Bill Text: CA SB775 | 2019-2020 | Regular Session | Amended

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

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Bill Title: Corporation taxes: exempt organizations: mutual ditch or irrigation companies: public water system: mutual water companies.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2019-08-30 - August 30 hearing: Held in committee and under submission. [SB775 Detail]

Download: California-2019-SB775-Amended.html

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Amended  IN  Senate  May 07, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 775

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Introduced by Senator Rubio

February 22, 2019

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An act to amend Section 24473 of, and to add Section Sections 23701m to, and 24316 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

SB 775, as amended, Rubio. Corporation taxes: exempt organizations: mutual ditch or irrigation companies. companies: public water system: mutual water companies.

The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law. law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met.

This bill, in further conformity with federal income tax laws, for taxable years beginning on or after January 1, 2019, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company, company that operates a public water system, as provided. This bill would make additional conforming changes. The bill would provide that gross income does not include specified funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company that operates a public water system or to specified mutual water companies.

This bill would take effect immediately as a tax levy.

Digest Key

Vote: MAJORITY   Appropriation: NO   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.

 Section 23701m is added to the Revenue and Taxation Code, to read:

23701m.

 (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.

(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:

(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.

(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.

(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation company’s tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.

SEC. 2.

 Section 24316 is added to the Revenue and Taxation Code, to read:

24316.

 Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water company’s tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.

SEC. 2.Section 24473 of the Revenue and Taxation Code is amended to read:

24473.

Notwithstanding any other provision of law, for taxable years beginning before January 1, 2019, the contribution or other transfer of the assets of a mutual water company established prior to September 26, 1977, that is tax exempt under Section 501(c)(12) of the Internal Revenue Code, but is a taxable entity under California Law, including its lands, easements, rights, and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of a water system and facilities serving the customers of the company, to a community services district formed pursuant to Part 1 (commencing with Section 61000) of Division 3 of Title 6 of the Government Code, is not a transfer subject to taxes imposed by this part if all of the following requirements are met:

(a)The consideration for the transfer of all or substantially all of the assets is the assumption by the district of the company’s liability to provide service to the company’s stockholders.

(b)The legal or beneficial title to all or substantially all of the company’s assets is vested in the district on or before January 1, 2008.

(c)For the one-year period immediately prior to commencement of the transfer and continuing until the transfer is completed, 85 percent or more of the company’s income consists of amounts collected from stockholders for the sole purpose of meeting losses and expenses.

SEC. 3.

  This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.