Bill Text: CA SB1505 | 2011-2012 | Regular Session | Amended
Bill Title: California Keep Our Promises Act: corporation taxes:
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-04-26 - Joint Rule 62(a) file notice suspended. (Ayes 23. Noes 12. Page 3289.) Set, second hearing. Held in committee without recommendation. [SB1505 Detail]
Download: California-2011-SB1505-Amended.html
BILL NUMBER: SB 1505 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 16, 2012
AMENDED IN SENATE APRIL 9, 2012
INTRODUCED BY Senator DeSaulnier
FEBRUARY 24, 2012
An act to amend Section 1012.3 of, to add Section 69.8 to, to add
Chapter 3 (commencing with Section 90) to Division 1 of, and Chapter
4 (commencing with Section 1850) to Division 8 of, the Military and
Veterans Code, and to amend Sections 23101 and 25128 of, to amend and
repeal Section 25128.5 of, to amend, repeal, and add Section 25136
of, and to add Sections 25128.7 and Section
25136.1 to, the Revenue and Taxation Code, relating to
veterans, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 1505, as amended, DeSaulnier. California Keep Our Promises Act:
corporation taxes: apportionment: single sales factor :
election: four-factor formula .
(1) The Corporation Tax Law imposes taxes measured by income and,
in the case of a business with income derived from or attributable to
sources both within and without this state, apportions the income
between this state and other states and foreign countries in
accordance with a specified 4-factor formula based on the property,
payroll, and sales within and without this state, except that in the
case of an apportioning trade or business that derives more than 50%
of its gross business receipts from conducting one or more qualified
business activities, as defined, business income is apportioned in
accordance with a specified 3-factor formula. That law, for taxable
years beginning on or after January 1, 2011, allows a taxpayer to
apportion its income in accordance with a single sales factor
formula, except as provided, pursuant to an irrevocable annual
election, as specified. That law also provides that sales of tangible
personal property and sales of other than tangible personal property
are in this state in accordance with specified criteria.
This bill would, for taxable years beginning on or after January
1, 2012, instead require a taxpayer, except as provided, to apportion
its income in accordance with a single sales factor, would
allow a taxpayer to apportion in accordance with a specified 4-factor
formula pursuant to an irrevocable annual election as specified,
and would revise the provisions that determine whether
sales other than tangible personal property occur in this state,
including specific provisions for cable systems or networks.
This bill would include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
(2) Under existing law, the Department of Veterans Affairs has
specified powers and duties relating to veterans and is required to
provide the Legislature with an annual budget estimate.
This bill would require the Department of Finance, based on the
annual budget estimate provided by the Department of Veterans Affairs
and other specified information, to determine the budget for the
fiscal year for the Department of Veterans Affairs and direct the
Controller to deposit that amount into the Keep Our Promises Fund, a
continuously appropriated fund established by this bill. This bill
would provide that the funds in the Keep Our Promises Fund would
supplant the General Fund revenues appropriated to the Department of
Veterans Affairs and would require specified additional allocations
by the Department of Veterans Affairs regarding veterans' homes,
small business loans for veterans, and the Veterans' Assistance Grant
Program, which would be created by this bill.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as the
California Keep Our Promises Act.
SEC. 2. Section 69.8 is added to the Military and Veterans Code,
to read:
69.8. (a) Notwithstanding Section 10231.5 of the Government Code,
on or before January 1, 2014, and each January 1 thereafter, the
department shall prepare and submit to the Legislature an annual
fiscal report on the department's activities. The report shall
include, but not be limited to, the amount of funds allocated and
spent by the department by program or administrative function.
(b) The report submitted pursuant to subdivision (a) shall comply
with Section 9795 of the Government Code.
SEC. 3. Chapter 3 (commencing with Section 90) is added to
Division 1 of the Military and Veterans Code, to read:
CHAPTER 3. CALIFORNIA KEEP OUR PROMISES ACT
90. The Director of Finance shall, on or before June 15, 2013,
and each June 15 thereafter, based on the budget provided pursuant to
Section 13320 of the Government Code and any other available
information including the allocations required by this chapter,
determine the fiscal year budget for the department and direct the
Controller to deposit that amount into the Keep Our Promises Fund.
90.5. (a) The Keep Our Promises Fund is hereby established in the
State Treasury. Notwithstanding Section 13340 of the Government
Code, moneys are hereby continuously appropriated, without regard to
fiscal year, to the department. Moneys in the fund shall supplant the
moneys appropriated to the department in the annual Budget Bill and
shall be used for the same purposes.
(b) In addition to any other allocations by the department, the
department shall:
(1) In the 2013-14 fiscal year, and each fiscal year thereafter,
if needed, allocate ____ dollars ($____) to veterans' homes to
achieve full staffing at each veterans' home within the state.
(2) In the 2013-14 fiscal year, and each fiscal year thereafter,
if needed, allocate ____ dollars ($____) to complete the construction
of the Veterans' Home of California, Redding and the Veterans' Home
of California, Fresno.
(3) In the 2013-14 fiscal year, and each fiscal year thereafter,
allocate one hundred million dollars ($100,000,000) to the California
Capital Access Fund for the purpose of funding small business loans
to veterans.
(4) In the 2013-14 fiscal year, and each fiscal year thereafter,
allocate two hundred million dollars ($200,000,000) to the Veterans'
Assistance Grant Program (Chapter 4 (commencing with Section 1850) of
Division 8).
SEC. 4. Section 1012.3 of the Military and Veterans Code is
amended to read:
1012.3. (a) Members of the home shall pay fees and charges as
determined by the department, except that the total of the individual
member's fees and charges for any fiscal year shall not be greater
than as set forth in the following schedule:
(1) ____ percent of the member's annual income for domiciliary
care.
(2) ____ percent of the member's annual income for residential
care for the elderly or assisted living.
(3) ____ percent of the member's annual income for intermediate
care.
(4) ____ percent of the member's annual income for skilled nursing
care.
(b) Nonveteran spouses who become members of the home on or after
July 1, 2009, shall pay fees and charges based on the level of care,
as described in subdivision (a), or an amount equal to the annual
amount of federal per diem received for a veteran member in
domiciliary care, whichever is greater. If the nonveteran member's
income is less than the annual amount of federal per diem for a
veteran member in domiciliary care, the nonveteran member shall pay a
maximum of ____ percent of his or her annual income.
SEC. 5. Chapter 4 (commencing with Section 1850) is added to
Division 8 of the Military and Veterans Code, to read:
CHAPTER 4. VETERANS' ASSISTANCE GRANT PROGRAM
1850. For purposes of this part:
(a) (1) "Qualified entity" means a unit of local government, an
organization exempt from federal income taxation as an organization
described in Section 501(c)(3), 501(c)(4), or 501(c)(19) of the
Internal Revenue Code, or a nonprofit organization authorized to do
business in California with experience providing services to
veterans. A qualified entity shall have professional liability or
malpractice insurance.
(2) "Qualified entity" shall not mean an individual, a for-profit
entity, a unit of federal or state government, including a state
agency, college, or university, an organization that has not
fulfilled all legal requirements to operate in the state, or an
organization that does not have current operations in the state or a
California-based chapter.
(b) "Unit of local government" means a county, municipality,
special district, school district, community college district, a
local workforce development board, or other legally constituted
political subdivision of the state.
(c) "Veterans' assistance program" includes, but is not limited
to, a program that provides veterans and their families:
(1) Limited emergency assistance.
(2) Transportation services.
(3) Family or individual counseling for post-traumatic stress
disorder and traumatic brain injury.
(4) Employment, training, education, and job placement assistance.
(5) Housing assistance for homeless veterans.
(6) Family and child services.
(7) Legal services, excluding criminal defense.
(8) Development of professional services networks.
1851. (a) The department shall establish a reimbursement grant
program and shall award reimbursement grants to qualified entities
that implement veterans' assistance programs.
(b) Under the reimbursement grant program, a qualified entity
shall finance its operation with its own working capital and may
apply for a reimbursement grant for actual cash disbursements,
supported by adequate documentation, for a veterans' assistance
program.
(c) Reimbursement grants shall not be granted for capital
expenditures, including capital purchases or capital leases,
subgranting of funds to other organizations or agencies, distribution
of cash or a cash equivalent to veterans or their families,
acquisition or construction of facilities, educational scholarships,
child support payments, contributions to any political party,
political association, or the campaign of any candidate for public
office, party office, or similar political activity, contributions to
support or oppose a candidate or public or party office,
contributions to support or oppose a ballot proposition, or costs
that are not allowable under federal Office of Management and Budget
(OMB) Circular A-87 (Cost Principles for State, Local, and Indian
Tribal Governments) or OMB Circular A-122 (Cost Principles for
Non-Profit Organizations).
1852. The reimbursement grant application shall include, but is
not limited to:
(a) Information on the number of veterans, dependents, and
surviving spouses serviced by the veterans' assistance program.
(b) Unless the qualified entity is a unit of local government,
documentation demonstrating the qualified entity's financial
stability, as determined by the department.
(c) The reimbursement amount requested for the veterans'
assistance program, including documentation substantiating the costs
of the program.
1853. (a) The department, or its authorized representative, shall
have the right of timely and reasonable access to any books,
documents, papers, computer records, or other records of qualified
entities that have received a reimbursement grant under this part
that are pertinent to the use of the reimbursement grant awarded by
the department.
(b) The right of access also includes timely and reasonable access
to qualified entity personnel for the purpose of interview and
discussion related to the documents described in subdivision (a).
SEC. 6. Section 23101 of the Revenue and Taxation Code is amended
to read:
23101. (a) "Doing business" means actively engaging in any
transaction for the purpose of financial or pecuniary gain or profit.
(b) For taxable years beginning on or after January 1, 2011, a
taxpayer is doing business in this state for a taxable year if any of
the following conditions has been satisfied:
(1) The taxpayer is organized or commercially domiciled in this
state.
(2) Sales, as defined in subdivision (e) or (f) of Section 25120
as applicable for the taxable year, of the taxpayer in this state
exceed the lesser of five hundred thousand dollars ($500,000) or 25
percent of the taxpayer's total sales. For purposes of this
paragraph, sales of the taxpayer include sales by an agent or
independent contractor of the taxpayer. For purposes of this
paragraph, sales in this state shall be determined using the rules
for assigning sales under Sections 25135 and 25136, and the
regulations thereunder, as modified by regulations under Section
25137.
(3) The real property and tangible personal property of the
taxpayer in this state exceed the lesser of fifty thousand dollars
($50,000) or 25 percent of the taxpayer's total real property and
tangible personal property. The value of real and tangible personal
property and the determination of whether property is in this state
shall be determined using the rules contained in Sections 25129 to
25131, inclusive, and the regulations thereunder, as modified by
regulations under Section 25137.
(4) The amount paid in this state by the taxpayer for
compensation, as defined in subdivision (c) of Section 25120, exceeds
the lesser of fifty thousand dollars ($50,000) or 25 percent of the
total compensation paid by the taxpayer. Compensation in this state
shall be determined using the rules for assigning payroll contained
in Section 25133 and the regulations thereunder, as modified by
regulations under Section 25137.
(c) (1) The Franchise Tax Board shall annually revise the amounts
in paragraphs (2), (3), and (4) of subdivision (b) in accordance with
subdivision (h) of Section 17041.
(2) For purposes of the adjustment required by paragraph (1),
subdivision (h) of Section 17041 shall be applied by substituting
"2012" in lieu of "1988."
(d) The sales, property, and payroll of the taxpayer include the
taxpayer's pro rata or distributive share of a pass-thru entity. For
purposes of this subdivision, a "pass-thru entity" means a
partnership or an "S" corporation.
SEC. 7. Section 25128 of the Revenue and Taxation Code is amended
to read:
25128. (a) (1) Notwithstanding Section 38006, for taxable years
beginning before January 1, 2012, all business income shall be
apportioned to this state by multiplying the business income by a
fraction, the numerator of which is the property factor plus the
payroll factor plus twice the sales factor, and the denominator of
which is four, except as provided in subdivision (b) or (c).
(2) Notwithstanding Section 38006, for taxable years beginning on
or after January 1, 2012, all business income of an apportioning
trade or business shall be apportioned to this state by multiplying
the business income by the sales factor, unless the trade or business
meets the criteria of subdivision (b) or makes an election
to apportion its income in accordance with Section 25128.7 .
(b) If an apportioning trade or business derives more than 50
percent of its "gross business receipts" from conducting one or more
qualified business activities, all business income of the
apportioning trade or business shall be apportioned to this state by
multiplying business income by a fraction, the numerator of which is
the property factor plus the payroll factor plus the sales factor,
and the denominator of which is three.
(c) For purposes of this section, a "qualified business activity"
means the following:
(1) An agricultural business activity.
(2) An extractive business activity.
(3) A savings and loan activity.
(4) A banking or financial business activity.
(d) For purposes of this section:
(1) "Gross business receipts" means gross receipts described in
subdivision (e) or (f) of Section 25120 (other than gross receipts
from sales or other transactions within an apportioning trade or
business between members of a group of corporations whose income and
apportionment factors are required to be included in a combined
report under Section 25101, limited, if applicable, by Section
25110), whether or not the receipts are excluded from the sales
factor by operation of Section 25137.
(2) "Agricultural business activity" means activities relating to
any stock, dairy, poultry, fruit, furbearing animal, or truck farm,
plantation, ranch, nursery, or range. "Agricultural business activity"
also includes activities relating to cultivating the soil or raising
or harvesting any agricultural or horticultural commodity,
including, but not limited to, the raising, shearing, feeding, caring
for, training, or management of animals on a farm as well as the
handling, drying, packing, grading, or storing on a farm any
agricultural or horticultural commodity in its unmanufactured state,
but only if the owner, tenant, or operator of the farm regularly
produces more than one-half of the commodity so treated.
(3) "Extractive business activity" means activities relating to
the production, refining, or processing of oil, natural gas, or
mineral ore.
(4) "Savings and loan activity" means any activities performed by
savings and loan associations or savings banks which have been
chartered by federal or state law.
(5) "Banking or financial business activity" means activities
attributable to dealings in money or moneyed capital in substantial
competition with the business of national banks.
(6) "Apportioning trade or business" means a distinct trade or
business whose business income is required to be apportioned under
Sections 25101 and 25120, limited, if applicable, by Section 25110,
using the same denominator for each of the applicable payroll,
property, and sales factors.
(7) Paragraph (4) of subdivision (c) shall apply only if the
Franchise Tax Board adopts the Proposed Multistate Tax Commission
Formula for the Uniform Apportionment of Net Income from Financial
Institutions, or its substantial equivalent, and shall become
operative upon the same operative date as the adopted formula.
(8) In any case where the income and apportionment factors of two
or more savings associations or corporations are required to be
included in a combined report under Section 25101, limited, if
applicable, by Section 25110, both of the following shall apply:
(A) The application of the more than 50 percent test of
subdivision (b) shall be made with respect to the "gross business
receipts" of the entire apportioning trade or business of the group.
(B) The entire business income of the group shall be apportioned
in accordance with either subdivision (a) or (b), or Section
25128.7, as applicable.
SEC. 8. Section 25128.5 of the Revenue and Taxation Code is
amended to read:
25128.5. (a) Notwithstanding Section 38006, for taxable years
beginning on or after January 1, 2011, and before January 1, 2012,
any apportioning trade or business, other than an apportioning trade
or business described in subdivision (b) of Section 25128, may make
an irrevocable annual election on an original timely filed return, in
the manner and form prescribed by the Franchise Tax Board to
apportion its income in accordance with this section, and not in
accordance with Section 25128.
(b) Notwithstanding Section 38006, for taxable years beginning on
or after January 1, 2011, and before January 1, 2012, all business
income of an apportioning trade or business making an election
described in subdivision (a) shall be apportioned to this state by
multiplying the business income by the sales factor.
(c) The Franchise Tax Board is authorized to issue regulations
necessary or appropriate regarding the making of an election under
this section, including regulations that are consistent with rules
prescribed for making an election under Section 25113.
(d) This section shall not apply to taxable years beginning on or
after January 1, 2012, and as of December 1, 2012, is repealed.
SEC. 9. Section 25128.7 is added to the Revenue
and Taxation Code, to read:
25128.7. (a) Notwithstanding Section 38006, for taxable years
beginning on or after January 1, 2012, any apportioning trade or
business, other than an apportioning trade or business described in
subdivision (b) of Section 25128, may make an irrevocable annual
election on an original timely filed return, in the manner and form
prescribed by the Franchise Tax Board, to apportion its income in
accordance with this section, and not in accordance with Section
25128, if the "tax," as defined in Section 23036 before the
application of any credits, using this section to apportion its
business income, is not less than the "tax," as defined in Section
23036 before the application of any credits, using paragraph (2) of
subdivision (a) of Section 25128 to apportion its business income.
(b) Notwithstanding Section 38006, for taxable years beginning on
or after January 1, 2012, all business income of an apportioning
trade or business making an election under subdivision (a) shall be
apportioned to this state by multiplying the business income by a
fraction, the numerator of which is the property factor plus the
payroll factor plus twice the sales factor, and the denominator of
which is four.
(c) The Franchise Tax Board is authorized to issue regulations
necessary or appropriate regarding the making of an election under
this section, including regulations that are consistent with rules
prescribed for making an election under Section 25113.
SEC. 10. SEC. 9. Section 25136 of
the Revenue and Taxation Code is amended to read:
25136. (a) For taxable years beginning before January 1, 2011,
and for taxable years beginning on or after January 1, 2011, and
before January 1, 2012, for which Section 25128.5 is operative and an
election under subdivision (a) of Section 25128.5 has not been made,
sales, other than sales of tangible personal property, are in this
state if:
(1) The income-producing activity is performed in this state; or
(2) The income-producing activity is performed both in and outside
this state and a greater proportion of the income-producing activity
is performed in this state than in any other state, based on costs
of performance.
(3) This subdivision shall apply, and subdivision (b) shall not
apply, for any taxable year beginning on or after January 1, 2011,
and before January 1, 2012, for which Section 25128.5 is not
operative for any taxpayer subject to the tax imposed under this
part.
(b) For taxable years beginning on or after January 1, 2011, and
before January 1, 2012:
(1) Sales from services are in this state to the extent the
purchaser of the service received the benefit of the service in this
state.
(2) Sales from intangible property are in this state to the extent
the property is used in this state. In the case of marketable
securities, sales are in this state if the customer is in this state.
(3) Sales from the sale, lease, rental, or licensing of real
property are in this state if the real property is located in this
state.
(4) Sales from the rental, lease, or licensing of tangible
personal property are in this state if the property is located in
this state.
(5) For taxable years beginning on or after January 1, 2011, and
before January 1, 2012:
(A) If Section 25128.5 is operative, then this subdivision shall
apply in lieu of subdivision (a) for any taxable year for which an
election has been made under subdivision (a) of Section 25128.5.
(B) If Section 25128.5 is not operative, then this subdivision
shall not apply and subdivision (a) shall apply for any taxpayer
subject to the tax imposed under this part.
(C) Notwithstanding subparagraph (A) or (B), this subdivision
shall apply for purposes of paragraph (2) of subdivision (b) of
Section 23101.
(c) The Franchise Tax Board may prescribe those regulations as
necessary or appropriate to carry out the purposes of subdivision
(b).
(d) This section shall not apply to taxable years beginning on or
after January 1, 2012, and as of December 1, 2012, is repealed.
SEC. 11. SEC. 10. Section 25136 is
added to the Revenue and Taxation Code, to read:
25136. (a) Notwithstanding Section 38006, for taxable years
beginning on or after January 1, 2012, sales, other than sales of
tangible personal property, are in this state if:
(1) Sales from services are in this state to the extent the
purchaser of the service received the benefit of the services in this
state.
(2) Sales from intangible property are in this state to the extent
the property is used in this state. In the case of marketable
securities, sales are in this state if the customer is in this state.
(3) Sales from the sale, lease, rental, or licensing of real
property are in this state if the real property is located in this
state.
(4) Sales from the rental, lease, or licensing of tangible
personal property are in this state if the property is located in
this state.
(b) The Franchise Tax Board may prescribe regulations as necessary
or appropriate to carry out the purposes of this section.
SEC. 12. SEC. 11. Section 25136.1 is
added to the Revenue and Taxation Code, to read:
25136.1. (a) For taxable years beginning on or after January 1,
2012, a qualified taxpayer that apportions its business income under
Section 25128 shall apply the following provisions:
(1) Notwithstanding Section 25137, qualified sales assigned to
this state shall be equal to 50 percent of the amount of qualified
sales that would be assigned to this state pursuant to Section 25136
but for the application of this section. The remaining 50 percent
shall not be assigned to this state.
(2) All other sales shall be assigned pursuant to Section 25135 or
25136.
(b) For purposes of this section:
(1) "Qualified taxpayer" means a member, as defined in paragraph
(10) of subdivision (b) of Section 25106.5 of Title 18 of the
California Code of Regulations, as in effect on the effective date of
the act adding this section, of a combined reporting group that is
also a qualified group.
(2) "Qualified group" means a combined reporting group, as defined
in paragraph (3) of subdivision (b) of Section 25106.5 of Title 18
of the California Code of Regulations, as in effect on the effective
date of the act adding this section, that satisfies the following
conditions:
(A) Has satisfied the minimum investment requirement for the
taxable year.
(B) For the combined reporting group's taxable year beginning in
the 2006 calendar year, the combined reporting group derived more
than 50 percent of its United States network gross business receipts
from the operation of one or more cable systems.
(C) For purposes of satisfying the requirements of subparagraph
(B), the following rules shall apply:
(i) If a member of the combined reporting group for the taxable
year was not a member of the same combined reporting group for the
taxable year beginning in the 2006 calendar year, the gross business
receipts of that nonincluded member shall be included in determining
the combined reporting group's gross business receipts for its
taxable year beginning in the 2006 calendar year as if the
nonincluded member were a member of the combined reporting group for
the taxable year beginning in the 2006 calendar year.
(ii) The gross business receipts shall include the gross business
receipts of a qualified partnership, but only to the extent of a
member's interest in the partnership.
(3) "Cable system" and "network" shall have the same meaning as
defined in Section 5830 of the Public Utilities Code, as in effect on
the effective date of the act adding this section. "Network services"
means video, cable, voice, or data services.
(4) "Gross business receipts" means gross receipts as defined in
paragraph (2) of subdivision (f) of Section 25120, other than gross
receipts from sales or other transactions between or among members of
a combined reporting group, limited, if applicable, by Section
25110.
(5) "Minimum investment requirement" means qualified expenditures
of not less than two hundred fifty million dollars ($250,000,000) by
a combined reporting group during the calendar year that includes the
beginning of the taxable year.
(6) "Qualified expenditures" means any combination of expenditures
attributable to this state for tangible property, payroll, services,
franchise fees, or any intangible property distribution or other
rights, paid or incurred by or on behalf of a member of a combined
reporting group.
(A) An expenditure for other than tangible property shall be
attributable to this state if the member of the combined reporting
group received the benefit of the purchase or expenditure in this
state.
(B) A purchase of or expenditure for tangible property shall be
attributable to this state if the property is placed in service in
this state.
(C) Qualified expenditures shall include expenditures by a
combined reporting group for property or services purchased, used, or
rendered by independent contractors in this state.
(D) Qualified expenditures shall also include expenditures by a
qualified partnership, but only to the extent of the member's
interest in the partnership.
(7) "Qualified partnership" means a partnership if the partnership'
s income and apportionment factors are included in the income and
apportionment factors of a member of the combined reporting group,
but only to the extent of the member's interest in the partnership.
(8) "Qualified sales" means gross business receipts from the
provision of any network services, other than gross business receipts
from the sale or rental of customer premises equipment. "Qualified
sales" shall include qualified sales by a qualified partnership, but
only to the extent of a member's interest in the partnership.
(c) The requirements in this section with respect to qualified
sales by a qualified partnership are intended to be consistent with
the rules for partnerships under paragraph (3) of subdivision (f) of
Section 25137-1 of Title 18 of the California Code of Regulations.
