Bill Text: CA SB1501 | 2023-2024 | Regular Session | Amended
Bill Title: Small Business Relief Act: penalties.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2024-04-25 - In Assembly. Read first time. Held at Desk. [SB1501 Detail]
Download: California-2023-SB1501-Amended.html
|
Amended
IN
Senate
March 20, 2024 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Senate Bill
No. 1501
| Introduced by Senator Glazer |
February 16, 2024 |
LEGISLATIVE COUNSEL'S DIGEST
SB 1501, as amended, Glazer.
Corporation taxes. Small Business Relief Act: penalties.
Existing law, known as the Small Business Relief Act, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, authorizes a partnership or “S” corporation to elect to pay an elective tax at a rate based on its net income, as specified, for the taxable year, if it meets certain requirements, including a requirement that the taxpayer pays an amount on or before June 15 of the taxable year of the election equal to the greater of $1,000 or 50% of the elective tax paid by the taxpayer in the prior taxable year. Existing law provides for interest to be imposed on any amount of tax imposed but not paid, as provided.
This bill would, for taxable years beginning on or after January 1, 2024, and before January 1, 2026,
authorize a partnership or “S” corporation to elect to pay the above-described elective tax without making the required payment on or before June 15 if the taxpayer pays a penalty equal to 5% of the elective tax. The bill would require the penalty be paid on or before the due date of the original return without regard to any extensions. The bill would also impose interest on this penalty for the period that begins on the date of the original return without regard to any extensions and ends on the day of payment, as provided.
The Corporation Tax Law specifies that its provisions are applicable to the corporation franchise tax, the alternative minimum tax, the corporation income tax, or the predecessor acts of the Corporation Tax Law.
This bill would make nonsubstantive changes to that provision.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 19101 of the Revenue and Taxation Code is amended to read:19101.
(a) If any amount of tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), is not paid on or before the last date prescribed for payment, interest on that amount at the adjusted annual rate established under Section 19521 shall be paid for the period from that last date to the date paid.(b) For purposes of this article, the last date prescribed for payment of the tax shall be determined under Chapter 4 (commencing with Section 19001), with the application of the following rules:
(1) The last date prescribed for payment shall be determined without regard to any extension of time for payment or any installment
agreement entered into under Section 19008.
(2) The last date prescribed for payment shall be determined without regard to any notice and demand for payment issued, by reason of jeopardy as provided in Article 5 (commencing with Section 19081), prior to the last date otherwise prescribed for that payment.
(3) In all other cases in which the last date for payment is not otherwise prescribed, the last date for payment shall be deemed to be the date the liability for tax arises (and in no event shall be later than the date notice and demand for the tax is made by the Franchise Tax Board).
(c) Except as provided in this article:
(1) Interest prescribed under this article on any tax shall be paid upon notice and demand, and shall be assessed, collected, and
paid in the same manner as taxes. Any reference in Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part (except Article 3 (commencing with Section 19031), relating to deficiency assessments) to any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) shall be deemed also to refer to interest imposed by this article on that tax.
(2) (A) Interest shall be imposed under subdivision (a) in respect to any assessable penalty, additional amount, or addition to the tax (other than an addition to tax imposed under Section 19131, 19132, or 19164) only if that assessable penalty, additional amount, or addition to the tax is not paid within 15 calendar days from the date of notice and demand therefor, and in that case interest shall be imposed only for the period from the date of the notice and demand to the date of payment.
(B) Interest shall be imposed under this article with respect to any addition to tax imposed by Section 19131 (relating to failure to file a return on or before the due date), Section 19132 (relating to underpayment of tax), or Section 19164 (relating to imposition of the accuracy-related penalty), for the period that:
(i) Begins on the date on which the return of the tax with respect to which that addition to tax is imposed is required to be filed (including any extensions), and
(ii) Ends on the date of payment of that addition to tax.
(C) Interest shall be imposed under this article with respect to the penalty imposed by subdivision (c) of Section 19904 (relating to June
15 payment requirement), for the period that begins on the date on which the return of the tax with respect to which that penalty is imposed is required to be filed, without regard to any extensions, and ends on the date of payment of that penalty.
(3) If notice and demand is made for payment of any amount and if that amount is paid within 15 calendar days after the date of the notice and demand, interest under this article on the amount so paid shall not be imposed for the period after the date of the notice and demand.
(d) This article shall not apply to any failure to pay estimated tax required by Section 19025 or 19136.
SEC. 2.
Section 19900 of the Revenue and Taxation Code is amended to read:19900.
(a) (1) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, a qualified entity doing business in this state, as defined in Section 23101, and that is required to file a return under Section 18633, 18633.5, or subdivision (a) of Section 18601, may elect to annually pay an elective tax according to or measured by its qualified net income, defined in paragraph (2), computed at the rate of 9.3 percent for the taxable year for which the election is made.(2) For purposes of this section, the “qualified net income” of a qualified entity means the sum of the pro rata share or distributive share of income, and any guaranteed payments, as described by Section 707(c) of the Internal Revenue Code, relating to
guaranteed payments, subject to tax under Part 10 (commencing with Section 17001) for the taxable year of each qualified taxpayer, as defined in Section 17052.10.
(b) (1) The elective tax authorized by this part shall be in addition to, and not in place of, any other tax or fee required to be paid under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).
(2) The elective tax and penalty described in this part shall be assessed and collected under Part 10.2 (commencing with Section 18401).
(3) Unless the context otherwise requires, the definitions set forth in this part and those in Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section
18401), or Part 11 (commencing with Section 23001) shall apply.
(c) (1) The qualified entity may include in its qualified net income the pro rata share or distributive share of the income of any of its partners, shareholders, or members upon their consent. A partner, shareholder, or member that does not consent does not prevent the qualified entity from making an election to pay the elective tax.
(2) All partners, shareholders, and members of the qualified entity shall be bound by the election made under this part for the taxable year.
(d) The election shall be irrevocable and shall be made on an original, timely filed return required under Part 10.2 (commencing with Section 18401) for the taxable year of the election in the form and manner as prescribed by the Franchise Tax Board.
(e) The amendments made to this section by Section 14 of Chapter 3 of the Statutes of 2022 shall apply for taxable years beginning on or after January 1, 2021, and before January 1, 2026.
(e)
(f) The amendments made to this section by the act adding this subdivision shall apply for taxable years beginning on or after January 1, 2021, 2024, and before January 1, 2026.
SEC. 3.
Section 19904 of the Revenue and Taxation Code is amended to read:19904.
(a) The elective tax authorized by this part shall be due and payable as follows:(1) For taxable years beginning on or after January 1, 2021, and before January 1, 2022, on or before the due date of the original return that the qualified entity is required to file pursuant to Part 10.2 (commencing with Section 18401) without regard to any extension of time for filing the return, for the taxable year of the election made pursuant to Section 19900.
(2) For each taxable year beginning on or after January 1, 2022, and before January 1, 2026, as follows:
(A) On or before June 15th during the taxable year of the election, an amount equal
to, or greater than, either 50 percent of the elective tax paid the prior taxable year or one thousand dollars ($1,000), whichever is greater.
(B) On or before the due date of the original return that the qualified entity is required to file pursuant to Part 10.2 (commencing with Section 18401) without regard to any extension of time for filing the return for the taxable year of the election made pursuant to Section 19900, an amount equal to the amount of the elective tax under subdivision (a) of Section 19900, less the payment made on or before June 15th of the taxable year pursuant to subparagraph (A).
(b) For each taxable year years beginning on or after January 1, 2022, and before January 1, 2026, 2024, if no payment is made as required in subparagraph (A) of paragraph (2) of subdivision (a) in the form and manner as prescribed by the Franchise Tax Board, the qualified entity may not make the election under Section 19900 for that taxable year.
(c) (1) Notwithstanding subdivision (a), for taxable years beginning on or after January 1, 2024, and before January 1, 2026, if no payment is made as required in subparagraph (A) of paragraph (2) of subdivision (a), a qualified entity that pays a penalty equal to 5 percent of the elective tax authorized by this part may make the election under Section 19900 for that taxable year.
(2) The penalty shall be paid on or before the due date of the original return that the qualified entity is required to file pursuant to Part 10.2 (commencing with Section 18401) without regard to any extension of time for filing the return for the taxable year of the election made pursuant to Section 19900.
(3) The penalty shall be included with a qualified entity’s return required under Chapter 2 (commencing with Section 18501) of Part 10.2 for the taxable year.
(c)
(d) This part shall not change any filing requirements under Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001).
(d)
(e) (1) The Franchise Tax Board may adopt regulations that are necessary or appropriate to implement this part.
(2) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any regulation, rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this part.
(f) The amendments made to this section by the act adding this subdivision shall apply for taxable
years beginning on or after January 1, 2024, and before January 1, 2026.
Except where otherwise expressly provided, all provisions of this part are applicable to the taxes imposed respectively under Chapter 2 (commencing with Section 23101), Chapter 2.5 (commencing with Section 23400), or Chapter 3 (commencing with Section 23501), or to the predecessor acts of this part, the Bank and Corporation Franchise Tax Act, or the Corporation Income Tax Act, respectively.
