First 2020 Legislative Session Bill Review

The deadline to introduce new bills for consideration during the 2020 legislation session was February 21. Since then, CSEA and Jennifer Tannehill of Aaron Read & Associates have been carefully analyzing the 26 bills that are germane to tax professionals and tax administration policy. The analysis process involves talking through the implications of each bill and weighing them against our legislative position statements to see if we will take an oppose, support, or watch position. The following is an analysis of a number of key bills that we feel warrant more discussion, as well as our projected position. The full CSEA Bill List can be found here.

AB 1140 (Stone) Tax preparers: disclosure. CSEA Position: Oppose.

AB 1140 would require a tax preparer to provide a client with a specified written disclosure that includes the costs and fees charged by the tax preparer for usual and customary tax preparation, before preparing the client’s tax return. Although EAs are exempt from the requirements of AB 1140, CSEA is working with other tax preparer groups to coordinate opposition efforts because the bill would adversely affect CRTPs.

AB 2369 (Nazarian) Taxation: tax liability: collections. CSEA Position: Watch.

This bill would redefine tax liability to exclude interest, penalties, costs, or fees, except for a specified fee on limited liability companies, relating to the assessment of tax, any other amounts relating to the imposed liability, and any additions to tax. This bill would help avoid confusion regarding different collection periods by requiring that all interest, penalties, costs, or fees that accrue with a particular tax liability lapse at the same time as the related tax liability.

SB 956 (Jackson) Taxation: tax expenditures: California Tax Expenditure Review Board. CSEA Position: Watch.

This bill is a “good governance” measure and would establish new accountability methods for spending in the state. Senator Jackson is proposing creating the California Tax Expenditure Review Board, which would serve as an independent advisory body within state government, to comprehensively assess major tax expenditures and make recommendations to the Legislature. The bill would also require the Board to be composed of five members who would serve without compensation.

AB 2306 (Melendez) Corporation tax: minimum franchise tax. CSEA Position: Support.

 CSEA typically supports all bills that would repeal the minimum franchise tax, because it is our position that it is an unnecessary barrier for small businesses that want to do business in the state. AB 2306 would repeal the $800 minimum franchise tax for taxable years beginning on and after January 1, 2020.

Important Spot Bill

Spot bills are introduced prior to the deadline and with no substantive changes, but with the intention of being amended by the author later in the year.

AB 2257 (Gonzalez) Corporation taxes: annual tax: limited liability company. CSEA Position: Watch.

Assembly Member Gonzalez has publicly stated that she and the governor are considering a one-time tax relief that would help independent contractors who want to continue working for themselves acquire a legal status as a limited liability company, which would make it easier for them to maintain contracts and operate under the new law. She’s also asking the state to waive the $800 fee temporarily. This bill could potentially serve as a home for any bill language that would enact these proposals.