Bill Text: CA AB2126 | 2009-2010 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Minimum annual tax: exemptions: corporations.

Spectrum: Partisan Bill (Republican 14-0)

Status: (Introduced - Dead) 2010-05-28 - In committee: Set, first hearing. Referred to APPR. suspense file. In committee: Set, first hearing. Held under submission. [AB2126 Detail]

Download: California-2009-AB2126-Introduced.html

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BILL NUMBER: AB 2126	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Garrick

                        FEBRUARY 18, 2010

   An act to amend Section 23153 of the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2126, as introduced, Garrick. Minimum annual tax: exemptions:
corporations.
   Existing law, generally, imposes a minimum franchise tax of $800,
except as provided, on every corporation incorporated in this state,
qualified to transact intrastate business in this state, or doing
business in this state, and on every limited partnership, limited
liability partnership, and limited liability company registered,
qualified to transact business, or doing business in this state, as
specified.
   This bill would, for the first 10 taxable years of a corporation
that first commences business operations on or after January 1, 2009,
reduce that minimum tax, as provided.
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 23153 of the Revenue and Taxation Code is
amended to read:
   23153.  (a) Every corporation described in subdivision (b) shall
be subject to the minimum franchise tax specified in subdivision (d)
from the earlier of the date of incorporation, qualification, or
commencing to do business within this state, until the effective date
of dissolution or withdrawal as provided in Section 23331 or, if
later, the date the corporation ceases to do business within the
limits of this state.
   (b) Unless expressly exempted by this part or the California
Constitution, subdivision (a) shall apply to each of the following:
   (1) Every corporation that is incorporated under the laws of this
state.
   (2) Every corporation that is qualified to transact intrastate
business in this state pursuant to Chapter 21 (commencing with
Section 2100) of Division 1 of Title 1 of the Corporations Code.
   (3) Every corporation that is doing business in this state.
   (c) The following entities are not subject to the minimum
franchise tax specified in this section:
   (1) Credit unions.
   (2) Nonprofit cooperative associations organized pursuant to
Chapter 1 (commencing with Section 54001) of Division 20 of the Food
and Agricultural Code that have been issued the certificate of the
board of supervisors prepared pursuant to Section 54042 of the Food
and Agricultural Code. The association shall be exempt from the
minimum franchise tax for five consecutive taxable years, commencing
with the first taxable year for which the certificate is issued
pursuant to subdivision (b) of Section 54042 of the Food and
Agricultural Code. This paragraph only applies to nonprofit
cooperative associations organized on or after January 1, 1994.
   (d) (1) Except as provided in paragraph (2), paragraph (1) of
subdivision (f) of Section 23151, paragraph (1) of subdivision (f) of
Section 23181, and paragraph (1) of subdivision (c) of Section
23183, corporations subject to the minimum franchise tax shall pay
annually to the state a minimum franchise tax of eight hundred
dollars ($800).
   (2) The minimum franchise tax shall be twenty-five dollars ($25)
for each of the following:
   (A) A corporation formed under the laws of this state whose
principal business when formed was gold mining, which is inactive and
has not done business within the limits of the state since 1950.
   (B) A corporation formed under the laws of this state whose
principal business when formed was quicksilver mining, which is
inactive and has not done business within the limits of the state
since 1971, or has been inactive for a period of 24 consecutive
months or more.
   (3) For purposes of paragraph (2), a corporation shall not be
considered to have done business if it engages in other than mining.
   (e) Notwithstanding subdivision (a), for taxable years beginning
on or after January 1, 1999, and before January 1, 2000, every
"qualified new corporation" shall pay annually to the state a minimum
franchise tax of five hundred dollars ($500) for the second taxable
year. This subdivision shall apply to any corporation that is a
qualified new corporation and is incorporated on or after January 1,
1999, and before January 1, 2000.
   (1) The determination of the gross receipts of a corporation, for
purposes of this subdivision, shall be made by including the gross
receipts of each member of the commonly controlled group, as defined
in Section 25105, of which the corporation is a member.
   (2) "Gross receipts, less returns and allowances reportable to
this state," means the sum of the gross receipts from the production
of business income, as defined in subdivision (a) of Section 25120,
and the gross receipts from the production of nonbusiness income, as
defined in subdivision (d) of Section 25120.
   (3) "Qualified new corporation" means a corporation that is
incorporated under the laws of this state or has qualified to
transact intrastate business in this state, that begins business
operations at or after the time of its incorporation and that
reasonably estimates that it will have gross receipts, less returns
and allowances, reportable to this state for the taxable year of one
million dollars ($1,000,000) or less. "Qualified new corporation"
does not include any corporation that began business operations as a
sole proprietorship, a partnership, or any other form of business
entity prior to its incorporation. This subdivision shall not apply
to any corporation that reorganizes solely for the purpose of
reducing its minimum franchise tax.
   (4) This subdivision shall not apply to limited partnerships, as
defined in Section 17935, limited liability companies, as defined in
Section 17941, limited liability partnerships, as defined in Section
17948, charitable organizations, as described in Section 23703,
regulated investment companies, as defined in Section 851 of the
Internal Revenue Code, real estate investment trusts, as defined in
Section 856 of the Internal Revenue Code, real estate mortgage
investment conduits, as defined in Section 860D of the Internal
Revenue Code, financial asset securitization investment trusts, as
defined in Section 860L of the Internal Revenue Code, qualified
Subchapter S subsidiaries, as defined in Section 1361(b)(3) of the
Internal Revenue Code, or to the formation of any subsidiary
corporation, to the extent applicable.
   (5) For any taxable year beginning on or after January 1, 1999,
and before January 1, 2000, if a corporation has qualified to pay
five hundred dollars ($500) for the second taxable year under this
subdivision, but in its second taxable year, the corporation's gross
receipts, as determined under paragraphs (1) and (2), exceed one
million dollars ($1,000,000), an additional tax in the amount equal
to three hundred dollars ($300) for the second taxable year shall be
due and payable by the corporation on the due date of its return,
without regard to extension, for that year.
   (f) (1) Notwithstanding subdivision (a), every corporation that
incorporates or qualifies to do business in this state on or after
January 1, 2000, shall not be subject to the minimum franchise tax
for its first taxable year.
   (2) This subdivision shall not apply to limited partnerships, as
defined in Section 17935, limited liability companies, as defined in
Section 17941, limited liability partnerships, as defined in Section
17948, charitable organizations, as described in Section 23703,
regulated investment companies, as defined in Section 851 of the
Internal Revenue Code, real estate investment trusts, as defined in
Section 856 of the Internal Revenue Code, real estate mortgage
investment conduits, as defined in Section 860D of the Internal
Revenue Code, financial asset securitization investment trusts, as
defined in Section 860L of the Internal Revenue Code, and qualified
Subchapter S subsidiaries, as defined in Section 1361(b)(3) of the
Internal Revenue Code, to the extent applicable.
   (3) This subdivision shall not apply to any corporation that
reorganizes solely for the purpose of avoiding payment of its minimum
franchise tax.
   (g) Notwithstanding subdivision (a), a domestic corporation, as
defined in Section 167 of the Corporations Code, that files a
certificate of dissolution in the office of the Secretary of State
pursuant to subdivision (c) of Section 1905 of the Corporations Code,
prior to its amendment by the act amending this subdivision, and
that does not thereafter do business shall not be subject to the
minimum franchise tax for taxable years beginning on or after the
date of that filing.
   (h) The minimum franchise tax imposed by paragraph (1) of
subdivision (d) shall not be increased by the Legislature by more
than 10 percent during any calendar year. 
   (i) Notwithstanding subdivision (a), each corporation that first
commences business operation on or after January 1, 2009, shall not
be subject to the minimum franchise tax for its first taxable year
and shall pay annually to the state a minimum franchise tax of one
hundred dollars ($100) for each of its succeeding nine taxable years.
This subdivision shall not apply to the following:  
   (1) Any corporation that began business operations as a sole
proprietorship, a partnership, or any other form of business entity
prior to its incorporation, or any corporation that reorganizes
solely for the purpose of reducing its minimum franchise tax. 
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.