Bill Text: CA AB308 | 2019-2020 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Taxation: corporations: minimum franchise tax: limited liability companies: annual tax.
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Passed) 2019-10-02 - Chaptered by Secretary of State - Chapter 421, Statutes of 2019. [AB308 Detail]
Download: California-2019-AB308-Introduced.html
Bill Title: Taxation: corporations: minimum franchise tax: limited liability companies: annual tax.
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Passed) 2019-10-02 - Chaptered by Secretary of State - Chapter 421, Statutes of 2019. [AB308 Detail]
Download: California-2019-AB308-Introduced.html
CALIFORNIA LEGISLATURE—
2019–2020 REGULAR SESSION
| Assembly Bill | No. 308 |
| Introduced by Assembly Members Muratsuchi and Smith |
January 29, 2019 |
An act to amend Section 17941 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 308, as introduced, Muratsuchi.
Taxation: limited liability companies.
The Corporation Tax Law imposes a tax according to or measured by net income, computed at a specified rate upon the basis of the net income for that taxable year, on every corporation, except as provided. Existing law, generally, also 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 an annual tax in an amount equal to the minimum franchise tax on every limited partnership, limited liability partnership, and limited liability company registered, qualified to transact business, or doing business in this state, as specified. Existing law exempts, for taxable years beginning before January 1, 2018, a limited liability company that is a small business solely owned by a deployed member of the United States Armed Forces from paying the annual
tax for any taxable year the owner is deployed and the limited liability company operates at a loss or ceases operation.
This bill would reduce to $400 the annual tax for a limited liability company that is a small business, would reduce to $100 the annual tax for microbusinesses, and would extend indefinitely the exemption for a limited liability company that is a small business solely owned by a deployed member of the United States Armed Forces.
This bill would take effect immediately as a tax levy.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 17941 of the Revenue and Taxation Code is amended to read:17941.
(a) For each taxable year beginning on or after January 1, 1997, a limited liability company doing business in this state (as defined in Section 23101) shall pay annually to this state a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified in subdivision (d) of Section 23153 for the taxable year.(b) (1) In addition to any limited liability company that is doing business in this state and is therefore subject to the tax imposed by subdivision (a), for each taxable year beginning on or after January 1, 1997, a limited liability company shall pay annually the tax prescribed in subdivision (a) if articles of organization have been accepted, or a certificate of registration has been issued, by
the office of the Secretary of State. The tax shall be paid for each taxable year, or part thereof, until a certificate of cancellation of registration or of articles of organization is filed on behalf of the limited liability company with the office of the Secretary of State.
(2) If a taxpayer files a return with the Franchise Tax Board that is designated as its final return, the Franchise Tax Board shall notify the taxpayer that the annual tax shall continue to be due annually until a certificate of dissolution is filed with the Secretary of State pursuant to Section 17707.08 of the Corporations Code or a certificate of cancellation is filed with the Secretary of State pursuant to Section 17708.06 of the Corporations Code.
(c) The tax assessed under this section shall be due and payable on or before the 15th day of the fourth month of the taxable year.
(d) For purposes of this section, “limited liability company” means an organization, other than a limited liability company that is exempt from the tax and fees imposed under this chapter pursuant to Section 23701h or Section 23701x, that is formed by one or more persons under the law of this state, any other country, or any other state, as a “limited liability company” and that is not taxable as a corporation for California tax purposes.
(e) Notwithstanding anything in this section to the contrary, if the office of the Secretary of State files a certificate of cancellation pursuant to Section 17707.02 of the Corporations Code for any limited liability company, then paragraph (1) of subdivision (f) of Section 23153 shall apply to that limited liability company as if the limited liability company were properly treated as a corporation for that limited purpose only, and paragraph (2)
of subdivision (f) of Section 23153 shall not apply. Nothing in this subdivision entitles a limited liability company to receive a reimbursement for any annual taxes or fees already paid.
(f) (1) Notwithstanding any provision of this section to the contrary, a limited liability company that is a small business solely owned by a deployed member of the United States Armed Forces shall not be subject to the tax imposed under this section for any taxable year the owner is deployed and the limited liability company operates at a loss or ceases operation.
(2) The Franchise Tax Board may promulgate regulations as necessary or appropriate to carry out the purposes of this subdivision, including a definition for “ceases operation.”
(3) For the purposes of this subdivision, all of the following
definitions apply:
(A) “Deployed” means being called to active duty or active service during a period when a Presidential Executive order specifies that the United States is engaged in combat or homeland defense. “Deployed” does not include either of the following:
(i) Temporary duty for the sole purpose of training or processing.
(ii) A permanent change of station.
(B) “Operates at a loss” means a limited liability company’s expenses exceed its receipts.
(C) “Small business” means a limited liability company with total income from all sources derived from, or attributable, to the state of two hundred fifty thousand dollars ($250,000) or less.
(4)This subdivision shall become inoperative for taxable years beginning on or after January 1, 2018.
(g) (1) Except as otherwise provided in subdivision (f), for taxable years beginning on or after January 1, 2019, a limited liability company that is a microbusiness shall pay to the state an annual tax of one hundred dollars ($100).
(2) “Microbusiness” means a limited liability company with a total income from all sources derived from, or attributable to, the state of one hundred fifty thousand dollars ($150,000) or less.
(h) (1) Except as otherwise provided in subdivision (f), for taxable years beginning on or after January 1, 2019, a limited liability company that is a small business shall pay to the state an
annual tax of four hundred dollars ($400).
(2) “Small business” means a limited liability company with a total income from all sources derived from, or attributable to, the state of more than one hundred fifty thousand dollars ($150,000) but no more than two hundred fifty thousand dollars ($250,000).
