Bill Text: CA SB1246 | 2021-2022 | Regular Session | Chaptered

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Bill Title: Income taxes: gross income exclusions: wildfires.

Spectrum: Bipartisan Bill

Status: (Passed) 2022-09-29 - Chaptered by Secretary of State. Chapter 841, Statutes of 2022. [SB1246 Detail]

Download: California-2021-SB1246-Chaptered.html

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Senate Bill No. 1246

CHAPTER 841

An act to add and repeal Sections 17138.6 and 24309.1 of the Revenue and Taxation Code, relating to taxation, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

[ Approved by Governor  September 29, 2022. Filed with Secretary of State  September 29, 2022. ]

LEGISLATIVE COUNSEL'S DIGEST

SB 1246, Stern. Income taxes: gross income exclusions: wildfires.

(1) The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.

This bill would, for taxable years beginning before January 1, 2027, provide an exclusion from gross income for any qualified taxpayer, as defined, for amounts received for costs and losses associated with the 2017 Thomas Fire and the 2018 Woolsey Fire, as provided.

(2) Existing law establishes the continuously appropriated Tax Relief and Refund Account and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account.

This bill would authorize the refund of overpayments of tax as a result of the above-described exclusion, in prior tax years, payable out of the Tax Relief and Refund Account. By authorizing new payments from a continuously appropriated fund, this bill would make an appropriation.

(3) Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements.

This bill would include additional information required for any bill authorizing a new tax expenditure.

(4) This bill would apply its provisions to taxable years beginning before, on, and after the effective date of this bill. The bill would make legislative findings and declarations regarding the public purpose served by this bill.

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

Digest Key

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

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Bill Text

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

SECTION 1.

 The Legislature finds and declares all of the following:

(a) On December 4, 2017, the Thomas Fire ignited in the County of Ventura. The Thomas Fire burned for nearly 40 days across 281,893 acres between the Counties of Ventura and Santa Barbara after it was first reported December 4, 2017. The fire destroyed 1,063 structures, most of which were homes in Ventura, Santa Paula, Ojai, Fillmore, and unincorporated areas across the west half of the counties.

(b) The Thomas Fire was fully contained on January 12, 2018.

(c) Since 2017, Southern California Edison has been involved in litigation with the victims of the Thomas Fire, and has entered into settlement agreements with many concerned.

(d) On November 8, 2018, the Woolsey Fire ignited in the County of Ventura. The Woolsey Fire burned 96,949 acres of land, destroying 1,643 structures in both the County of Los Angeles and the County of Ventura, resulting in the death of three individuals.

(e) The Woolsey Fire was finally contained on November 21, 2018, by the valiant efforts of CalFire, the Los Angeles County Fire Department, Ventura County Fire Department, and numerous local fire suppression agencies.

(f) Since 2018, Southern California Edison has been involved in litigation with the victims of the Woolsey Fire, and has entered into settlement agreements with many concerned.

SEC. 2.

 Section 17138.6 is added to the Revenue and Taxation Code, to read:

17138.6.

 (a) For taxable years beginning before January 1, 2027, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from Southern California Edison in settlement for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer that owned real property located in the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(B) Any taxpayer that resided within the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(C) Any taxpayer that had a place of business within the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(D) Any taxpayer that owned real property located in the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(E) Any taxpayer that resided within the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(F) Any taxpayer that had a place of business within the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(3) “Settlement entity” means the entity making the settlement payment to a qualified taxpayer as described in paragraph (2).

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of that date by the operation of any law or rule of law, including res judicata, that credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

(e) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 3.

 Section 24309.1 is added to the Revenue and Taxation Code, to read:

24309.1.

 (a) For taxable years beginning before January 1, 2027, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from Southern California Edison in settlement for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire.

(2) “Qualified taxpayer” means either of the following:

(A) Any taxpayer that owned real property located in the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(B) Any taxpayer that had a place of business within the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(C) Any taxpayer that owned real property located in the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(D) Any taxpayer that had a place of business within the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(3) “Settlement entity” means the entity making the settlement payment to a qualified taxpayer as described in subparagraphs (A) and (B) of paragraph (2).

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of that date by the operation of any law or rule of law, including res judicata, that credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

(e) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 4.

 (a) For the purpose of complying with Section 41 of the Revenue and Taxation Code, the Legislature finds and declares that the purpose of the tax expenditure allowed pursuant to Sections 17138.6 and 24309.1 of the Revenue and Taxation Code, as added by this act, is to provide essential relief to individuals who have suffered injury, loss, inconvenience, and expenses resulting from the devastating 2017 Thomas Fire and 2018 Woolsey Fire.

(b) (1) On December 31, 2027, the Franchise Tax Board shall deliver to the Legislature a written report that includes both of the following:

(A) The number of qualified taxpayers that excluded qualified amounts from gross income, as those terms are used in this act, as a result of the tax expenditure allowed by this act.

(B) The aggregate amount of those settlement payments arising out of the Thomas and Woolsey Fires.

(2) The report required by this subdivision shall be delivered to the Legislature pursuant to Section 9795 of the Government Code.

(3) The disclosure provisions of this subdivision 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, and any taxpayer information shall be in an aggregate and anonymized form.

SEC. 5.

 The Legislature finds and declares that Sections 17138.6 and 24309.1 of the Revenue and Taxation Code, as added by this act, are necessary for the public purpose of preventing undue hardship to taxpayers who reside, or used to reside, in a part of California devastated by wildfires, and do not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.

SEC. 6.

 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 essential relief to those persons who have suffered injury, loss, inconvenience, and expenses resulting from the devastating 2017 Thomas Fire and 2018 Woolsey Fire as soon as possible, it is necessary that this act take effect immediately.