Bill Text: CA AB1612 | 2021-2022 | Regular Session | Introduced

California Assembly Bill 1612 (Prior Session Legislation)

Introduced

Bill Title: Taxation: Federal Consolidated Appropriations Act, 2021: Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act: shuttered venue operator grants.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2022-01-14 - Referred to Com. on REV. & TAX. [AB1612 Detail]

Download: California-2021-AB1612-Introduced.html

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 1612

Introduced by Assembly Member Burke

January 05, 2022

An act to add Sections 17158.3 and 24308.3 to the Revenue and Taxation Code, relating to taxation, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL'S DIGEST

AB 1612, as introduced, Burke. Taxation: Federal Consolidated Appropriations Act, 2021: Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act: shuttered venue operator grants.

The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally define “gross income” as income from whatever source derived, and provide various exclusions from gross income. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

Existing federal law, the Hard-Hit Small Businesses, Nonprofits, and Venues Act, among other things, awards grants to eligible shuttered venue operators, including live venue operators or promoters, theatrical producers, and live performing arts organization operators. Existing federal law excludes from gross income for purposes of federal income taxes any amount received in the form of a shuttered venue operator grant, as specified. Existing federal law prohibits reductions in tax deductions, reductions in tax attributes, and denials of basis adjustments, for federal income tax purposes based on that exclusion.

This bill, for taxable years beginning on or after January 1, 2019, and in conformity with federal law, would exclude from gross income any amount received in the form of a federal shuttered venue operator grant. The bill would adopt, except as provided, the provisions of the federal Consolidated Appropriations Act, 2021, prohibiting any reduction in tax deductions, reductions in tax attributes, and denials of basis adjustments based on the exclusion from gross income, as provided.

This bill would provide findings to comply with the additional information requirement for any bill authorizing a new tax expenditure.

This bill would also make findings and declarations related to a gift of public funds.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 17158.3 is added to the Revenue and Taxation Code, to read:

17158.3.

(a) For taxable years beginning on or after January 1, 2019, gross income does not include any amount awarded as a shuttered venue operator grant pursuant to Section 9009a of Title 15 of the United States Code.

(b) (1) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part”.

(3) Paragraphs (2) and (3) of subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(1) “Ineligible entity” means a taxpayer that either:

(A) Is a publicly-traded company.

(B) Does not meet the reduction from the gross receipts requirements of Section 636(a)(37)(A)(iv)(bb) of Title 15 of the United States Code, as added by Section 311 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(2) “Publicly-traded company” means a publicly-traded entity as described in Section 342 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(d) This section shall be operative for taxable years beginning on or after January 1, 2019.

SEC. 2.

Section 24308.3 is added to the Revenue and Taxation Code, to read:

24308.3.

(b) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2019, subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(3) Paragraphs (2) and (3) of subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(1) “Ineligible entity” means a taxpayer that either:

(A) Is a publicly-traded company.

(2) “Publicly-traded company” means a publicly-traded entity as described in Section 342 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(d) This section shall be operative for taxable years beginning on or after January 1, 2019.

SEC. 3.

For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 17158.3 and 24308.3 of the Revenue and Taxation Code as added by this act (hereafter “the deductions, exclusions, tax basis, and other attributes”), the Legislature finds and declares all of the following:

(a) The specific goal, purpose, and objective that the deductions, exclusions, tax basis, and other attributes will achieve is to provide assistance to shuttered venues operating in the state that have been harmed economically by the COVID-19 pandemic.

(b) Detailed performance indicators for the Legislature to use in determining whether the deductions, exclusions, tax basis, and other attributes meet the goal, purpose, and objective described in subdivision (a) is the extent to which the businesses that received a shuttered venue operator grant and subsequently used the deductions, exclusions, tax basis, and other attributes reflect the industries, regions, and businesses by type of ownership that were most substantially harmed by the COVID-19 pandemic, and whether any particular industries, regions, or businesses by type of ownership in the business community were not able to receive a shuttered venue operator grant and the deductions, exclusions, tax basis, and other attributes.

(c) The Legislative Analyst’s Office shall collaborate with the Franchise Tax Board, as well as reviewing other publicly available data, to analyze whether the shuttered venue operator grants and the tax benefits of the deductions, exclusions, tax basis, and other attributes were distributed evenly over industries, regions, and businesses by type of ownership harmed by the COVID-19 pandemic and report by January 1, 2024, and in compliance with Section 9795 of the Government Code, to the Legislature.

(d) The data collection requirements for determining whether the deductions, exclusions, tax basis, and other attributes meet, or fail to meet, the specific goal, purpose, and objective described in subdivision (a) are:

(1) To assist the Legislature in determining whether the deductions, exclusions, tax basis, and other attributes meet the specific goal, purpose, and objective described in subdivision (a), and in order to carry out its duties pursuant to subdivision (c), the Legislative Analyst’s Office may request information from the Franchise Tax Board.

(2) (A) The Franchise Tax Board shall provide any available data requested by the Legislative Analyst’s Office pursuant to this subdivision.

(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code.

SEC. 4.

The Legislature hereby finds and declares that the deductions and other tax benefits authorized by Sections 17158.3 and 24308.3 of the Revenue and Taxation Code made by this bill serve the public purpose of securing the financial condition of businesses that were economically harmed by the COVID-19 pandemic and do not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.

SEC. 5.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to provide, as soon as possible, much needed tax relief in conformity with federal tax relief enacted due to the COVID-19 pandemic and to assist California businesses struggling under the economic strain thereof, it is necessary that this act go into immediate effect.