Source: http://leginfo.ca.gov/pub/15-16/bill/asm/ab_0151-0200/ab_154_bill_20150528_amended_asm_v96.htm
Timestamp: 2020-04-05 01:15:40
Document Index: 798233174

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An act to amend Sections 17024.5, 17053.46, 17053.47, 17053.74, 17088, 17144, 17215, 18155, 19141.5, 19164, 19167, 19183, 19772, 23622.7, 23622.8, 23646, 23701i, 24307, 24427, 24439, 24870, 24871, and 24990.5 of, to add Sections 17240, 17241, 17323, 19131.5, 24345.5, 24454, and 24459 to, and to repeal Sections 17131.7, 17131.12, 17131.14, 17134.1, 17201.1, 17280.1, 17322.1, 24452.1, and 24871.1 of, the Revenue and Taxation Code, relating to taxation,begin insert and declaring the urgency thereof,end insert to take effectbegin delete immediately, tax levy.end deletebegin insert immediately.end insert
This bill would change the specified date of those referenced Internal Revenue Code sections to January 1, 2015, for taxable years beginning on or after January 1, 2015, and thereby would make numerous substantive changes to both the Personal Income Tax Law and the Corporation Tax Law with respect to those areas of preexisting conformity that are subject to changes under federal laws enacted after January 1, 2009, and that have not been, or are not being, excepted or modified. This bill would make certain other changes in federal income tax laws applicable, with specified exceptions and modifications, and make specified supplemental, technical, or clarifying changes for purposes of the Personal Income Tax Law or the Corporation Tax Law, or both, or the administration of those laws, with respect to, among other things, tax credits, tax on specified distributions from Archer MSAs, income exclusions, reporting requirements, qualified tuition program investment direction, disclosure of information with respect to foreign financial assets, redemptions by foreign subsidiaries, listed property, extension of time for the payment of taxes, deductions for annual fees on branded prescription pharmaceutical manufacturers and importers, and penalty amounts related to the failure to file specified returns or include specified information on returns.
5or “Internal Revenue Code of 1986,” for purposes of this part,
6mean Title 26 of the United States Code, including all amendments
7thereto as enacted on the specified date for the applicable taxable
8year as follows:
P4 23
24(2) (A) Unless otherwise specifically provided, for federal laws
25enacted on or after January 1, 1987, and on or before the specified
26date for the taxable year, uncodified provisions that relate to
27provisions of the Internal Revenue Code that are incorporated for
28purposes of this part shall be applicable to the same taxable years
29as the incorporated provisions.
30(B) In the case where Section 901 of the Economic Growth and
31Tax Relief Act of 2001 (Public Law 107-16) applies to any
32provision of the Internal Revenue Code that is incorporated for
33purposes of this part, Section 901 of the Economic Growth and
34Tax Relief Act of 2001 shall apply for purposes of this part in the
35same manner and to the same taxable years as it applies for federal
36income tax purposes.
37(3) Subtitle G (Tax Technical Corrections) and Part I of Subtitle
38H (Repeal of Expired or Obsolete Provisions) of the Revenue
39Reconciliation Act of 1990 (Public Law 101-508) modified
40numerous provisions of the Internal Revenue Code and provisions
P5 1of prior federal acts, some of which are incorporated by reference
2into this part. Unless otherwise provided, the provisions described
3in the preceding sentence, to the extent that they modify provisions
4that are incorporated into this part, are declaratory of existing law
5and shall be applied in the same manner and for the same periods
6as specified in the Revenue Reconciliation Act of 1990.
7(b) Unless otherwise specifically provided, when applying any
8provision of the Internal Revenue Code for purposes of this part,
9a reference to any of the following is not applicable for purposes
10of this part:
11(1) Except as provided in Chapter 4.5 (commencing with Section
1223800) of Part 11 of Division 2, an electing small business
13corporation, as defined in Section 1361(b) of the Internal Revenue
15(2) Domestic international sales corporations (DISC), as defined
16in Section 992(a) of the Internal Revenue Code.
17(3) A personal holding company, as defined in Section 542 of
18the Internal Revenue Code.
19(4) A foreign personal holding company, as defined in Section
20552 of the Internal Revenue Code.
21(5) A foreign investment company, as defined in Section 1246(b)
22of the Internal Revenue Code.
23(6) A foreign trust, as defined in Section 679 of the Internal
25(7) Foreign income taxes and foreign income tax credits.
26(8) Section 911 of the Internal Revenue Code, relating to citizens
27or residents of the United States living abroad.
28(9) A foreign corporation, except that Section 367 of the Internal
29Revenue Code shall be applicable.
30(10) Federal tax credits and carryovers of federal tax credits.
31(11) Nonresident aliens.
32(12) Deduction for personal exemptions, as provided in Section
33151 of the Internal Revenue Code.
34(13) The tax on generation-skipping transfers imposed by
35Section 2601 of the Internal Revenue Code.
36(14) The tax, relating to estates, imposed by Section 2001 or
372101 of the Internal Revenue Code.
38(c) (1) The provisions contained in Sections 41 to 44, inclusive,
39and Section 172 of the Tax Reform Act of 1984 (Public Law
P6 198-369), relating to treatment of debt instruments, is not applicable
2for taxable years beginning before January 1, 1987.
3(2) The provisions contained in Public Law 99-121, relating to
4the treatment of debt instruments, is not applicable for taxable
5years beginning before January 1, 1987.
6(3) For each taxable year beginning on or after January 1, 1987,
7the provisions referred to by paragraphs (1) and (2) shall be
8applicable for purposes of this part in the same manner and with
9respect to the same obligations as the federal provisions, except
10as otherwise provided in this part.
11(d) When applying the Internal Revenue Code for purposes of
12this part, regulations promulgated in final form or issued as
13temporary regulations by “the secretary” shall be applicable as
14regulations under this part to the extent that they do not conflict
15with this part or with regulations issued by the Franchise Tax
16Board.
17(e) Whenever this part allows a taxpayer to make an election,
18the following rules shall apply:
19(1) A proper election filed with the Internal Revenue Service
20in accordance with the Internal Revenue Code or regulations issued
21by “the secretary” shall be deemed to be a proper election for
22purposes of this part, unless otherwise provided in this part or in
23regulations issued by the Franchise Tax Board.
24(2) A copy of that election shall be furnished to the Franchise
25Tax Board upon request.
26(3) (A) Except as provided in subparagraph (B), in order to
27obtain treatment other than that elected for federal purposes, a
28separate election shall be filed at the time and in the manner
29required by the Franchise Tax Board.
30(B) (i) If a taxpayer makes a proper election for federal income
31tax purposes prior to the time that taxpayer becomes subject to the
32tax imposed under this part or Part 11 (commencing with Section
3323001), that taxpayer is deemed to have made the same election
34for purposes of the tax imposed by this part, Part 10.2 (commencing
35with Section 18401), and Part 11 (commencing with Section
3623001), as applicable, and that taxpayer may not make a separate
37election for California tax purposes unless that separate election
38is expressly authorized by this part, Part 10.2 (commencing with
39Section 18401), or Part 11 (commencing with Section 23001), or
40by regulations issued by the Franchise Tax Board.
P7 1(ii) If a taxpayer has not made a proper election for federal
2income tax purposes prior to the time that taxpayer becomes subject
3to tax under this part or Part 11 (commencing with Section 23001),
4that taxpayer may not make a separate California election for
5purposes of this part, Part 10.2 (commencing with Section 18401),
6or Part 11 (commencing with Section 23001), unless that separate
7election is expressly authorized by this part, Part 10.2 (commencing
8with Section 18401), or Part 11 (commencing with Section 23001),
9or by regulations issued by the Franchise Tax Board.
10(iii) This subparagraph applies only to the extent that the
11provisions of the Internal Revenue Code or the regulation issued
12by “the secretary” authorizing an election for federal income tax
13purposes apply for purposes of this part, Part 10.2 (commencing
14with Section 18401) or Part 11 (commencing with Section 23001).
15(f) Whenever this part allows or requires a taxpayer to file an
16application or seek consent, the rules set forth in subdivision (e)
17shall be applicable with respect to that application or consent.
18(g) When applying the Internal Revenue Code for purposes of
19determining the statute of limitations under this part, any reference
20to a period of three years shall be modified to read four years for
21purposes of this part.
22(h) When applying, for purposes of this part, any section of the
23Internal Revenue Code or any applicable regulation thereunder,
24all of the following shall apply:
25(1) References to “adjusted gross income” shall mean the
26amount computed in accordance with Section 17072, except as
27provided in paragraph (2).
28(2) (A) Except as provided in subparagraph (B), references to
29“adjusted gross income” for purposes of computing limitations
30based upon adjusted gross income, shall mean the amount required
31to be shown as adjusted gross income on the federal tax return for
32the same taxable year.
33(B) In the case of registered domestic partners and former
34registered domestic partners, adjusted gross income, for the
35purposes of computing limitations based upon adjusted gross
36income, shall mean the adjusted gross income on a federal tax
37 return computed as if the registered domestic partner or former
38registered domestic partner was treated as a spouse or former
39spouse, respectively, for federal income tax purposes, and used
P8 1the same filing status that was used on the state tax return for the
2same taxable year.
3(3) Any reference to “subtitle” or “chapter” shall mean this part.
4(4) The provisions of Section 7806 of the Internal Revenue
5Code, relating to construction of title, shall apply.
6(5) Any provision of the Internal Revenue Code that becomes
7operative on or after the specified date for that taxable year shall
8become operative on the same date for purposes of this part.
9(6) Any provision of the Internal Revenue Code that becomes
10inoperative on or after the specified date for that taxable year shall
11become inoperative on the same date for purposes of this part.
12(7) Due account shall be made for differences in federal and
13state terminology, effective dates, substitution of “Franchise Tax
14Board” for “secretary” when appropriate, and other obvious
15differences.
16(8) Except as otherwise provided, any reference to Section 501
17of the Internal Revenue Code shall be interpreted to also refer to
18Section 23701.
19(i) Any reference to a specific provision of the Internal Revenue
20Code shall include modifications of that provision, if any, in this
21part.
Section 17053.46 of the Revenue and Taxation Code
25January 1, 1995, there shall be allowed as a credit against the “net
26tax” (as defined in Section 17039) to a qualified taxpayer for hiring
27a qualified disadvantaged individual or a qualified displaced
28employee during the taxable year for employment in the LAMBRA.
29The credit shall be equal to the sum of each of the following:
30(1) Fifty percent of the qualified wages in the first year of
32(2) Forty percent of the qualified wages in the second year of
34(3) Thirty percent of the qualified wages in the third year of
36(4) Twenty percent of the qualified wages in the fourth year of
38(5) Ten percent of the qualified wages in the fifth year of
40(b) For purposes of this section:
P9 1(1) “Qualified wages” means:
2(A) That portion of wages paid or incurred by the employer
3during the taxable year to qualified disadvantaged individuals or
4qualified displaced employees that does not exceed 150 percent
5of the minimum wage.
6(B) The total amount of qualified wages which may be taken
7into account for purposes of claiming the credit allowed under this
8section shall not exceed two million dollars ($2,000,000) per
9taxable year.
10(C) Wages received during the 60-month period beginning with
11the first day the individual commences employment with the
12taxpayer. Reemployment in connection with any increase, including
13a regularly occurring seasonal increase, in the trade or business
14operations of the qualified taxpayer does not constitute
15commencement of employment for purposes of this section.
16(D) Qualified wages do not include any wages paid or incurred
17by the qualified taxpayer on or after the LAMBRA expiration date.
18However, wages paid or incurred with respect to qualified
19disadvantaged individuals or qualified displaced employees who
20are employed by the qualified taxpayer within the LAMBRA within
21the 60-month period prior to the LAMBRA expiration date shall
22continue to qualify for the credit under this section after the
23LAMBRA expiration date, in accordance with all provisions of
24this section applied as if the LAMBRA designation were still in
25existence and binding.
26(2) “Minimum wage” means the wage established by the
27Industrial Welfare Commission as provided for in Chapter 1
28(commencing with Section 1171) of Part 4 of Division 2 of the
29Labor Code.
30(3) “LAMBRA” means a local agency military base recovery
31area designated in accordance with Section 7114 of the Government
33(4) “Qualified disadvantaged individual” means an individual
34who satisfies all of the following requirements:
35(A) (i) At least 90 percent of whose services for the taxpayer
36during the taxable year are directly related to the conduct of the
37taxpayer’s trade or business located in a LAMBRA.
38(ii) Who performs at least 50 percent of his or her services for
39the taxpayer during the taxable year in the LAMBRA.
P10 1(B) Who is hired by the employer after the designation of the
2area as a LAMBRA in which the individual’s services were
3primarily performed.
4(C) Who is any of the following immediately preceding the
5individual’s commencement of employment with the taxpayer:
6(i) An individual who has been determined eligible for services
7under the federal Job Training Partnership Act (29 U.S.C. Sec.
81501 et seq.).
9(ii) Any voluntary or mandatory registrant under the Greater
10Avenues for Independence Act of 1985 as provided pursuant to
11Article 3.2 (commencing with Section 11320) of Chapter 2 of Part
123 of Division 9 of the Welfare and Institutions Code.
13(iii) An economically disadvantaged individual age 16 years or
14older.
15(iv) A dislocated worker who meets any of the following
16conditions:
17(I) Has been terminated or laid off or who has received a notice
18of termination or layoff from employment, is eligible for or has
19exhausted entitlement to unemployment insurance benefits, and
20is unlikely to return to his or her previous industry or occupation.
21(II) Has been terminated or has received a notice of termination
22of employment as a result of any permanent closure or any
23substantial layoff at a plant, facility, or enterprise, including an
24individual who has not received written notification but whose
25employer has made a public announcement of the closure or layoff.
26(III) Is long-term unemployed and has limited opportunities for
27employment or reemployment in the same or a similar occupation
28in the area in which the individual resides, including an individual
2955 years of age or older who may have substantial barriers to
30employment by reason of age.
31(IV) Was self-employed (including farmers and ranchers) and
32is unemployed as a result of general economic conditions in the
33community in which he or she resides or because of natural
34disasters.
35(V) Was a civilian employee of the Department of Defense
36employed at a military installation being closed or realigned under
37the Defense Base Closure and Realignment Act of 1990.
38(VI) Was an active member of the Armed Forces or National
39Guard as of September 30, 1990, and was either involuntarily
40separated or separated pursuant to a special benefits program.
P11 1(VII) Experiences chronic seasonal unemployment and
2underemployment in the agriculture industry, aggravated by
3continual advancements in technology and mechanization.
4(VIII) Has been terminated or laid off or has received a notice
5of termination or layoff as a consequence of compliance with the
6Clean Air Act.
7(v) An individual who is enrolled in or has completed a state
8rehabilitation plan or is a service-connected disabled veteran,
9veteran of the Vietnam era, or veteran who is recently separated
10from military service.
11(vi) An ex-offender. An individual shall be treated as convicted
12if he or she was placed on probation by a state court without a
13finding of guilty.
14(vii) A recipient of:
15(I) Federal Supplemental Security Income benefits.
16(II) Aid to Families with Dependent Children.
17(III) CalFresh benefits.
18(IV) State and local general assistance.
19(viii) Is a member of a federally recognized Indian tribe, band,
20or other group of Native American descent.
21(5) “Qualified taxpayer” means a taxpayer or partnership that
22conducts a trade or business within a LAMBRA and, for the first
23two taxable years, has a net increase in jobs (defined as 2,000 paid
24hours per employee per year) of one or more employees in the
25LAMBRA.
26(A) The net increase in the number of jobs shall be determined
27by subtracting the total number of full-time employees (defined
28as 2,000 paid hours per employee per year) the taxpayer employed
29in this state in the taxable year prior to commencing business
30operations in the LAMBRA from the total number of full-time
31employees the taxpayer employed in this state during the second
32taxable year after commencing business operations in the
33LAMBRA. For taxpayers who commence doing business in this
34state with their LAMBRA business operation, the number of
35employees for the taxable year prior to commencing business
36operations in the LAMBRA shall be zero. If the taxpayer has a net
37increase in jobs in the state, the credit shall be allowed only if one
38or more full-time employees is employed within the LAMBRA.
39(B) The total number of employees employed in the LAMBRA
40shall equal the sum of both of the following:
P12 1(i) The total number of hours worked in the LAMBRA for the
2taxpayer by employees (not to exceed 2,000 hours per employee)
3who are paid an hourly wage divided by 2,000.
4(ii) The total number of months worked in the LAMBRA for
5the taxpayer by employees who are salaried employees divided
6by 12.
7(C) In the case of a taxpayer who first commences doing
8business in the LAMBRA during the taxable year, for purposes of
9clauses (i) and (ii), respectively, of subparagraph (B), the divisors
10“2,000” and “12” shall be multiplied by a fraction, the numerator
11of which is the number of months of the taxable year that the
12taxpayer was doing business in the LAMBRA and the denominator
13of which is 12.
14(6) “Qualified displaced employee” means an individual who
15 satisfies all of the following requirements:
16(A) Any civilian or military employee of a base or former base
17who has been displaced as a result of a federal base closure act.
18(B) (i) At least 90 percent of whose services for the taxpayer
19during the taxable year are directly related to the conduct of the
20taxpayer’s trade or business located in a LAMBRA.
21(ii) Who performs at least 50 percent of his or her services for
22the taxpayer during the taxable year in a LAMBRA.
23(C) Who is hired by the employer after the designation of the
24area in which services were performed as a LAMBRA.
25(7) “Seasonal employment” means employment by a qualified
26taxpayer that has regular and predictable substantial reductions in
27trade or business operations.
28(8) “LAMBRA expiration date” means the date the LAMBRA
29designation expires, is no longer binding, becomes inoperative, or
30is repealed.
31(c) For qualified disadvantaged individuals or qualified displaced
32employees hired on or after January 1, 2001, the taxpayer shall do
34(1) Obtain from the Employment Development Department, as
35permitted by federal law, the local county or city Job Training
36Partnership Act administrative entity, the local county GAIN office
37or social services agency, or the local government administering
38the LAMBRA, a certification that provides that a qualified
39disadvantaged individual or qualified displaced employee meets
40the eligibility requirements specified in subparagraph (C) of
P13 1paragraph (4) of subdivision (b) or subparagraph (A) of paragraph
2(6) of subdivision (b). The Employment Development Department
3may provide preliminary screening and referral to a certifying
4agency. The Department of Housing and Community Development
5shall develop regulations governing the issuance of certificates
6pursuant to Section 7114.2 of the Government Code and shall
7develop forms for this purpose.
8(2) Retain a copy of the certification and provide it upon request
9to the Franchise Tax Board.
10(d) (1) For purposes of this section, both of the following apply:
11(A) All employees of trades or businesses that are under
12common control shall be treated as employed by a single employer.
13(B) The credit (if any) allowable by this section with respect to
14each trade or business shall be determined by reference to its
15proportionate share of the qualified wages giving rise to the credit.
16The regulations prescribed under this paragraph shall be based
17on principles similar to the principles that apply in the case of
18controlled groups of corporations as specified in subdivision (e)
19of Section 23622.
20(2) If an employer acquires the major portion of a trade or
21business of another employer (hereinafter in this paragraph referred
22to as the “predecessor”) or the major portion of a separate unit of
23a trade or business of a predecessor, then, for purposes of applying
24this section (other than subdivision (d)) for any calendar year
25ending after that acquisition, the employment relationship between
26an employee and an employer shall not be treated as terminated if
27the employee continues to be employed in that trade or business.
28(e) (1) (A) If the employment, other than seasonal employment,
29of any employee, with respect to whom qualified wages are taken
30into account under subdivision (a), is terminated by the taxpayer
31at any time during the first 270 days of that employment (whether
32or not consecutive) or before the close of the 270th calendar day
33after the day in which that employee completes 90 days of
34employment with the taxpayer, the tax imposed by this part for
35the taxable year in which that employment is terminated shall be
36increased by an amount (determined under those regulations) equal
37to the credit allowed under subdivision (a) for that taxable year
38and all prior taxable years attributable to qualified wages paid or
39incurred with respect to that employee.
P14 1(B) If the seasonal employment of any qualified disadvantaged
2individual, with respect to whom qualified wages are taken into
3account under subdivision (a), is not continued by the qualified
4taxpayer for a period of 270 days of employment during the
560-month period beginning with the day the qualified
6disadvantaged individual commences seasonal employment with
7the qualified taxpayer, the tax imposed by this part, for the taxable
8year that includes the 60th month following the month in which
9the qualified disadvantaged individual commences seasonal
10employment with the qualified taxpayer, shall be increased by an
11amount equal to the credit allowed under subdivision (a) for that
12taxable year and all prior taxable years attributable to qualified
13wages paid or incurred with respect to that qualified disadvantaged
14individual.
15(2) (A) Subparagraph (A) of paragraph (1) shall not apply to
16any of the following:
17(i) A termination of employment of an employee who voluntarily
18leaves the employment of the taxpayer.
19(ii) A termination of employment of an individual who, before
20the close of the period referred to in subparagraph (A) of paragraph
21(1), becomes disabled to perform the services of that employment,
22unless that disability is removed before the close of that period
23and the taxpayer fails to offer reemployment to that individual.
24(iii) A termination of employment of an individual, if it is
25determined that the termination was due to the misconduct (as
26defined in Sections 1256-30 to 1256-43, inclusive, of Title 22 of
27the California Code of Regulations) of that individual.
28(iv) A termination of employment of an individual due to a
29substantial reduction in the trade or business operations of the
31(v) A termination of employment of an individual, if that
32individual is replaced by other qualified employees so as to create
33a net increase in both the number of employees and the hours of
35(B) Subparagraph (B) of paragraph (1) shall not apply to any
37(i) A failure to continue the seasonal employment of a qualified
38disadvantaged individual who voluntarily fails to return to the
39seasonal employment of the qualified taxpayer.
P15 1(ii) A failure to continue the seasonal employment of a qualified
2disadvantaged individual who, before the close of the period
3referred to in subparagraph (B) of paragraph (1), becomes disabled
4and unable to perform the services of that seasonal employment,
5unless that disability is removed before the close of that period
6and the qualified taxpayer fails to offer seasonal employment to
7that individual.
8(iii) A failure to continue the seasonal employment of a qualified
9disadvantaged individual, if it is determined that the failure to
10continue the seasonal employment was due to the misconduct (as
11defined in Sections 1256-30 to 1256-43, inclusive, of Title 22 of
12the California Code of Regulations) of that qualified disadvantaged
13individual.
14(iv) A failure to continue seasonal employment of a qualified
15disadvantaged individual due to a substantial reduction in the
16regular seasonal trade or business operations of the qualified
18(v) A failure to continue the seasonal employment of a qualified
19disadvantaged individual, if that individual is replaced by other
20qualified displaced employees so as to create a net increase in both
21the number of seasonal employees and the hours of seasonal
23(C) For purposes of paragraph (1), the employment relationship
24between the taxpayer and an employee shall not be treated as
25terminated by reason of a mere change in the form of conducting
26the trade or business of the taxpayer, if the employee continues to
27be employed in that trade or business and the taxpayer retains a
28substantial interest in that trade or business.
29(3) Any increase in tax under paragraph (1) shall not be treated
30as tax imposed by this part for purposes of determining the amount
31of any credit allowable under this part.
32(4) At the close of the second taxable year, if the taxpayer has
33not increased the number of its employees as determined by
34paragraph (5) of subdivision (b), then the amount of the credit
35previously claimed shall be added to the taxpayer’s net tax for the
36taxpayer’s second taxable year.
37(f) In the case of an estate or trust, both of the following apply:
38(1) The qualified wages for any taxable year shall be apportioned
39between the estate or trust and the beneficiaries on the basis of the
40income of the estate or trust allocable to each.
P16 1(2) Any beneficiary to whom any qualified wages have been
2apportioned under paragraph (1) shall be treated (for purposes of
3this part) as the employer with respect to those wages.
4(g) The credit shall be reduced by the credit allowed under
5Section 17053.7. The credit shall also be reduced by the federal
6credit allowed under Section 51 of the Internal Revenue Code, as
7amended by the Emergency Economic Stabilization Act of 2008
8(Public Law 110-343).
9In addition, any deduction otherwise allowed under this part for
10the wages or salaries paid or incurred by the taxpayer upon which
11the credit is based shall be reduced by the amount of the credit,
12prior to any reduction required by subdivision (h) or (i).
13(h) In the case where the credit otherwise allowed under this
14section exceeds the “net tax” for the taxable year, that portion of
15the credit that exceeds the “net tax” may be carried over and added
16to the credit, if any, in the succeeding 10 taxable years, if necessary,
17until the credit is exhausted. The credit shall be applied first to the
18earliest taxable years possible.
19(i) (1) The amount of credit otherwise allowed under this section
20and Section 17053.45, including prior year credit carryovers, that
21may reduce the “net tax” for the taxable year shall not exceed the
22amount of tax that would be imposed on the taxpayer’s business
23income attributed to a LAMBRA determined as if that attributed
24income represented all of the net income of the taxpayer subject
25to tax under this part.
26(2) Attributable income shall be that portion of the taxpayer’s
27California source business income that is apportioned to the
28LAMBRA. For that purpose, the taxpayer’s business income that
29is attributable to sources in this state first shall be determined in
30accordance with Chapter 17 (commencing with Section 25101) of
31Part 11. That business income shall be further apportioned to the
32LAMBRA in accordance with Article 2 (commencing with Section
3325120) of Chapter 17 of Part 11, modified for purposes of this
34section in accordance with paragraph (3).
35(3) Income shall be apportioned to a LAMBRA by multiplying
36the total California business income of the taxpayer by a fraction,
37the numerator of which is the property factor plus the payroll factor,
38and the denominator of which is two. For purposes of this
39paragraph:
P17 1(A) The property factor is a fraction, the numerator of which is
2the average value of the taxpayer’s real and tangible personal
3property owned or rented and used in the LAMBRA during the
4taxable year, and the denominator of which is the average value
5of all the taxpayer’s real and tangible personal property owned or
6rented and used in this state during the taxable year.
7(B) The payroll factor is a fraction, the numerator of which is
8the total amount paid by the taxpayer in the LAMBRA during the
9taxable year for compensation, and the denominator of which is
10the total compensation paid by the taxpayer in this state during the
12(4) The portion of any credit remaining, if any, after application
13of this subdivision, shall be carried over to succeeding taxable
14years, if necessary, until the credit is exhausted, as if it were an
15amount exceeding the “net tax” for the taxable year, as provided
16in subdivision (h). However, the portion of any credit remaining
17for carryover to taxable years beginning on or after January 1,
182014, if any, after application of this subdivision, shall be carried
19over only to the succeeding 10 taxable years if necessary, until the
20credit is exhausted, as if it were an amount exceeding the “net tax”
21for the taxable year, as provided in subdivision (h).
22(j) If the taxpayer is allowed a credit pursuant to this section for
23qualified wages paid or incurred, only one credit shall be allowed
24to the taxpayer under this part with respect to any wage consisting
25in whole or in part of those qualified wages.
26(k) (1) Except as provided in paragraph (2), this section shall
27cease to be operative on January 1, 2014, and shall be repealed on
28December 1, 2019. A credit shall not be allowed under this section
29with respect to an employee who first commences employment
30with a qualified taxpayer on or after January 1, 2014.
31(2) This section shall continue to apply with respect to qualified
32disadvantaged individuals or qualified displaced employees who
33are employed by the qualified taxpayer within the LAMBRA within
34the 60-month period immediately preceding January 1, 2014, and
35qualified wages paid or incurred with respect to those qualified
36disadvantaged individuals or qualified displaced employees shall
37continue to qualify for the credit under this section for taxable
38years beginning on or after January 1, 2014, in accordance with
39this section, as amended by the act adding this subdivision.
Section 17053.47 of the Revenue and Taxation Code
4January 1, 1998, there shall be allowed a credit against the “net
5tax” (as defined in Section 17039) to a qualified taxpayer for hiring
6a qualified disadvantaged individual during the taxable year for
7employment in the manufacturing enhancement area. The credit
8shall be equal to the sum of each of the following:
9(1) Fifty percent of the qualified wages in the first year of
11(2) Forty percent of the qualified wages in the second year of
12employment.
13(3) Thirty percent of the qualified wages in the third year of
14employment.
15(4) Twenty percent of the qualified wages in the fourth year of
17(5) Ten percent of the qualified wages in the fifth year of
19(b) For purposes of this section:
20(1) “Qualified wages” means:
21(A) That portion of wages paid or incurred by the qualified
22taxpayer during the taxable year to qualified disadvantaged
23individuals that does not exceed 150 percent of the minimum wage.
24(B) The total amount of qualified wages which may be taken
25into account for purposes of claiming the credit allowed under this
26section shall not exceed two million dollars ($2,000,000) per
27taxable year.
28(C) Wages received during the 60-month period beginning with
29the first day the qualified disadvantaged individual commences
30employment with the qualified taxpayer. Reemployment in
31connection with any increase, including a regularly occurring
32seasonal increase, in the trade or business operations of the taxpayer
33does not constitute commencement of employment for purposes
35(D) Qualified wages do not include any wages paid or incurred
36by the qualified taxpayer on or after the manufacturing
37enhancement area expiration date. However, wages paid or incurred
38with respect to qualified employees who are employed by the
39qualified taxpayer within the manufacturing enhancement area
40 within the 60-month period prior to the manufacturing enhancement
P19 1area expiration date shall continue to qualify for the credit under
2this section after the manufacturing enhancement area expiration
3date, in accordance with all provisions of this section applied as
4if the manufacturing enhancement area designation were still in
5existence and binding.
6(2) “Minimum wage” means the wage established by the
7Industrial Welfare Commission as provided for in Chapter 1
8(commencing with Section 1171) of Part 4 of Division 2 of the
9Labor Code.
10(3) “Manufacturing enhancement area” means an area designated
11pursuant to Section 7073.8 of the Government Code according to
12the procedures of Chapter 12.8 (commencing with Section 7070)
13of Division 7 of Title 1 of the Government Code.
14(4) “Manufacturing enhancement area expiration date” means
15the date the manufacturing enhancement area designation expires,
16is no longer binding, becomes inoperative, or is repealed.
17(5) “Qualified disadvantaged individual” means an individual
18who satisfies all of the following requirements:
19(A) (i) At least 90 percent of whose services for the qualified
20taxpayer during the taxable year are directly related to the conduct
21of the qualified taxpayer’s trade or business located in a
22manufacturing enhancement area.
23(ii) Who performs at least 50 percent of his or her services for
24the qualified taxpayer during the taxable year in the manufacturing
25enhancement area.
26(B) Who is hired by the qualified taxpayer after the designation
27of the area as a manufacturing enhancement area in which the
28individual’s services were primarily performed.
29(C) Who is any of the following immediately preceding the
30individual’s commencement of employment with the qualified
31taxpayer:
32(i) An individual who has been determined eligible for services
33under the federal Job Training Partnership Act (29 U.S.C. Sec.
341501 et seq.), or its successor.
35(ii) Any voluntary or mandatory registrant under the Greater
36Avenues for Independence Act of 1985, or its successor, as
37provided pursuant to Article 3.2 (commencing with Section 11320)
38of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions
P20 1(iii) Any individual who has been certified eligible by the
2Employment Development Department under the federal Targeted
3Jobs Tax Credit Program, or its successor, whether or not this
4program is in effect.
5(6) “Qualified taxpayer” means any taxpayer engaged in a trade
6or business within a manufacturing enhancement area designated
7pursuant to Section 7073.8 of the Government Code and who meets
8all of the following requirements:
9(A) Is engaged in those lines of business described in Codes
100211 to 0291, inclusive, Code 0723, or in Codes 2011 to 3999,
11inclusive, of the Standard Industrial Classification (SIC) Manual
12published by the United States Office of Management and Budget,
131987 edition.
14(B) At least 50 percent of the qualified taxpayer’s workforce
15hired after the designation of the manufacturing enhancement area
16is composed of individuals who, at the time of hire, are residents
17of the county in which the manufacturing enhancement area is
18located.
19(C) Of this percentage of local hires, at least 30 percent shall
20be qualified disadvantaged individuals.
21(7) “Seasonal employment” means employment by a qualified
22taxpayer that has regular and predictable substantial reductions in
23trade or business operations.
24(c) (1) For purposes of this section, all of the following apply:
25(A) All employees of trades or businesses that are under
26common control shall be treated as employed by a single qualified
27taxpayer.
28(B) The credit (if any) allowable by this section with respect to
29each trade or business shall be determined by reference to its
30proportionate share of the expense of the qualified wages giving
31rise to the credit and shall be allocated in that manner.
32(C) Principles that apply in the case of controlled groups of
33corporations, as specified in subdivision (d) of Section 23622.7,
34shall apply with respect to determining employment.
35(2) If a qualified taxpayer acquires the major portion of a trade
36or business of another employer (hereinafter in this paragraph
37referred to as the “predecessor”) or the major portion of a separate
38unit of a trade or business of a predecessor, then, for purposes of
39applying this section (other than subdivision (d)) for any calendar
40year ending after that acquisition, the employment relationship
P21 1between a qualified disadvantaged individual and a qualified
2taxpayer shall not be treated as terminated if the qualified
3disadvantaged individual continues to be employed in that trade
4or business.
5(d) (1) (A) If the employment, other than seasonal employment,
6of any qualified disadvantaged individual, with respect to whom
7qualified wages are taken into account under subdivision (b) is
8terminated by the qualified taxpayer at any time during the first
9270 days of that employment (whether or not consecutive) or before
10the close of the 270th calendar day after the day in which that
11qualified disadvantaged individual completes 90 days of
12employment with the qualified taxpayer, the tax imposed by this
13part for the taxable year in which that employment is terminated
14shall be increased by an amount equal to the credit allowed under
15subdivision (a) for that taxable year and all prior taxable years
16attributable to qualified wages paid or incurred with respect to that
17qualified disadvantaged individual.
18(B) If the seasonal employment of any qualified disadvantaged
19individual, with respect to whom qualified wages are taken into
20account under subdivision (a) is not continued by the qualified
21taxpayer for a period of 270 days of employment during the
2260-month period beginning with the day the qualified
23disadvantaged individual commences seasonal employment with
24the qualified taxpayer, the tax imposed by this part, for the taxable
25year that includes the 60th month following the month in which
26the qualified disadvantaged individual commences seasonal
27employment with the qualified taxpayer, shall be increased by an
28amount equal to the credit allowed under subdivision (a) for that
29taxable year and all prior taxable years attributable to qualified
30wages paid or incurred with respect to that qualified disadvantaged
32(2) (A) Subparagraph (A) of paragraph (1) does not apply to
33any of the following:
34(i) A termination of employment of a qualified disadvantaged
35individual who voluntarily leaves the employment of the qualified
36taxpayer.
37(ii) A termination of employment of a qualified disadvantaged
38individual who, before the close of the period referred to in
39 subparagraph (A) of paragraph (1), becomes disabled to perform
40the services of that employment, unless that disability is removed
P22 1before the close of that period and the taxpayer fails to offer
2reemployment to that individual.
3(iii) A termination of employment of a qualified disadvantaged
4individual, if it is determined that the termination was due to the
5misconduct (as defined in Sections 1256-30 to 1256-43, inclusive,
6of Title 22 of the California Code of Regulations) of that individual.
7(iv) A termination of employment of a qualified disadvantaged
8individual due to a substantial reduction in the trade or business
9operations of the qualified taxpayer.
10(v) A termination of employment of a qualified disadvantaged
11individual, if that individual is replaced by other qualified
12disadvantaged individuals so as to create a net increase in both the
13number of employees and the hours of employment.
14(B) Subparagraph (B) of paragraph (1) shall not apply to any
16(i) A failure to continue the seasonal employment of a qualified
17disadvantaged individual who voluntarily fails to return to the
18seasonal employment of the qualified taxpayer.
19(ii) A failure to continue the seasonal employment of a qualified
20disadvantaged individual who, before the close of the period
21referred to in subparagraph (B) of paragraph (1), becomes disabled
22and unable to perform the services of that seasonal employment,
23unless that disability is removed before the close of that period
24and the qualified taxpayer fails to offer seasonal employment to
25that qualified disadvantaged individual.
26(iii) A failure to continue the seasonal employment of a qualified
27disadvantaged individual, if it is determined that the failure to
28continue the seasonal employment was due to the misconduct (as
29defined in Sections 1256-30 to 1256-43, inclusive, of Title 22 of
30the California Code of Regulations) of that qualified disadvantaged
32(iv) A failure to continue seasonal employment of a qualified
33disadvantaged individual due to a substantial reduction in the
34regular seasonal trade or business operations of the qualified
35taxpayer.
36(v) A failure to continue the seasonal employment of a qualified
37disadvantaged individual, if that qualified disadvantaged individual
38is replaced by other qualified disadvantaged individuals so as to
39create a net increase in both the number of seasonal employees
40and the hours of seasonal employment.
P23 1(C) For purposes of paragraph (1), the employment relationship
2between the qualified taxpayer and a qualified disadvantaged
3individual shall not be treated as terminated by reason of a mere
4change in the form of conducting the trade or business of the
5qualified taxpayer, if the qualified disadvantaged individual
6continues to be employed in that trade or business and the qualified
7taxpayer retains a substantial interest in that trade or business.
8(3) Any increase in tax under paragraph (1) shall not be treated
9as tax imposed by this part for purposes of determining the amount
10of any credit allowable under this part.
11(e) In the case of an estate or trust, both of the following apply:
12(1) The qualified wages for any taxable year shall be apportioned
13between the estate or trust and the beneficiaries on the basis of the
14income of the estate or trust allocable to each.
15(2) Any beneficiary to whom any qualified wages have been
16apportioned under paragraph (1) shall be treated (for purposes of
17this part) as the employer with respect to those wages.
18(f) The credit shall be reduced by the credit allowed under
19Section 17053.7. The credit shall also be reduced by the federal
20credit allowed under Section 51 of the Internal Revenue Code, as
21amended by the Emergency Economic Stabilization Act of 2008
22(Public Law 110-343).
23In addition, any deduction otherwise allowed under this part for
24the wages or salaries paid or incurred by the qualified taxpayer
25upon which the credit is based shall be reduced by the amount of
26the credit, prior to any reduction required by subdivision (g) or
27(h).
28(g) In the case where the credit otherwise allowed under this
29section exceeds the “net tax” for the taxable year, that portion of
30the credit that exceeds the “net tax” may be carried over and added
31to the credit, if any, in the succeeding 10 taxable years, if necessary,
32until the credit is exhausted. The credit shall be applied first to the
33earliest taxable years possible.
34(h) (1) The amount of credit otherwise allowed under this
35section, including prior year credit carryovers, that may reduce
36the “net tax” for the taxable year shall not exceed the amount of
37tax that would be imposed on the qualified taxpayer’s business
38income attributed to a manufacturing enhancement area determined
39 as if that attributed income represented all of the net income of the
40qualified taxpayer subject to tax under this part.
P24 1(2) Attributable income shall be that portion of the taxpayer’s
2California source business income that is apportioned to the
3manufacturing enhancement area. For that purpose, the taxpayer’s
4business income that is attributable to sources in this state first
5shall be determined in accordance with Chapter 17 (commencing
6with Section 25101) of Part 11. That business income shall be
7further apportioned to the manufacturing enhancement area in
8accordance with Article 2 (commencing with Section 25120) of
9Chapter 17 of Part 11, modified for purposes of this section in
10accordance with paragraph (3).
11(3) Income shall be apportioned to a manufacturing enhancement
12area by multiplying the total California business income of the
13taxpayer by a fraction, the numerator of which is the property
14factor plus the payroll factor, and the denominator of which is two.
15For purposes of this paragraph:
16(A) The property factor is a fraction, the numerator of which is
17the average value of the taxpayer’s real and tangible personal
18property owned or rented and used in the manufacturing
19enhancement area during the taxable year, and the denominator
20of which is the average value of all the taxpayer’s real and tangible
21personal property owned or rented and used in this state during
22the taxable year.
24the total amount paid by the taxpayer in the manufacturing
25enhancement area during the taxable year for compensation, and
26the denominator of which is the total compensation paid by the
27taxpayer in this state during the taxable year.
32in subdivision (g). However, the portion of any credit remaining
35over only to the succeeding 10 taxable years if necessary, until the
36credit is exhausted, as if it were an amount exceeding the “net tax”
37for the taxable year, as provided in subdivision (g).
38(i) If the taxpayer is allowed a credit pursuant to this section for
39qualified wages paid or incurred, only one credit shall be allowed
P25 1to the taxpayer under this part with respect to any wage consisting
2in whole or in part of those qualified wages.
3(j) The qualified taxpayer shall do both of the following:
4(1) Obtain from the Employment Development Department, as
5permitted by federal law, the local county or city Job Training
6Partnership Act administrative entity, the local county GAIN office
7or social services agency, or the local government administering
8the manufacturing enhancement area, a certification that provides
9that a qualified disadvantaged individual meets the eligibility
10requirements specified in paragraph (5) of subdivision (b). The
11Employment Development Department may provide preliminary
12screening and referral to a certifying agency. The Department of
13Housing and Community Development shall develop regulations
14governing the issuance of certificates pursuant to subdivision (d)
15of Section 7086 of the Government Code and shall develop forms
16for this purpose.
17(2) Retain a copy of the certification and provide it upon request
18to the Franchise Tax Board.
19(k) (1) Except as provided in paragraph (2), this section shall
20cease to be operative for taxable years beginning on or after January
211, 2014, and shall be repealed on December 1, 2019.
22(2) The section shall continue to apply with respect to qualified
23employees who are employed by the qualified taxpayer within the
24manufacturing enhancement area within the 60-month period
25immediately preceding January 1, 2014, and qualified wages paid
26or incurred with respect to those qualified employees shall continue
27to qualify for the credit under this section for taxable years
28beginning on or after January 1, 2014, in accordance with the
29provisions of this section, as amended by the act adding this
30subdivision.
Section 17053.74 of the Revenue and Taxation Code
34tax” (as defined in Section 17039) to a taxpayer who employs a
35qualified employee in an enterprise zone during the taxable year.
36The credit shall be equal to the sum of each of the following:
37(1) Fifty percent of qualified wages in the first year of
39(2) Forty percent of qualified wages in the second year of
P26 1(3) Thirty percent of qualified wages in the third year of
3(4) Twenty percent of qualified wages in the fourth year of
5(5) Ten percent of qualified wages in the fifth year of
7(b) For purposes of this section:
8(1) “Qualified wages” means:
9(A) (i) Except as provided in clause (ii), that portion of wages
10paid or incurred by the taxpayer during the taxable year to qualified
11employees that does not exceed 150 percent of the minimum wage.
12(ii) For up to 1,350 qualified employees who are employed by
13the taxpayer in the Long Beach Enterprise Zone in aircraft
14 manufacturing activities described in Codes 3721 to 3728,
15inclusive, and Code 3812 of the Standard Industrial Classification
16(SIC) Manual published by the United States Office of
17Management and Budget, 1987 edition, “qualified wages” means
18that portion of hourly wages that does not exceed 202 percent of
19the minimum wage.
20(B) Wages received during the 60-month period beginning with
21the first day the employee commences employment with the
22taxpayer. Reemployment in connection with any increase, including
23a regularly occurring seasonal increase, in the trade or business
24operations of the taxpayer does not constitute commencement of
25employment for purposes of this section.
26(C) Qualified wages do not include any wages paid or incurred
27by the taxpayer on or after the zone expiration date. However,
28wages paid or incurred with respect to qualified employees who
29are employed by the taxpayer within the enterprise zone within
30the 60-month period prior to the zone expiration date shall continue
31to qualify for the credit under this section after the zone expiration
32date, in accordance with all provisions of this section applied as
33if the enterprise zone designation were still in existence and
34binding.
35(2) “Minimum wage” means the wage established by the
36Industrial Welfare Commission as provided for in Chapter 1
37(commencing with Section 1171) of Part 4 of Division 2 of the
38Labor Code.
P27 1(3) “Zone expiration date” means the date the enterprise zone
2designation expires, is no longer binding, becomes inoperative, or
4(4) (A) “Qualified employee” means an individual who meets
5all of the following requirements:
6(i) At least 90 percent of whose services for the taxpayer during
7the taxable year are directly related to the conduct of the taxpayer’s
8trade or business located in an enterprise zone.
9(ii) Performs at least 50 percent of his or her services for the
10taxpayer during the taxable year in an enterprise zone.
11(iii) Is hired by the taxpayer after the date of original designation
12of the area in which services were performed as an enterprise zone.
13(iv) Is any of the following:
14(I) Immediately preceding the qualified employee’s
15commencement of employment with the taxpayer, was a person
16eligible for services under the federal Job Training Partnership
17Act (29 U.S.C. Sec. 1501 et seq.), or its successor, who is receiving,
18or is eligible to receive, subsidized employment, training, or
19services funded by the federal Job Training Partnership Act, or its
20successor.
21(II) Immediately preceding the qualified employee’s
22commencement of employment with the taxpayer, was a person
23eligible to be a voluntary or mandatory registrant under the Greater
24Avenues for Independence Act of 1985 (GAIN) provided for
25pursuant to Article 3.2 (commencing with Section 11320) of
26Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions
27Code, or its successor.
28(III) Immediately preceding the qualified employee’s
29commencement of employment with the taxpayer, was an
30economically disadvantaged individual 14 years of age or older.
31(IV) Immediately preceding the qualified employee’s
32commencement of employment with the taxpayer, was a dislocated
33worker who meets any of the following:
34(aa) Has been terminated or laid off or who has received a notice
35of termination or layoff from employment, is eligible for or has
36exhausted entitlement to unemployment insurance benefits, and
37is unlikely to return to his or her previous industry or occupation.
38(bb) Has been terminated or has received a notice of termination
39of employment as a result of any permanent closure or any
40substantial layoff at a plant, facility, or enterprise, including an
P28 1individual who has not received written notification but whose
2employer has made a public announcement of the closure or layoff.
3(cc) Is long-term unemployed and has limited opportunities for
4employment or reemployment in the same or a similar occupation
5in the area in which the individual resides, including an individual
655 years of age or older who may have substantial barriers to
7employment by reason of age.
8(dd) Was self-employed (including farmers and ranchers) and
9is unemployed as a result of general economic conditions in the
10community in which he or she resides or because of natural
11disasters.
12(ee) Was a civilian employee of the Department of Defense
13employed at a military installation being closed or realigned under
14the Defense Base Closure and Realignment Act of 1990.
15(ff) Was an active member of the armed forces or National
16Guard as of September 30, 1990, and was either involuntarily
17separated or separated pursuant to a special benefits program.
18(gg) Is a seasonal or migrant worker who experiences chronic
19seasonal unemployment and underemployment in the agriculture
20industry, aggravated by continual advancements in technology and
21mechanization.
22(hh) Has been terminated or laid off, or has received a notice
23of termination or layoff, as a consequence of compliance with the
24Clean Air Act.
25(V) Immediately preceding the qualified employee’s
26commencement of employment with the taxpayer, was a disabled
27individual who is eligible for or enrolled in, or has completed a
28state rehabilitation plan or is a service-connected disabled veteran,
29veteran of the Vietnam era, or veteran who is recently separated
30from military service.
31(VI) Immediately preceding the qualified employee’s
32commencement of employment with the taxpayer, was an
33ex-offender. An individual shall be treated as convicted if he or
34she was placed on probation by a state court without a finding of
35guilt.
36(VII) Immediately preceding the qualified employee’s
37commencement of employment with the taxpayer, was a person
38eligible for or a recipient of any of the following:
39(aa) Federal Supplemental Security Income benefits.
40(bb) Aid to Families with Dependent Children.
P29 1(cc) CalFresh benefits.
2(dd) State and local general assistance.
3(VIII) Immediately preceding the qualified employee’s
4commencement of employment with the taxpayer, was a member
5of a federally recognized Indian tribe, band, or other group of
6Native American descent.
7(IX) Immediately preceding the qualified employee’s
8commencement of employment with the taxpayer, was a resident
9of a targeted employment area, as defined in Section 7072 of the
10Government Code.
11(X) An employee who qualified the taxpayer for the enterprise
12zone hiring credit under former Section 17053.8 or the program
13area hiring credit under former Section 17053.11.
14(XI) Immediately preceding the qualified employee’s
15commencement of employment with the taxpayer, was a member
16of a targeted group, as defined in Section 51(d) of the Internal
17Revenue Code, or its successor.
18(B) Priority for employment shall be provided to an individual
19who is enrolled in a qualified program under the federal Job
20Training Partnership Act or the Greater Avenues for Independence
21Act of 1985 or who is eligible as a member of a targeted group
22under the Work Opportunity Tax Credit (Section 51 of the Internal
23Revenue Code), or its successor.
24(5) “Taxpayer” means a person or entity engaged in a trade or
25business within an enterprise zone designated pursuant to Chapter
2612.8 (commencing with Section 7070) of the Government Code.
27(6) “Seasonal employment” means employment by a taxpayer
28that has regular and predictable substantial reductions in trade or
29business operations.
30(c) The taxpayer shall do both of the following:
31(1) Obtain from the Employment Development Department, as
32permitted by federal law, the local county or city Job Training
33Partnership Act administrative entity, the local county GAIN office
34or social services agency, or the local government administering
35the enterprise zone, a certification which provides that a qualified
36employee meets the eligibility requirements specified in clause
37(iv) of subparagraph (A) of paragraph (4) of subdivision (b). The
38Employment Development Department may provide preliminary
39screening and referral to a certifying agency. The Employment
40Development Department shall develop a form for this purpose.
P30 1The Department of Housing and Community Development shall
2develop regulations governing the issuance of certificates by local
3governments pursuant to subdivision (a) of Section 7086 of the
5(2) Retain a copy of the certification and provide it upon request
6to the Franchise Tax Board.
7(d) (1) For purposes of this section:
8(A) All employees of trades or businesses, which are not
9incorporated, that are under common control shall be treated as
10employed by a single taxpayer.
11(B) The credit, if any, allowable by this section with respect to
12each trade or business shall be determined by reference to its
13proportionate share of the expense of the qualified wages giving
14rise to the credit, and shall be allocated in that manner.
15(C) Principles that apply in the case of controlled groups of
16corporations, as specified in subdivision (d) of Section 23622.7,
17shall apply with respect to determining employment.
18(2) If an employer acquires the major portion of a trade or
19business of another employer (hereinafter in this paragraph referred
20to as the “predecessor”) or the major portion of a separate unit of
21a trade or business of a predecessor, then, for purposes of applying
22this section (other than subdivision (e)) for any calendar year
23ending after that acquisition, the employment relationship between
24a qualified employee and an employer shall not be treated as
25terminated if the employee continues to be employed in that trade
26or business.
27(e) (1) (A) If the employment, other than seasonal employment,
28of any qualified employee, with respect to whom qualified wages
29are taken into account under subdivision (a), is terminated by the
30taxpayer at any time during the first 270 days of that employment
31(whether or not consecutive) or before the close of the 270th
32calendar day after the day in which that employee completes 90
33days of employment with the taxpayer, the tax imposed by this
34part for the taxable year in which that employment is terminated
35shall be increased by an amount equal to the credit allowed under
36subdivision (a) for that taxable year and all prior taxable years
37attributable to qualified wages paid or incurred with respect to that
38employee.
39(B) If the seasonal employment of any qualified employee, with
40respect to whom qualified wages are taken into account under
P31 1subdivision (a), is not continued by the taxpayer for a period of
2270 days of employment during the 60-month period beginning
3with the day the qualified employee commences seasonal
4employment with the taxpayer, the tax imposed by this part, for
5the taxable year that includes the 60th month following the month
6in which the qualified employee commences seasonal employment
7with the taxpayer, shall be increased by an amount equal to the
8credit allowed under subdivision (a) for that taxable year and all
9prior taxable years attributable to qualified wages paid or incurred
10with respect to that qualified employee.
13(i) A termination of employment of a qualified employee who
14voluntarily leaves the employment of the taxpayer.
15(ii) A termination of employment of a qualified employee who,
16before the close of the period referred to in paragraph (1), becomes
17disabled and unable to perform the services of that employment,
18unless that disability is removed before the close of that period
19and the taxpayer fails to offer reemployment to that employee.
20(iii) A termination of employment of a qualified employee, if
21it is determined that the termination was due to the misconduct (as
23the California Code of Regulations) of that employee.
24(iv) A termination of employment of a qualified employee due
25to a substantial reduction in the trade or business operations of the
27(v) A termination of employment of a qualified employee, if
28that employee is replaced by other qualified employees so as to
29create a net increase in both the number of employees and the
30hours of employment.
34employee who voluntarily fails to return to the seasonal
35employment of the taxpayer.
37employee who, before the close of the period referred to in
38subparagraph (B) of paragraph (1), becomes disabled and unable
39to perform the services of that seasonal employment, unless that
40disability is removed before the close of that period and the
P32 1taxpayer fails to offer seasonal employment to that qualified
2employee.
4employee, if it is determined that the failure to continue the
5seasonal employment was due to the misconduct (as defined in
6Sections 1256-30 to 1256-43, inclusive, of Title 22 of the California
7Code of Regulations) of that qualified employee.
9employee due to a substantial reduction in the regular seasonal
10trade or business operations of the taxpayer.
11(v) A failure to continue the seasonal employment of a qualified
12employee, if that qualified employee is replaced by other qualified
13employees so as to create a net increase in both the number of
14seasonal employees and the hours of seasonal employment.
15(C) For purposes of paragraph (1), the employment relationship
16between the taxpayer and a qualified employee shall not be treated
17as terminated by reason of a mere change in the form of conducting
18the trade or business of the taxpayer, if the qualified employee
19continues to be employed in that trade or business and the taxpayer
20retains a substantial interest in that trade or business.
21(3) Any increase in tax under paragraph (1) shall not be treated
22as tax imposed by this part for purposes of determining the amount
23of any credit allowable under this part.
24(f) In the case of an estate or trust, both of the following apply:
25(1) The qualified wages for any taxable year shall be apportioned
26between the estate or trust and the beneficiaries on the basis of the
27income of the estate or trust allocable to each.
28(2) Any beneficiary to whom any qualified wages have been
29apportioned under paragraph (1) shall be treated, for purposes of
30this part, as the employer with respect to those wages.
31(g) For purposes of this section, “enterprise zone” means an
32area designated as an enterprise zone pursuant to Chapter 12.8
33(commencing with Section 7070) of Division 7 of Title 1 of the
35(h) The credit allowable under this section shall be reduced by
36the credit allowed under Sections 17053.10, 17053.17, and
3717053.46 claimed for the same employee. The credit shall also be
38reduced by the federal credit allowed under Section 51 of the
39Internal Revenue Code, as amended by the Economic Stabilization
40Act of 2008 (Public Law 110-343).
P33 1In addition, any deduction otherwise allowed under this part for
4prior to any reduction required by subdivision (i) or (j).
5(i) In the case where the credit otherwise allowed under this
11(j) (1) The amount of the credit otherwise allowed under this
12section and Section 17053.70, including any credit carryover from
13prior years, that may reduce the “net tax” for the taxable year shall
14not exceed the amount of tax which would be imposed on the
15taxpayer’s business income attributable to the enterprise zone
16determined as if that attributable income represented all of the
17income of the taxpayer subject to tax under this part.
20enterprise zone. For that purpose, the taxpayer’s business income
21attributable to sources in this state first shall be determined in
24enterprise zone in accordance with Article 2 (commencing with
25Section 25120) of Chapter 17 of Part 11, modified for purposes
26of this section in accordance with paragraph (3).
27(3) Business income shall be apportioned to the enterprise zone
28by multiplying the total California business income of the taxpayer
29by a fraction, the numerator of which is the property factor plus
30the payroll factor, and the denominator of which is two. For
31purposes of this paragraph:
34property owned or rented and used in the enterprise zone during
35the taxable year, and the denominator of which is the average value
39the total amount paid by the taxpayer in the enterprise zone during
40the taxable year for compensation, and the denominator of which
P34 1is the total compensation paid by the taxpayer in this state during
2the taxable year.
7in subdivision (i). However, the portion of any credit remaining
12for the taxable year, as provided in subdivision (i).
13(k) The changes made to this section by the act adding this
14subdivision shall apply to taxable years beginning on or after
15January 1, 1997.
16(l) (1) Except as provided in paragraph (2), this section shall
17cease to be operative on January 1, 2014, and shall be repealed on
18December 1, 2019. A credit shall not be allowed under this section
19with respect to an employee who first commences employment
20with a taxpayer on or after January 1, 2014.
21(2) This section shall continue to apply with respect to qualified
22employees who are employed by the taxpayer within the enterprise
23zone within the 60-month period immediately preceding January
241, 2014, and qualified wages paid or incurred with respect to those
25qualified employees shall continue to qualify for the credit under
26this section for taxable years beginning on or after January 1, 2014,
27in accordance with this section, as amended by the act adding this
32Internal Revenue Code, relating to regulated investment companies
33and real estate investment trusts, shall apply, except as otherwise
34provided.
35(b) Section 17145 shall apply in lieu of Section 852(b)(5) of the
36Internal Revenue Code, relating to exempt-interest dividends.
37(c) (1) Section 852(b)(3)(D) of the Internal Revenue Code,
38relating to treatment by shareholders of undistributed capital gains,
39shall not apply.
P35 1(2) Section 852(g)(1)(A) of the Internal Revenue Code is
2modified by substituting the phrase “subdivision (a) of Section
317145” for the phrase “the first sentence of subsection (b)(5)”
4contained therein.
Section 17131.7 of the Revenue and Taxation Code
Section 17134.1 of the Revenue and Taxation Code
16relating to general business credit, is modified by substituting “this
17part” in lieu of “Section 38 (relating to general business credit).”
18(b) Section 108(b)(2)(G) of the Internal Revenue Code, relating
19to foreign tax credit carryovers, shall not apply.
20(c) Section 108(b)(3)(B) of the Internal Revenue Code, relating
21to credit carryover reduction, is modified by substituting “11.1
22cents” in lieu of “331⁄3 cents” in each place in which it appears. In
23the case where more than one credit is allowable under this part,
24the credits shall be reduced on a pro rata basis.
25(d) Section 108(g)(3)(B) of the Internal Revenue Code, relating
26to adjusted tax attributes, is modified by substituting “($9)” in lieu
27of “($3).”
28(e) (1) If a taxpayer makes an election for federal income tax
29purposes under Section 108(c) of the Internal Revenue Code,
30relating to treatment of discharge of qualified real property business
31indebtedness, a separate election shall not be allowed under
32paragraph (3) of subdivision (e) of Section 17024.5 and the federal
33election shall be binding for purposes of this part.
34(2) If a taxpayer has not made an election for federal income
35tax purposes under Section 108(c) of the Internal Revenue Code,
36relating to treatment of discharge of qualified real property business
37indebtedness, then the taxpayer shall not be allowed to make that
38election for purposes of this part.
39(f) Section 108(i) of the Internal Revenue Code, relating to
40deferral and ratable inclusion of income arising from business
P36 1indebtedness discharged by the reacquisition of a debt instrument,
2shall not apply.
24Protection and Affordable Care Act (Public Law 111-148), shall
25be considered a tax described in Section 275(a)(6) of the Internal
30relating to allowance of deduction, is modified by substituting “7.5
31percent” for “10 percent.”
32(b) Section 213(f) of the Internal Revenue Code, relating to
33special rule for 2013, 2014, 2015, and 2016, shall not apply.
2to special rule for certain ownership changes, shall not apply.
6carrybacks provided by Section 1212 of the Internal Revenue Code,
7relating to capital loss carrybacks and carryovers.
11relating to extension of time for payment of taxes by corporations
12expecting carrybacks, shall apply, except as otherwise provided.
13(b) (1) Section 6164 of the Internal Revenue Code is modified
14by substituting the phrase “Secretary or the Franchise Tax Board”
15for the word “Secretary” in each place it appears.
16(2) Section 6164(a) of the Internal Revenue Code is modified
17by substituting the phrase “Part 11 (commencing with Section
1823001)” in lieu of the phrase “subtitle A.”
19(3) Section 6164(b) of the Internal Revenue Code, relating to
20contents of statement, is modified by substituting the phrase
21“Section 24416.20” in lieu of the phrase “Section 172(b).”
22(4) Section 6164(d)(2) of the Internal Revenue Code shall not
23apply.
24(5) Section 6164(h) of the Internal Revenue Code, relating to
25jeopardy, is modified as follows:
26(A) By substituting the phrase “he or the Franchise Tax Board”
27for the word “he” in each place it appears.
28(B) By substituting the phrase “him or the Franchise Tax Board”
29for the word “him” in each place it appears.
30(6) Section 6164(i) of the Internal Revenue Code, relating to
31consolidated returns, is modified by substituting the phrase
32 “combined report” in lieu of the phrase “consolidated return” in
33each place it appears.
37relating to information with respect to certain foreign-owned
38corporations, shall apply.
39(2) A penalty shall be imposed under this part for failure to
40furnish information or maintain records and that penalty shall be
P38 1determined in accordance with Section 6038A of the Internal
2Revenue Code.
3(3) Section 11314 of Public Law 101-508, relating to application
4of amendments made by Section 7403 of the Revenue
5Reconciliation Act of 1989 to taxable years beginning on or before
6July 10, 1989, shall apply.
7(4) Section 6038A(e) of the Internal Revenue Code, relating to
8enforcement of requests for certain records, is modified as follows:
9(A) Each reference to Section 7602, 7603, or 7604 of the Internal
10Revenue Code shall instead refer to Section 19504.
11(B) Each reference to “summons” shall instead refer to
12“subpoena duces tecum.”
13(C) Section 6038A(e)(4)(C) of the Internal Revenue Code shall
14 refer to “superior courts of the State of California for the Counties
15of Los Angeles, Sacramento, and San Diego, and for the City and
16County of San Francisco,” instead of “United States district court
17for the district in which the person (to whom the summons is
18issued) resides or is found.”
19(b) In the case of a corporation, each of the following shall
21(1) Section 6038B of the Internal Revenue Code, relating to
22notice of certain transfers to foreign persons, shall apply, except
23as otherwise provided.
24(2) The information required to be filed with the Franchise Tax
25Board under this subdivision shall be a copy of the information
26required to be filed with the Internal Revenue Service.
27(3) (A) A penalty shall be imposed under this part for failure
28to furnish information and that penalty shall be determined in
29accordance with Section 6038B of the Internal Revenue Code,
30except as otherwise provided.
31(B) Subparagraph (A) shall not apply to any transfer described
32in Section 6038B(a)(1)(B) of the Internal Revenue Code.
33(c) (1) Section 6038C of the Internal Revenue Code, relating
34to information with respect to foreign corporations engaged in
35United States business, shall apply.
36(2) A penalty shall be imposed under this part for failure to
37furnish information or maintain records and that penalty shall be
38determined in accordance with Section 6038C of the Internal
39Revenue Code.
P39 1(3) Section 6038C(d) of the Internal Revenue Code, relating to
7(d) (1) Section 6038D of the Internal Revenue Code, relating
8to information with respect to foreign financial assets, shall apply.
10furnish information and that penalty shall be determined in
11accordance with Section 6038D of the Internal Revenue Code.
12(e) For purposes of this part, the information required to be filed
13with the Franchise Tax Board pursuant to this section shall be a
14copy of the information filed with the Internal Revenue Service.
15(f) For purposes of this section, each of the following shall
17(1) Section 7701(a)(4) of the Internal Revenue Code, relating
18to the term “domestic,” shall apply.
19(2) Section 7701(a)(5) of the Internal Revenue Code, relating
20to the term “foreign,” shall apply.
21(3) Section 7701(a)(30) of the Internal Revenue Code, relating
22to the term “United States person,” shall apply. However, the term
23“United States person” shall not include any corporation that is
24not subject to the tax imposed under Chapter 2 (commencing with
25Section 23101), Chapter 2.5 (commencing with Section 23400),
26or Chapter 3 (commencing with Section 23501), of Part 11.
27(g) The amendments made to this section by the act adding this
28subdivision shall apply to taxable years beginning on or after
29January 1, 2016.
33imposed under this part and shall be determined in accordance
34with Section 6662 of the Internal Revenue Code, relating to
35imposition of accuracy-related penalty on underpayments, except
36as otherwise provided.
37(B) (i) Except for understatements relating to reportable
38transactions to which Section 19164.5 applies, in the case of any
39proposed deficiency assessment issued after the last date of the
40amnesty period specified in Chapter 9.1 (commencing with Section
P40 119730) for any taxable year beginning prior to January 1, 2003,
2the penalty specified in Section 6662(a) of the Internal Revenue
3Code shall be computed by substituting “40 percent” for “20
4percent.”
5(ii) Clause (i) shall not apply to any taxable year of a taxpayer
6beginning prior to January 1, 2003, if, as of the start date of the
7amnesty program period specified in Section 19731, the taxpayer
8is then under audit by the Franchise Tax Board, or the taxpayer
9has filed a protest under Section 19041, or the taxpayer has filed
10an appeal under Section 19045, or the taxpayer is engaged in
11settlement negotiations under Section 19442, or the taxpayer has
12a pending judicial proceeding in any court of this state or in any
13federal court relating to the tax liability of the taxpayer for that
14taxable year.
15(2) With respect to corporations, this subdivision shall apply to
17(A) All taxable years beginning on or after January 1, 1990.
18(B) Any other taxable year for which an assessment is made
19after July 16, 1991.
20(C) For purposes of this section, references in Section 6662(e)
21of the Internal Revenue Code and the regulations thereunder,
22relating to treatment of an affiliated group that files a consolidated
23federal return, are modified to apply to those entities required to
24be included in a combined report under Section 25101 or 25110.
25For these purposes, entities included in a combined report pursuant
26to paragraph (4) or (6) of subdivision (a) of Section 25110 shall
27be considered only to the extent required to be included in the
28combined report.
29(3) Section 6662(d)(1)(B) of the Internal Revenue Code is
30modified to provide that in the case of a corporation, other than
31an “S” corporation, there is a substantial understatement of tax for
32any taxable year if the amount of the understatement for the taxable
33year exceeds the lesser of:
34(A) Ten percent of the tax required to be shown on the return
35for the taxable year (or, if greater, two thousand five hundred
36dollars ($2,500)).
37(B) Five million dollars ($5,000,000).
38(4) Section 6662(d)(2)(A) of the Internal Revenue Code is
39modified to additionally provide that the excess determined under
40Section 6662(d)(2)(A) of the Internal Revenue Code shall be
P41 1determined without regard to items to which Section 19164.5
2applies and without regard to items with respect to which a penalty
3is imposed by Section 19774.
4(5) The provisions of Sections 6662(e)(1) and 6662(h)(2) of the
5Internal Revenue Code shall apply to returns filed on or after
6January 1, 2010.
7(b) For purposes of Section 6662(d) of the Internal Revenue
8Code, Section 6664 of the Internal Revenue Code, Section
96694(a)(1) of the Internal Revenue Code, and this part, the
10Franchise Tax Board may prescribe a list of positions for which
11the Franchise Tax Board believes there is not substantial authority
12or there is no reasonable belief that the tax treatment is more likely
13than not the proper tax treatment. That list (and any revisions
14thereof) shall be published through the use of Franchise Tax Board
15Notices or other published positions. In addition, the “listed
16transactions” identified and published pursuant to the preceding
17sentence shall be published on the Web site of the Franchise Tax
18Board.
19(c) A fraud penalty shall be imposed under this part and shall
20be determined in accordance with Section 6663 of the Internal
21Revenue Code, relating to imposition of fraud penalty, except as
22otherwise provided.
23(d) (1) Section 6664 of the Internal Revenue Code, relating to
24definitions and special rules, shall apply, except as otherwise
25provided.
26(2) Section 6664(c)(3) of the Internal Revenue Code shall apply
27to returns filed on or after January 1, 2010.
28(3) Section 6664(c)(4) of the Internal Revenue Code shall apply
29to appraisals prepared with respect to returns or submissions filed
30on or after January 1, 2010.
31(e) Except for purposes of subdivision (e) of Section 19774,
32Section 6662(b)(6) of the Internal Revenue Code shall not apply.
36transactions, shall not apply.
P42 1(h) The amendments made to this section by Chapter 14 of the
2Statutes of 2011 shall apply to notices mailed on or after January
9Code, relating to failure to furnish a copy to taxpayer, as required
10by Section 18625, except as otherwise provided.
11(b) In accordance with Section 6695(c) of the Internal Revenue
12Code, relating to failure to furnish identifying number, as required
13by Section 18624, except as otherwise provided.
14(c) In accordance with Section 6695(d) of the Internal Revenue
15Code, relating to failure to retain copy or list, as required by Section
1618625 or for failure to retain an electronic filing declaration, as
17required by Section 18621.5, except as otherwise provided.
18(d) Section 6695(h) of the Internal Revenue Code, relating to
19adjustment for inflation, shall not apply.
20(e) Failure to register as a tax preparer with the California Tax
21Education Council, as required by Section 22253 of the Business
22and Professions Code, unless it is shown that the failure was due
23to reasonable cause and not due to willful neglect.
24(1) The amount of the penalty under this subdivision for the
25first failure to register is two thousand five hundred dollars
26($2,500). This penalty shall be waived if proof of registration is
27provided to the Franchise Tax Board within 90 days from the date
28notice of the penalty is mailed to the tax preparer.
29(2) The amount of the penalty under this subdivision for a failure
30to register, other than the first failure to register, is five thousand
31dollars ($5,000).
32(f) The Franchise Tax Board shall not impose the penalties
33authorized by subdivision (e) until either one of the following has
34occurred:
35(1) Commencing January 1, 2006, and continuing each year
36thereafter, there is an appropriation in the Franchise Tax Board’s
37annual budget to fund the costs associated with the penalty
38authorized by subdivision (e).
39(2) (A) An agreement has been executed between the California
40Tax Education Council and the Franchise Tax Board that provides
P43 1that an amount equal to all first year costs associated with the
2penalty authorized by subdivision (e) shall be received by the
3Franchise Tax Board. For purposes of this subparagraph, first year
4costs include, but are not limited to, costs associated with the
5development of processes or systems changes, if necessary, and
6labor.
7(B) An agreement has been executed between the California
8Tax Education Council and the Franchise Tax Board that provides
9that the annual costs incurred by the Franchise Tax Board
10associated with the penalty authorized by subdivision (e) shall be
11reimbursed by the California Tax Education Council to the
12Franchise Tax Board.
13(C) Pursuant to the agreement described in subparagraph (A),
14the Franchise Tax Board has received an amount equal to the first
15year costs described in that subparagraph.
19correct information returns, as required by this part, and that
20penalty shall be determined in accordance with Section 6721 of
21the Internal Revenue Code, relating to failure to file correct
22information returns.
23(2) Section 6721(e) of the Internal Revenue Code, relating to
24penalty in case of intentional disregard, is modified to the extent
25that the reference to Section 6041A(b) of the Internal Revenue
26Code, relating to direct sales of $5,000 or more, shall not apply.
27(3) Section 6721(f)(1) of the Internal Revenue Code is modified
28to substitute the phrase “For each fifth calendar year beginning
29after 2014” for the phrase “In the case of any failure relating to a
30return required to be filed in a calendar year beginning after 2014.”
31(b) (1) A penalty shall be imposed for failure to furnish correct
32payee statements as required by this part, and that penalty shall be
33determined in accordance with Section 6722 of the Internal
34Revenue Code, relating to failure to furnish correct payee
35statements.
36(2) Section 6722(c) of the Internal Revenue Code, relating to
37exception for de minimus failures, is modified to the extent that
38the references to Sections 6041A(b) and 6041A(e) of the Internal
39Revenue Code, relating to direct sales of $5,000 or more, and
P44 1statements to be furnished to persons with respect to whom
2information is required to be furnished, shall not apply.
3(3) Section 6722(f)(1) of the Internal Revenue Code is modified
4to substitute the phrase “For each fifth calendar year beginning
5after 2014” for the phrase “In the case of any failure relating to a
6return required to be filed in a calendar year beginning after 2014.”
7(c) A penalty shall be imposed for failure to comply with other
8information reporting requirements under this part, and that penalty
9shall be determined in accordance with Section 6723 of the Internal
10Revenue Code, relating to failure to comply with other information
11reporting requirements.
12(d) (1) The provisions of Section 6724 of the Internal Revenue
13Code, relating to waiver; definitions, and special rules, shall apply,
14except as otherwise provided.
15(2) Section 6724(d)(1) of the Internal Revenue Code, relating
16to information return, is modified as follows:
17(A) The following references are substituted:
18(i) Subdivision (a) of Section 18640, in lieu of Section
196044(a)(1) of the Internal Revenue Code.
20(ii) Subdivision (a) of Section 18644, in lieu of Section 6050A(a)
21of the Internal Revenue Code, relating to reports.
22(B) References to Sections 4101(d), 6041(b), 6041A(b), 6045(d),
236051(d), and 6053(c)(1) of the Internal Revenue Code shall not
24apply.
25(C) The term “information return” shall also include both of the
27(i) The return required by paragraph (1) of subdivision (i) of
28Section 18662.
29(ii) The return required by subdivision (a) of Section 18631.7.
30(3) Section 6724(d)(2) of the Internal Revenue Code, relating
31to payee statement, is modified as follows:
32(A) The following references are substituted:
33(i) Subdivision (b) of Section 18640, in lieu of Section 6044(e)
34of the Internal Revenue Code, relating to statements to be furnished
35to persons with respect to whom information is required.
36(ii) Subdivision (b) of Section 18644, in lieu of Section
376050A(b) of the Internal Revenue Code, relating to written
38statement.
P45 1(B) References to Sections 6031(b), 6037(b), 6041A(e), 6045(d),
26051(d), 6053(b), and 6053(c) of the Internal Revenue Code shall
3not apply.
4(C) The term “payee statement” shall also include the statement
5required by paragraph (2) of subdivision (i) of Section 18662.
6(e) In the case of each failure to provide a written explanation
7as required by Section 402(f) of the Internal Revenue Code, relating
8to written explanation to recipients of distributions eligible for
9rollover treatment, at the time prescribed therefor, unless it is
10shown that the failure is due to reasonable cause and not to willful
11neglect, there shall be paid, on notice and demand of the Franchise
12Tax Board and in the same manner as tax, by the person failing to
13 provide that written explanation, an amount equal to ten dollars
14($10) for each failure, but the total amount imposed on that person
15for all those failures during any calendar year shall not exceed five
16thousand dollars ($5,000).
17(f) Any penalty imposed by this part shall be paid on notice and
18demand by the Franchise Tax Board and in the same manner as
20(g) The amendments made to this section by the act adding this
21subdivision shall apply to information returns required to be filed
22on or after January 1, 2016.
26relating to penalty for failure to include reportable transactions
27information with a return, shall apply, except as otherwise
29(b) (1) Section 6707A(b)(1) of the Internal Revenue Code
30relating to amount of penalty is modified by substituting the phrase
31“or which would have resulted from such transaction if such
32transaction were respected for state tax purposes” for the phrase
33“or which would have resulted from such transaction if such
34transaction were respected for Federal tax purposes.”
35(2) The penalty amounts in Section 6707A(b)(2)(A) of the
36Internal Revenue Code are modified by substituting “$30,000
37($15,000” for “$200,000 ($100,000.”
38(3) The penalty amounts in Section 6707A(b)(2)(B) of the
39Internal Revenue Code are modified by substituting “$15,000
40($5,000” for “$50,000 ($10,000.”
P46 1(4) The penalty amounts in Section 6707A(b)(3) of the Internal
2Revenue Code relating to minimum penalty are modified by
3substituting “$2,500 ($1,250” for “$10,000 ($5,000.”
4(c) (1) Section 6707A(c)(1) of the Internal Revenue Code
5 relating to reportable transaction is modified to include reportable
6transactions within the meaning of paragraph (3) of subdivision
7(a) of Section 18407.
8(2) Section 6707A(c)(2) of the Internal Revenue Code relating
9to listed transaction is modified to include listed transactions within
10the meaning of paragraph (4) of subdivision (a) of Section 18407.
11(d) The penalty under this section only applies to taxpayers with
12taxable income greater than two hundred thousand dollars
13($200,000).
14(e) Section 6707A(e) of the Internal Revenue Code, relating to
15a penalty reported to the Securities and Exchange Commission,
17(f) Section 6707A(d) of the Internal Revenue Code, relating to
18authority to rescind penalty, shall not apply, and in lieu thereof,
19the following shall apply:
20(1) The Chief Counsel of the Franchise Tax Board may rescind
21all or any portion of any penalty imposed by this section with
22respect to any violation if all of the following apply:
23(A) The violation is with respect to a reportable transaction
24other than a listed transaction.
25(B) The person on whom the penalty is imposed has a history
26of complying with the requirements of this part and Part 10
27(commencing with Section 17001) or Part 11 (commencing with
28Section 23001).
29(C) It is shown that the violation is due to an unintentional
30mistake of fact.
31(D) Imposing the penalty would be against equity and good
32conscience.
33(E) Rescinding the penalty would promote compliance with the
34requirements of this part and Part 10 (commencing with Section
3517001) or Part 11 (commencing with Section 23001) and effective
36tax administration.
37(2) The exercise of authority under paragraph (1) shall be at the
38sole discretion of the Chief Counsel of the Franchise Tax Board
39and may not be delegated.
P47 1(3) Notwithstanding any other law or rule of law, any
2determination under this subdivision may not be reviewed in any
3administrative or judicial proceeding.
4(g) Article 3 (commencing with Section 19031) of Chapter 4
5(relating to deficiency assessments) shall not apply with respect
6to the assessment or collection of any penalty imposed under this
8(h) The penalty imposed by this section is in addition to any
9penalty imposed under Part 10 (commencing with Section 17001),
10Part 11 (commencing with Section 23001), or this part.
11(i) The amendments made to this section by the act adding this
12subdivision shall apply to penalties assessed on or after January
131, 2016.
Section 23622.7 of the Revenue and Taxation Code
17(as defined by Section 23036) to a taxpayer who employs a
18qualified employee in an enterprise zone during the taxable year.
20(1) Fifty percent of qualified wages in the first year of
22(2) Forty percent of qualified wages in the second year of
24(3) Thirty percent of qualified wages in the third year of
26(4) Twenty percent of qualified wages in the fourth year of
28(5) Ten percent of qualified wages in the fifth year of
32(A) (i) Except as provided in clause (ii), that portion of wages
33paid or incurred by the taxpayer during the taxable year to qualified
34employees that does not exceed 150 percent of the minimum wage.
35(ii) For up to 1,350 qualified employees who are employed by
36the taxpayer in the Long Beach Enterprise Zone in aircraft
37manufacturing activities described in Codes 3721 to 3728,
38inclusive, and Code 3812 of the Standard Industrial Classification
39(SIC) Manual published by the United States Office of
40Management and Budget, 1987 edition, “qualified wages” means
P48 1that portion of hourly wages that does not exceed 202 percent of
2the minimum wage.
3(B) Wages received during the 60-month period beginning with
4the first day the employee commences employment with the
7operations of the taxpayer does not constitute commencement of
8employment for purposes of this section.
9(C) Qualified wages do not include any wages paid or incurred
10by the taxpayer on or after the zone expiration date. However,
11wages paid or incurred with respect to qualified employees who
12are employed by the taxpayer within the enterprise zone within
13the 60-month period prior to the zone expiration date shall continue
14to qualify for the credit under this section after the zone expiration
15date, in accordance with all provisions of this section applied as
16if the enterprise zone designation were still in existence and
17binding.
18(2) “Minimum wage” means the wage established by the
19Industrial Welfare Commission as provided for in Chapter 1
20(commencing with Section 1171) of Part 4 of Division 2 of the
21Labor Code.
22(3) “Zone expiration date” means the date the enterprise zone
23designation expires, is no longer binding, becomes inoperative, or
24is repealed.
25(4) (A) “Qualified employee” means an individual who meets
26all of the following requirements:
27(i) At least 90 percent of whose services for the taxpayer during
28the taxable year are directly related to the conduct of the taxpayer’s
29trade or business located in an enterprise zone.
30(ii) Performs at least 50 percent of his or her services for the
31taxpayer during the taxable year in an enterprise zone.
32(iii) Is hired by the taxpayer after the date of original designation
33of the area in which services were performed as an enterprise zone.
34(iv) Is any of the following:
35(I) Immediately preceding the qualified employee’s
36commencement of employment with the taxpayer, was a person
37eligible for services under the federal Job Training Partnership
38Act (29 U.S.C. Sec. 1501 et seq.), or its successor, who is receiving,
39or is eligible to receive, subsidized employment, training, or
P49 1services funded by the federal Job Training Partnership Act, or its
2successor.
3(II) Immediately preceding the qualified employee’s
4commencement of employment with the taxpayer, was a person
5eligible to be a voluntary or mandatory registrant under the Greater
6Avenues for Independence Act of 1985 (GAIN) provided for
7pursuant to Article 3.2 (commencing with Section 11320) of
8Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions
9Code, or its successor.
10(III) Immediately preceding the qualified employee’s
11commencement of employment with the taxpayer, was an
12economically disadvantaged individual 14 years of age or older.
13(IV) Immediately preceding the qualified employee’s
14commencement of employment with the taxpayer, was a dislocated
15worker who meets any of the following:
16(aa) Has been terminated or laid off or who has received a notice
17of termination or layoff from employment, is eligible for or has
18exhausted entitlement to unemployment insurance benefits, and
19is unlikely to return to his or her previous industry or occupation.
20(bb) Has been terminated or has received a notice of termination
21of employment as a result of any permanent closure or any
22substantial layoff at a plant, facility, or enterprise, including an
23individual who has not received written notification but whose
24employer has made a public announcement of the closure or layoff.
25(cc) Is long-term unemployed and has limited opportunities for
26employment or reemployment in the same or a similar occupation
27in the area in which the individual resides, including an individual
2855 years of age or older who may have substantial barriers to
29employment by reason of age.
30(dd) Was self-employed (including farmers and ranchers) and
31is unemployed as a result of general economic conditions in the
32community in which he or she resides or because of natural
33disasters.
34(ee) Was a civilian employee of the Department of Defense
35employed at a military installation being closed or realigned under
36the Defense Base Closure and Realignment Act of 1990.
37(ff) Was an active member of the armed forces or National
38Guard as of September 30, 1990, and was either involuntarily
39separated or separated pursuant to a special benefits program.
P50 1(gg) Is a seasonal or migrant worker who experiences chronic
2seasonal unemployment and underemployment in the agriculture
3industry, aggravated by continual advancements in technology and
4mechanization.
5(hh) Has been terminated or laid off, or has received a notice
6of termination or layoff, as a consequence of compliance with the
7Clean Air Act.
8(V) Immediately preceding the qualified employee’s
9commencement of employment with the taxpayer, was a disabled
10individual who is eligible for or enrolled in, or has completed a
11state rehabilitation plan or is a service-connected disabled veteran,
12veteran of the Vietnam era, or veteran who is recently separated
13from military service.
14(VI) Immediately preceding the qualified employee’s
15commencement of employment with the taxpayer, was an
16ex-offender. An individual shall be treated as convicted if he or
17she was placed on probation by a state court without a finding of
18guilt.
19(VII) Immediately preceding the qualified employee’s
20commencement of employment with the taxpayer, was a person
21eligible for or a recipient of any of the following:
22(aa) Federal Supplemental Security Income benefits.
23(bb) Aid to Families with Dependent Children.
24(cc) CalFresh benefits.
25(dd) State and local general assistance.
26(VIII) Immediately preceding the qualified employee’s
27commencement of employment with the taxpayer, was a member
28of a federally recognized Indian tribe, band, or other group of
29Native American descent.
30(IX) Immediately preceding the qualified employee’s
31commencement of employment with the taxpayer, was a resident
32of a targeted employment area (as defined in Section 7072 of the
33Government Code).
34(X) An employee who qualified the taxpayer for the enterprise
35zone hiring credit under former Section 23622 or the program area
36hiring credit under former Section 23623.
37(XI) Immediately preceding the qualified employee’s
38commencement of employment with the taxpayer, was a member
39of a targeted group, as defined in Section 51(d) of the Internal
40Revenue Code, or its successor.
P51 1(B) Priority for employment shall be provided to an individual
2who is enrolled in a qualified program under the federal Job
3Training Partnership Act or the Greater Avenues for Independence
4Act of 1985 or who is eligible as a member of a targeted group
5under the Work Opportunity Tax Credit (Section 51 of the Internal
6Revenue Code), or its successor.
7(5) “Taxpayer” means a corporation engaged in a trade or
8business within an enterprise zone designated pursuant to Chapter
912.8 (commencing with Section 7070) of Division 7 of Title 1 of
10the Government Code.
11(6) “Seasonal employment” means employment by a taxpayer
12that has regular and predictable substantial reductions in trade or
13business operations.
14(c) The taxpayer shall do both of the following:
15(1) Obtain from the Employment Development Department, as
16permitted by federal law, the local county or city Job Training
17Partnership Act administrative entity, the local county GAIN office
18or social services agency, or the local government administering
19the enterprise zone, a certification that provides that a qualified
20employee meets the eligibility requirements specified in clause
21(iv) of subparagraph (A) of paragraph (4) of subdivision (b). The
22Employment Development Department may provide preliminary
23screening and referral to a certifying agency. The Employment
24Development Department shall develop a form for this purpose.
25The Department of Housing and Community Development shall
26develop regulations governing the issuance of certificates by local
27governments pursuant to subdivision (a) of Section 7086 of the
29(2) Retain a copy of the certification and provide it upon request
30to the Franchise Tax Board.
31(d) (1) For purposes of this section:
32(A) All employees of all corporations which are members of
33the same controlled group of corporations shall be treated as
34employed by a single taxpayer.
35(B) The credit, if any, allowable by this section to each member
36shall be determined by reference to its proportionate share of the
37expense of the qualified wages giving rise to the credit, and shall
38be allocated in that manner.
P52 1(C) For purposes of this subdivision, “controlled group of
2corporations” means “controlled group of corporations” as defined
3in Section 1563(a) of the Internal Revenue Code, except that:
4(i) “More than 50 percent” shall be substituted for “at least 80
5percent” each place it appears in Section 1563(a)(1) of the Internal
7(ii) The determination shall be made without regard to
8subsections (a)(4) and (e)(3)(C) of Section 1563 of the Internal
10(2) If an employer acquires the major portion of a trade or
11business of another employer (hereinafter in this paragraph referred
12to as the “predecessor”) or the major portion of a separate unit of
13a trade or business of a predecessor, then, for purposes of applying
14this section (other than subdivision (e)) for any calendar year
15ending after that acquisition, the employment relationship between
16a qualified employee and an employer shall not be treated as
17terminated if the employee continues to be employed in that trade
18or business.
19(e) (1) (A) If the employment, other than seasonal employment,
20of any qualified employee with respect to whom qualified wages
21are taken into account under subdivision (a) is terminated by the
22taxpayer at any time during the first 270 days of that employment,
23whether or not consecutive, or before the close of the 270th
24calendar day after the day in which that employee completes 90
25days of employment with the taxpayer, the tax imposed by this
26part for the taxable year in which that employment is terminated
27shall be increased by an amount equal to the credit allowed under
28 subdivision (a) for that taxable year and all prior taxable years
29attributable to qualified wages paid or incurred with respect to that
30employee.
31(B) If the seasonal employment of any qualified employee, with
32respect to whom qualified wages are taken into account under
33subdivision (a) is not continued by the taxpayer for a period of
34270 days of employment during the 60-month period beginning
35with the day the qualified employee commences seasonal
36employment with the taxpayer, the tax imposed by this part, for
37the taxable year that includes the 60th month following the month
38in which the qualified employee commences seasonal employment
39with the taxpayer, shall be increased by an amount equal to the
40credit allowed under subdivision (a) for that taxable year and all
P53 1prior taxable years attributable to qualified wages paid or incurred
2with respect to that qualified employee.
3(2) (A) Subparagraph (A) of paragraph (1) shall not apply to
5(i) A termination of employment of a qualified employee who
6voluntarily leaves the employment of the taxpayer.
7(ii) A termination of employment of a qualified employee who,
8before the close of the period referred to in subparagraph (A) of
9paragraph (1), becomes disabled and unable to perform the services
10of that employment, unless that disability is removed before the
11close of that period and the taxpayer fails to offer reemployment
12to that employee.
P54 1(iv) A failure to continue seasonal employment of a qualified
35Revenue Code, as amended by the Emergency Economic
36Stabilization Act of 2008 (Public Law 110-343).
P55 1(i) In the case where the credit otherwise allowed under this
P56 1years, if necessary, until the credit is exhausted, as if it were an
Section 23622.8 of the Revenue and Taxation Code
P57 1(5) Ten percent of the qualified wages in the fifth year of
10 section shall not exceed two million dollars ($2,000,000) per
P58 1(5) “Qualified disadvantaged individual” means an individual
P59 1of the county in which the manufacturing enhancement area is
P60 1attributable to qualified wages paid or incurred with respect to that
P61 1(i) A failure to continue the seasonal employment of a qualified
P62 1(e) The credit shall be reduced by the credit allowed under
3credit allowed under Section 51 of the Internal Revenue Code, as
4amended by the Emergency Economic Stabilization Act of 2008
5(Public Law 110-343).
P63 1of which is the average value of all the taxpayer’s real and tangible
P64 1(j) (1) Except as provided in paragraph (2), this section shall
Section 23646 of the Revenue and Taxation Code is
P65 1(C) Wages received during the 60-month period beginning with
P66 1Article 3.2 (commencing with Section 11320) of Chapter 2 of Part
P67 1(vi) An ex-offender. An individual shall be treated as convicted
P68 1numerator of which is the number of months of the taxable year
P69 1(A) All employees of all corporations that are members of the
P70 160-month period beginning with the day the qualified
P71 1and the qualified taxpayer fails to offer seasonal employment to
P72 1(g) The credit shall be reduced by the credit allowed under
4amended by the Emergency Stabilization Act of 2008 (Public Law
5110-343).
P73 1 of all the taxpayer’s real and tangible personal property owned or
39described in Section 501(c)(9) of the Internal Revenue Code.
4to income from discharge of indebtedness, shall apply, except as
5otherwise provided.
6(b) Section 108(b)(2)(B) of the Internal Revenue Code, relating
7to general business credit, is modified by substituting “this part”
8in lieu of “Section 38 (relating to general business credit).”
9(c) Section 108(b)(2)(G) of the Internal Revenue Code, relating
10to foreign tax credit carryovers, shall not apply.
11(d) Section 108(b)(3)(B) of the Internal Revenue Code, relating
12to credit carryover reduction, is modified by substituting “11.1
13cents” in lieu of “331⁄3 cents” in each place in which it appears. In
14the case where more than one credit is allowable under this part,
15the credits shall be reduced on a pro rata basis.
16(e) Section 108(g)(3)(B) of the Internal Revenue Code, relating
17to adjusted tax attributes, is modified by substituting “$9” in lieu
18of “$3.”
19(f) (1) The amendments to Section 108 of the Internal Revenue
20Code made by Section 13150 of the Revenue Reconciliation Act
21of 1993 (Public Law 103-66), relating to exclusion from gross
22income for income from discharge of qualified real property
23business indebtedness, shall apply to discharges occurring on or
24after January 1, 1996, in taxable years beginning on or after January
251, 1996.
26(2) If a taxpayer makes an election for federal income tax
30paragraph (3) of subdivision (e) of Section 23051.5 and the federal
32(3) If a taxpayer has not made an election for federal income
37(g) The amendments to Section 108 of the Internal Revenue
38Code made by Section 13226 of the Revenue Reconciliation Act
39of 1993 (Public Law 103-66), relating to modifications of discharge
40of indebtedness provisions, shall apply to discharges occurring on
P75 1or after January 1, 1996, in taxable years beginning on or after
2January 1, 1996.
3(h) The amendments made to Section 108(d)(7)(A) of the
4Internal Revenue Code, relating to certain provisions to be applied
5at the corporate level by Section 402 of the Job Creation and
6Worker Assistance Act of 2002 (Public Law 107-147), shall apply
7to discharges of indebtedness after December 31, 2001, in taxable
8years ending after that date. This subdivision shall not apply to
9any discharge of indebtedness made before March 1, 2002, pursuant
10to a plan of reorganization filed with a bankruptcy court on or
11before October 11, 2001.
12(i) Section 108(i) of the Internal Revenue Code, relating to
13deferral and ratable inclusion of income arising from business
14indebtedness discharged by the reacquisition of a debt instrument,
15shall not apply.
Section 24345.5 is added to the Revenue and Taxation
19by subsection (a) of Section 9008 of the Patient Protection and
20Affordable Care Act (Public Law 111-148).
24losses, expenses, and interest with respect to transactions between
25related taxpayers, shall apply, except as otherwise provided.
29corporation for any premium paid or incurred upon the repurchase
30of a bond, debenture, note, or certificate or other evidence of
31indebtedness which is convertible into the stock of the issuing
32corporation, or a corporation in the same parent-subsidiary
33controlled group, within the meaning of Section 1563(a)(1) of the
34Internal Revenue Code, relating to parent-subsidiary controlled
35group, as the issuing corporation, to the extent the repurchase price
36exceeds an amount equal to the adjusted issue price plus a normal
37call premium on bonds or other evidences of indebtedness which
38are not convertible. The preceding sentence shall not apply to the
39extent that the corporation can demonstrate to the satisfaction of
P76 1the Franchise Tax Board that such excess is attributable to the cost
2of borrowing and is not attributable to the conversion feature.
3 (b) For purposes of subdivision (a), the adjusted issue price is
4the issue price, as defined in Sections 1273(b) and 1274 of the
5Internal Revenue Code, increased by any amount of discount
6deducted before repurchase, or, in the case of bonds or other
7evidences of indebtedness issued after February 28, 1913,
8decreased by any amount of premium included in gross income
9before repurchase by the issuing corporation.
10(c) The provisions of this section shall not apply to a convertible
11bond or other convertible evidence of indebtedness repurchased
12pursuant to a binding obligation incurred on or before April 22,
131969, to repurchase such bond or other evidence of indebtedness
14at a specified call premium, but no inference shall be drawn from
15the fact that this section does not apply to the repurchase of such
16convertible bond or other convertible evidence of indebtedness.
17(d) The amendments made to this section by the act adding this
18subdivision shall apply to repurchases on or after January 1, 2015.
33Revenue Code, relating to regulated investment companies and
34real estate investment trusts, shall apply, except as otherwise
39relating to imposition of tax on regulated investment companies,
P77 1(2) Every regulated investment company shall be subject to the
2taxes imposed under Chapter 2 (commencing with Section 23101)
3and Chapter 3 (commencing with Section 23501), except that its
4“net income” shall be equal to its “investment company income,”
5as defined in subdivision (b).
6(3) (A) Section 851(d)(2)(C)(i)(I) of the Internal Revenue Code
7is modified by substituting “$12,500” for “$50,000.”
8(B) Section 851(d)(2)(C)(i)(II) of the Internal Revenue Code is
9modified by substituting the phrase “the rate of tax specified in
10Section 23151” for the phrase “the highest rate of tax specified in
11section 11” contained therein.
12(C) Section 851(d)(2)(C)(iii) of the Internal Revenue Code,
13relating to administrative provisions, is modified by substituting
14the phrase “Article 3 of Part 10.2 (commencing with Section
1519031), a tax imposed by this subparagraph shall be treated as a
16tax with respect to which the deficiency procedures of such article
17apply” for the phrase “subtitle F, a tax imposed by this
18subparagraph shall be treated as an excise tax with respect to which
19the deficiency procedures of such subtitle apply” contained therein.
20(D) Section 851(i)(2) of the Internal Revenue Code, relating to
21imposition of tax on failures, shall not apply.
22(b) “Investment company income” means investment company
23taxable income, as defined in Section 852(b)(2) of the Internal
24Revenue Code, modified as follows:
25(1) Section 852(b)(2)(A) of the Internal Revenue Code, relating
26to an exclusion for net capital gain, does not apply.
27(2) Section 852(b)(2)(B) of the Internal Revenue Code, relating
28to net operating losses, is modified to deny the deduction allowed
29under Sections 24416 and 24416.1, in lieu of denying the deduction
30allowed by Section 172 of the Internal Revenue Code.
31(3) In lieu of the provision of Section 852(b)(2)(C) of the
32Internal Revenue Code, relating to special deductions for
33corporations, no deduction shall be allowed under Sections 24402,
3424406, 24410, and 25106.
35(4) The deduction for dividends paid, under Section
36852(b)(2)(D) of the Internal Revenue Code, is modified to allow
37capital gain dividends and exempt interest dividends (to the extent
38that interest is included in gross income under this part) to be
39included in the computation of the deduction.
P78 1(c) Section 852(b)(3)(A) of the Internal Revenue Code, relating
2to imposition of tax, shall not apply.
3(d) (1) Section 852(b)(5) of the Internal Revenue Code, relating
4to exempt-interest dividends, is modified by substituting the phrase
5“that, when held by an individual, the interest therefrom is exempt
6from taxation by this state” for the phrase “described in section
7103(a)” contained therein.
8(2) Section 852(b)(5)(A)(iv)(V) of the Internal Revenue Code,
9relating to exempt interest, is modified by substituting the phrase
10“on obligations that, if held by an individual, is exempt from
11taxation by this state, over the amounts disallowed as deductions
12under subdivision (b) of Section 24360 or Section 24425” for the
13phrase “excludable from gross income under section 103(a) over
14the amounts disallowed as deductions under sections 265 and
15171(a)(2)” contained therein.
16(3) Section 852(b)(5)(B) of the Internal Revenue Code, relating
17to treatment of exempt-interest dividends by shareholders, shall
18not apply.
19(e) Section 854 of the Internal Revenue Code, relating to
20limitations applicable to dividends received from regulated
21investment companies, is modified to refer to Sections 24402,
2224406, 24410, and 25106, in lieu of Section 243 of the Internal
24(f) Section 852(g)(1)(A) of the Internal Revenue Code is
25modified by substituting the phrase “subdivision (a) of Section
2617145” for the phrase “the first sentence of subsection (b)(5)”
27contained therein.
33relating to alternative tax for corporations, shall not be applicable.
34(b) The provisions of Section 1212 of the Internal Revenue
35Code, relating to capital loss carrybacks and carryovers, are
36modified as follows:
37(1) Section 1212(a)(1)(A) of the Internal Revenue Code, relating
38to capital loss carrybacks, shall not apply.
39(2) Section 1212(a)(4) of the Internal Revenue Code, relating
40to special rules on carrybacks, shall not apply.
P79 1(3) Sections 1212(b) and 1212(c) of the Internal Revenue Code,
2relating to other taxpayers and carryback of losses from Section
31256 contracts to offset prior gains from such contracts,
4respectively, shall not apply.
6this act shall apply to taxable years beginning on or after January
71, 2015.
8(b) Sections 201 to 221, inclusive, of the Tax Technical
9Corrections Act of 2014 (Title II of Division A of Public Law
10113-295), enacted numerous technical corrections and clarifications
11to provisions of the Internal Revenue Code, including technical
12corrections and clarifications relating to the American Taxpayer
13 Relief Act of 2012 (Public Law 112-240), the Middle Class Tax
14Relief and Job Creation Act of 2012 (Public Law 112-96), the
15FAA Modernization and Reform Act of 2012 (Title IX of Public
16Law 112-95), the Regulated Investment Company Modernization
17Act of 2010 (Public Law 111-325), the Tax Relief, Unemployment
18Insurance Reauthorization, and Job Creation Act of 2010 (Public
19Law 111-312), the Creating Small Business Jobs Act of 2010 (Title
20II of Public Law 111-240), the Hiring Incentives to Restore
21Employment Act (Public Law 111-147), the American Recovery
22and Reinvestment Tax Act of 2009 (Public Law 111-5), the
23Economic Stimulus Act of 2008 (Division A of Public Law
24110-343), the Energy Improvement and Extension Act of 2008
25(Division B of Public Law 110-343), the Tax Extenders and
26Alternative Minimum Tax Relief Act of 2008 (Division C of Public
27Law 110-343), the Housing Assistance Tax Act of 2008 (Division
28C of Public Law 110-289), the Heroes Earnings Assistance and
29Relief Tax Act of 2008 (Public Law 110-245), the Tax Technical
30Corrections Act of 2007 (Public Law 110-172), the Tax Relief and
31Health Care Act of 2006 (Public Law 109-432), the Safe,
32Accountable, Flexible, Efficient Transportation Equity Act of
332005: A Legacy for Users (Public Law 109-59), the Energy Tax
34Incentives Act of 2005 (Title XIII of Public Law 109-58), and the
35American Jobs Creation Act of 2004 (Public Law 108-357), some
36of which are incorporated by reference into Part 10 (commencing
37with Section 17001), Part 10.2 (commencing with Section 18401),
38and Part 11 (commencing with Section 23001) of Division 2 of
39the Revenue and Taxation Code. Unless otherwise provided, the
40technical corrections described in the preceding sentence, to the
P80 1extent that they correct provisions that are incorporated by
2reference into the Revenue and Taxation Code, are declaratory of
3existing law and shall be applied in the same manner and for the
4same periods as specified for federal purposes, or if later, the
5specified date of incorporation.
7validity and ongoing effect of Senate Bill No. 401 of the 2009-10
8Regular Session.
10of Article IV of the Constitution and shall go into immediate effect.
12immediate preservation of the public peace, health, or safety within
13the meaning of Article IV of the Constitution and shall go into
14immediate effect. The facts constituting the necessity are:
15In order to provide much needed tax relief to taxpayers in
16conformity with federal tax relief enacted in the last four years
17and to alleviate administrative burdens on state tax agencies, it is
18necessary that this act go into immediate effect.