CSTC works closely with a Legislative Consultant to keep an eye on important bills that would affect taxpayers and small business owners. After pushing back the start date by one week due to COVID-19, the legislature began it’s 2021 session on January 11. They will hit the ground running with a focus on bills and policy issues related to unemployment benefits, renter relief, re-opening schools, vaccinations, the state budget, and more. Below are bills identified for monitoring for CSTC.

Now that the legislature has been active for a few months, we’re starting to see some more trends. Among them is the desire to provide businesses, mostly small businesses and nonprofits, relief from any tax liability they may incur associated with COVID-related state and federal grants or loans. These bills include SB 265 (Borgeas), AB 80 (Burke), AB 936 (Chen), AB 708 (Garcia), and AB 1380 (Fong).

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BILLS RELATING TO THE TAX PROFESSION

AB 62 (Gray): Income taxes: credits: costs to comply with COVID-19 regulations. This bill would provide employers with a tax credit for complying with Cal/OSHA’s new emergency temporary standard on COVID-19 prevention. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation. 

AB 71 (Luz Rivas): Homelessness funding: Bring California Home Act. Would increase the tax rate for Corporations taxed under the Corporate Tax Law, if their taxable income exceeds five million dollars, from 8.84 percent to 9.6 percent.
Status: Referred to the Committees on Revenue & Taxation and Homeless and Community Development

AB 91 (Valladares):Taxation: corporations: minimum franchise tax: limited liability companies: annual tax: small businesses: microbusinesses. For taxable years beginning on or after January 1, 2021, this bill would reduce the minimum franchise tax to $400 for small businesses and to $200 for microbusinesses and would reduce the annual tax for the limited liability companies that are small businesses to $400 and that are microbusinesses to $200. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation.

AB 116 (Voepel): Personal income taxes: gross income: exclusion: student loan assistance. Allows an employee to exclude from gross income up to $5,250 of the principal or interest on a qualified education loan paid by an employer on the employee’s behalf. If signed into law, this bill would take effect immediately. This appears to be at least the third time Mr. Voepel has brought this bill: 2019’s AB 152, did not pass the Assembly Appropriations Committee, and 2018’s AB 2478, also stalled in Appropriations.
Status: Referred to Assembly Committee on Revenue & Taxation.

AB222(BlancaRubio): Income taxes: net operating losses: active solar energy systems. For taxable years beginning on and after January 1, 2023, this bill would authorize a net operating loss carryback for a net operating loss or carryover of net operating loss for which a deduction was suspended for a qualified taxpayer, as defined in the bill. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation. 

AB 248 (Choi): Income taxes: credits: cleaning and sanitizing supplies. COVID-19. Would allow a tax credit for businesses that purchase COVID-19-realted cleaning and sanitizing supplies. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee of Revenue & Taxation.

AB 249 (Choi): Income tax credits: research credit. Increases the amount of the credit for research activities to 20% of the excess of the qualified research expenses for the taxable year over the base amount and increases the amount of the credit for basic research payments to 30%. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation.

AB 259 (Davies): Protecting Our Restaurants Tax Credit. Allows credits for taxable years between January 1, 2020 and January 1, 2021, to a qualified taxpayer in an amount equal to 50% of the annual fee paid or incurred for an alcohol license during that taxable year. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation.

AB 264 (Voepel): California Competes tax credit: pharmaceutical companies. Increases the total amount of credits that may be allocated by $10,000,000 and would require that those credits be reserved for pharmaceutical companies, as defined. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation. 

AB 281 (Burke): Personal income taxes: corporation taxes: gross income. A place holder bill that will be amended to bring California’s tax treatment of covered Paycheck Protection Program loans into conformity with federal tax laws.
Status: Not yet assigned to a committee.

AB 324 (Choi): Income taxes: credits: attic vent closures. Allows a credit beginning on or after January 1, 2022, and before January 1, 2027, to a qualified taxpayer that installs an attic vent closure in a residential property in an amount equal to 40% of the qualified costs incurred. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation.

AB 593 (Petrie-Norris): Income taxes: net operating losses: tax credits: research, development, and testing for diseases. Called the Golden State Innovation Act of 2021, this bill would restore the Research and Development Tax Credit and Net Operating Loss deduction for Life Sciences companies after January 1, 2021, and before January 1, 2023. If signed into law, this bill would take effect immediately.
Status: Referred to Assembly Committee on Revenue & Taxation.

AB 632 (Ramos): Minimum franchise tax: small business fees. For taxable years beginning on or after January 1, 2022, and before January 1, 2027, this bill would reduce the minimum franchise tax based on the gross receipts during the taxable year of certain corporations. If signed into law, this bill would take effect immediately.
Status: Referred to the Assembly Committee on Revenue & Taxation

AB 664 (Bigelow): Taxation: Corporation Tax Law: annual tax: small businesses. Would suspend annual tax payments for small businesses from taxable year January 1, 2020 until the COVID-19 emergency has ended. If signed into law, this bill would take effect immediately.
Status: Referred to the Assembly Committee on Revenue & Taxation

AB879(BlancaRubio): Personal income tax: corporation tax: sales and use taxes: California Tax Amnesty and Revenue Recovery Act. Creates the California Tax Amnesty and Revenue Recovery Act for specified taxpayers with respect to penalties and fees for tax reporting periods beginning before January 1, 2021.
Status: Referred to the Assembly Committee on Revenue & Taxation

AB 994 (Patterson): Income taxation: exclusion: California Small Business COVID-19 Relief Grant Program. From January 1, 2021 to January 1, 2026, this bill would exclude from gross income the amount of a grant awarded pursuant to the California Small Business COVID-19 Relief Grant Program. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Committee on Revenue & Taxation

AB 1219 (Berman): Income taxes: Natural Heritage Preservation Tax Credit Act of 2000. Would renew Natural Heritage Preservation Tax Credit for qualified contributions on or after January 1, 2021, and no later than June 30, 2026. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Committee on Revenue & Taxation

AB 1249 (Gallagher): Income taxes: gross income exclusions: wildfires. Would provide an exclusion from gross income for any qualified taxpayer for amounts received for costs and losses associated with one or more specified fires from a settlement and authorizes the refund of overpayments as a result of the above- described exclusion, in prior tax years, payable out of the existing Tax Relief and Refund Account. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Committee on Revenue & Taxation

AB 1572 (Committee on Jobs, Economic Development, and the Economy): Personal income taxes: corporation taxes: credits: California New Markets Tax Credit. Creates a California New Markets Tax Credit under the Personal Income and Corporation Tax Laws, in modified conformity with the federal New Markets Tax Credit, for taxable years beginning on January 1, 2023, and before January 1, 2028, in a specified amount for investments in low-income communities. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Committees on Revenue & Taxation and Jobs, Economic Development & the Economy

AB 1582 (Committee on Revenue and Taxation): Income taxes: withholding: real property sales: Katz-Harris Taxpayers’ Bill of Rights Act: report. With respect to dispositions of California real property interests that occur on or after January 1, 2022, this bill provides that the transferee is required to notify the FTB and remit the applicable withholding amount only to the extent that an intermediary or accommodator has received amounts from the disposition of property and has not disbursed those amounts for the purpose of completing an exchange.
Status: Referred to the Assembly Committee on Revenue & Taxation

SB 49 (Umberg): Income taxes: credits: California Fair Fees Tax Credit. Establishes the California Fair Fees Tax Credit for any amount of fees a taxpayer paid to a state agency or a local government in connection with a permit, license, or other mandatory operating costs during the time the taxpayer was required to stop business operations in response to an emergency order. Would take effect immediately if signed into law.
Status: In the Senate Government & Finance Committee

SB 104 (McGuire): Elective tax: limited partnership: limited liability partnership: limited liability company: “S” corporation: credit. Creates an elective tax that allows pass-through entities to pay tax on behalf of their owners and allows a credit to the owners of those entities.
Status: In the Senate Governance & Finance Committee.

SB 265 (Borgeas):Taxation: federal conformity: grant allocations. This bill conforms certain federal COVID- related laws to state law for items such as loans forgiveness and small business relief grants.
Status: Referred to the Senate Government & Finance Committee

SB 276 (Ochoa Bogh): Earned Income Tax Credit: 2021 credit calculation. Authorizes a taxpayer to elect to have the amount of an earned income tax credit calculated based on the taxpayer’s earned income for the prior taxable year.
Status: Referred to the Senate Governance & Finance Committee

SB 303 (Borgeas): Property taxation: transfer of base year value: disaster relief. Extends from five to seven years the time period for a taxpayer affected by a disaster to transfer their base year value to a replacement property. This bill would take effect immediately upon signing.
Status: In the Senate Appropriations Committee

SB 313 (Durazo): California Competes tax credit: refunds. Would allow the refund to taxpayers of their California Competes tax credits if specified conditions are met. The amount refunded cannot exceed the amount of total taxes imposed by the state and paid by the taxpayer.
Status: This bill would take effect immediately upon signing.

SB 408 (Min): Income taxes: credits: restaurants, bars, and hotels. For taxable years between January 1, 2021 and January 1, 2022, this bill allows a credit against taxes for those that owned and operated a bar, hotel, or restaurant that employs 50 or fewer employees. The bill would take effect immediately if signed into law.
Status: Referred to the Senate Governance & Finance Committee 

SB 553 (Limón): Income taxes: California work opportunity tax credit. For each taxable year between January 1, 2021, and January 1, 2025, this bill allows a credit to a qualified employer in an amount equal to that allowed under the federal Work Opportunity Tax Credit. The bill would prohibit the credit from exceeding $2,400 per qualified employee per taxable year. This bill would take effect immediately upon signing.
Status: In the Senate Governance & Finance Committee

BILLS RELATING TO EMPLOYERS

AB 25 (Kiley): Worker classification: employees and independent contractors. Seeks to repeal 2019’s AB 5 which put in place the “ABC test” for independent contractors. This bill would replace the “ABC test” with factors contained in the California Supreme Court’s Borello decision to determine who can be considered an independent contractor.
Status: Referred to the Assembly Labor & Employment Committee

AB 84 (Ting):Employment: COVID-19: supplemental paid sick leave. Provides two weeks of paid sick leave to certain workers to care for themselves or their loved ones affected by COVID-19. The bill would take effect immediately if signed into law.
Status: Referred to the Budget Committee

AB 95 (Low): Employees: bereavement leave. Requires an employer with 25 or more employees to grant a request made by any employee to take up to 10 business days of unpaid bereavement leave upon the death of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner, subject to certain procedures and exclusions. The bill also requires an employer with fewer than 25 employees to grant a request by any employee to take up to 3 business days of leave, in accordance with the bill’s provisions.
Status: In the Assembly Labor & Employment Committee 

AB 247 (Ramos): Definitions: Small Business Procurement and Contract Act. Would exempt a small business or nonprofit organization with 100 or fewer employees from liability for an injury or illness to a consumer due to COVID-19 based on a claim that the consumer contracted COVID-19 while at that business/organization, or due to the actions of that business/organization. For the exemption to apply, the business/organization must have implemented and substantially complied with all applicable state and local health laws.
Status: In the Assembly Judiciary Committee 

AB 654 (Reyes)COVID-19: exposure: notification. Would require State Public Health to make workplace and industry information received from local public health departments available on its website in a manner that allows the public to track the number of COVID-19 cases and outbreaks by both workplace and industry. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Labor & Employment Committee

AB 743 (Ramos): Insurance: business interruption: coverage for COVID-19. Regarding business interruption insurance, this bill creates certain rebuttable presumptions that COVID-19 was present on specified property and caused physical loss or damage to that property which was the direct cause of the business interruption. The bill also provides that, with respect to coverage for business interruption due to a government order, a rebuttable presumption applies that COVID-19 was present on property located within the government’s jurisdiction and caused physical loss or damage to that property which was the direct cause of the insured’s business. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Insurance Committee

AB 757 (Davies): Private employment: COVID-19: positive test or diagnosis: documentation. Authorizes a private employer to request documentation of a positive COVID-19 test or diagnosis if an employee reports that the employee has been diagnosed or tested positive for COVID-19, is unable to work, and the employer determines that an employee may be subject to a 14-day quarantine. Employers must keep private such documentation. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Labor & Employment Committee

AB 1003 (Lorena Gonzalez):Wage theft: grand theft. Makes the intentional theft of wages greater than $950 in aggregate, by an employer from one or more employees, punishable as grand theft. Punishment could include fines and/or jail time.
Status: Referred to the Assembly Public Safety Committee

AB 1028 (Seyarto):Telework Flexibility Act. Would exempt from the current legal eight-hour overtime requirement certain employees who select a flexible work schedule adopted pursuant to the bill. Specifically, allows an individual, nonexempt employee who is working remotely and who is not under the physical control of the employer to work up to 10 hours per workday without overtime payment.
Status: Referred to the Assembly Labor & Employment and Judiciary Committees

AB 1313 (Bigelow):COVID-19: immunity from civil liability. Exempt businesses from liability for an injury or illness due to coronavirus based on a claim that the person contracted COVID-19 while at that business, or due to the actions of that business, if the business has substantially complied with all applicable state and local health laws, regulations, and protocols. The bill would take effect immediately if signed into law.
Status: Referred to the Assembly Judiciary Committee

SB 74 (Borgeas):Keep California Working Act. Establishes the Keep California Working Grant Program and requires the Small Business Advocate to administer the program and award grants to small businesses and nonprofits that have experienced economic hardship resulting from the COVID-19 pandemic. The bill would take effect immediately if signed into law.
Status: Referred to Business, Professions & Economic Development Committee

SB 335 (Cortese): Workers’ compensation: Liability. Would reduce, from the current 90 days to 45 days, the time an employer has to reject liability for certain claims. The bill also increases by $7,000 the liability cap for medical treatment.
Status: In the Senate Labor, Public Employment & Retirement Committee

SB 430 (Borgeas): Small businesses: reduction or waiver of civil penalties for violation of regulations or statutes. Would require a state agency to establish a policy, by January 1, 2023, that provides for the reduction or waiver of civil penalties for a violation of a legal requirement by a small business if the violation did not involve willful or criminal conduct and did not pose a serious health, safety, or environmental threat.
Status: In the Senate Appropriations Committee

SB 606 (Gonzalez): Workplace safety: citations: employer retaliation. Empowers OSHA to issue a citation to an “egregious employer” for willful violations of the Health and Safety code and counts each affected employee as a separate violation. Also establishes a rebuttable presumption that an employer’s actions are retaliatory if an employer takes adverse action in certain circumstances. The author notes the bill also makes retaliation easier to prove.
Status: In the Judiciary Committee; also referred to the Labor, Public Employment & Retirement Committee