The federal Tax Increase Prevention Act of 2014 extended the provisions to debt that is discharged before January 1, 2015. This bill would conform to the federal extension. The bill was referred by the Assembly Committee on Revenue and Taxation to the Suspense File on March 23. CSEA Position: SUPPORT

AB 557 (Irwin, D-Thousand Oaks) – Nonprofit Corporations: Abatement: Dissolution: Surrender

This bill would streamline the dissolution process for nonprofit corporations. There is a significant problem with nonprofit corporations filing incorporation papers with the Secretary of State (SOS), and then failing to launch or continue operations. This leads to the entity failing to remain up-to-date on filing and tax requirements. The SOS and the Franchise Tax Board (FTB) estimate that there are close to 60,000 non-profits currently in their systems that would be eligible for the administrative dissolution process established under AB 557. This bill creates a streamlined administrative dissolution process for nonprofits that have been suspended for at least 48 continuous months after proper notice has been served. This new process will allow FTB and SOS to dissolved non-profits that have been sitting inactive on the “books.” The bill was heard by the Assembly Committee on Banking and Finance on April 14 and passed 11-0. It was then referred to the Assembly Committee on Revenue and Taxation. CSEA Position: SUPPORT

AB 871 (Brown, D-San Bernardino) – Statement of Information Filing Date Proposal

This bill would change the Statement of Information (SOI) filing date from the date an entity was formed to being based on the entity’s type. For example, corporations would file by March 15, limited liability companies by April 15 and nonprofits by May 15. By streamlining the SOI filing dates there will be less confusion as to when the SOI is due. Standardizing the due dates will increase filing compliance and prevent businesses from becoming suspended and suffering the consequences of a suspended status. CSEA Member Services Director Cara Watson and lobbyist Jennifer Tannehill accompanied CSEA Legislative Affairs Committee Vice Chair Joyce Cheng, EA to the Assembly Committee on Banking and Finance hearing on April 20 to provide testimony as sponsor of the bill. The bill passed 11-0 and will move on to the Assembly Committee on Appropriations. CSEA Position: SPONSOR

SB 35 (Wolk, D-Davis) – Income and Corporation Taxes: Deductions: Disaster Relief: Counties of Napa, Solano, and Sonoma

Many taxpayers that suffered from the August 2014 Napa earthquake would like to apply losses to their tax returns filed the previous year, resulting in a tax refund which can immediately be used to rebuild and recover from the earthquake. The Legislature has enacted identical treatment for almost every significant disaster that has occurred in California for the last 25 years. This bill would, for taxable years beginning on or after January 1, 2014, extend the provisions relating to disaster losses to losses in any city, county, or city and county that is proclaimed by the Governor to be in a state of emergency and would extend the time during which a taxpayer may claim the deduction. CSEA Position: SUPPORT

SB 8 (Hertzberg, D-Van Nuys) – Taxation: Tax on Specified Services – The Upward Mobility Act

We also saw a bill introduced very early in the season proposing to expand the state’s retail sales tax to services. The bill author maintains that the bill would enhance the state’s business climate, incentivize entrepreneurship and business creation by evaluating the corporate tax, and would examine the impacts of a lower and simpler personal income tax. The State Board of Equalization issued an estimation of potential revenue to be derived from taxation of currently non-taxable services, determining that if the tax on services in all sectors was levied at a rate of 8.4 percent, this would result in a $122.63 billion revenue impact. CSEA joined 48 other associations and industry representatives in a coalition opposing the bill. CSEA Position: OPPOSE

CSEA will continue to keep you updated on the progress of these bills. You can also view the CSEA legislative bill list, history, analysis and more here on the CSEA website.