CSTC works closely with a Legislative Consultant to keep an eye on important bills that would affect taxpayers and small business owners. The legislature returned on January 6 and began hearings and floor sessions quickly. Below is an update of bills relating to tax consultants and businesses. More bills may appear in next month’s report as the deadline to introduce new bills is February 21.

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COVID-19-RELATED BILLS OF INTEREST

AB 1842 (Salas). Commission on Judicial Performance: complaints against judges. California Works and Recovery Act.
Among other provisions, this bill would allow a small business or a nonprofit organization impacted by COVID- 19, an earned income tax credit for each taxable year beginning on and after January 1, 2020, in an amount equal to 20% of the taxpayer’s annual revenue. The bill would specify that the credit is only operative for taxable years for which the Legislature appropriates from the General Fund to the Franchise Tax Board moneys to administer the credit.
Status: Re-referred to the Assembly Judiciary Committee

AB 2496 (Choi). Income taxes: credits: cleaning and sanitizing supplies: COVID-19.
This bill would allow a credit against personal and corporate taxes for each taxable year beginning on or after January 1, 2020, and before January 1, 2021, to a taxpayer that is a business with a physical location in an amount equal to the costs paid or incurred by the qualified taxpayer during the taxable year for the purchase of cleaning and sanitizing supplies used at California business locations to prevent the transmission of COVID-19. This bill would take effect immediately as a tax levy.
Status: Re-referred to the Assembly Committee on Revenue and Taxation

AB 3196 (Kiley). Small business regulation: COVID-19 pandemic: employment: work hours: compensation. This bill would permit an individual nonexempt employee to work an employee-selected flexible work schedule, without any obligation on the part of the employer to pay overtime, if the employee requests and the employer approves the schedule.
Status: Substantially amended on May 11 to include the above language.

BILLS ATTEMPTING TO CLARIFY OR REPEAL THE NEW INDEPENDENT CONTRACTOR LAW (AB 5)

 

AB 1850 (Gonzalez). Employee classification
As amended from a placeholder bill, makes non-substantive changes to last year’s AB 5. More substantive amendments are expected.
Status: Re-referred to the Assembly Committee on Labor and Employment

 

SB 806 (Grove). Worker status: employees: independent contractors.
Repeals AB 5 and creates a very broad definition of an independent contractor and assumes an independent contractor, rather than an employee, status.
Status: Failed to pass the Senate Labor Committee on May 18, but given a second chance

 

OTHER BILLS OF INTEREST

 

AB 2166 (Kiley). Personal Income Tax Law: net operating loss.
This bill would, under personal and corporate tax laws, conform to the relevant provision of the CARES Act and authorize a taxpayer to file a return for the first six months of a taxable year if that return includes a claim for a net operating loss carryback pursuant to that provision.
Status: Re-referred to the Assembly Committee on Revenue and Taxation

 

AB 2493 (Choi). Income tax credits: research credit.
This bill would, for both the Personal Income Tax Law and the Corporation Tax Law for each taxable year beginning on or after January 1, 2020, increase the amount of the research activity credit to 20% of the excess of the qualified research expenses for the taxable year over the base amount. The bill would also, under the Corporation Tax Law for each taxable year beginning on or after January 1, 2020, increase the amount of the credit for basic research payments to 30%.
Status: Re-referred to the Assembly Committee on Revenue and Taxation

 

AB 3208 (Kiley). Income tax: gross income: loan forgiveness.
This bill, for taxable years beginning on or after January 1, 2020, would exclude from gross income, for state income tax purposes, any covered loan amount forgiven pursuant to the federal CARES Act.
Status: Re-referred to the Assembly Committee on Revenue and Taxation 

 

SB 1210 (Bradford). Insurance taxation: credit: California Jumpstart Act.
Provides tax credits to incentivize federally licensed Small Business Administration investors to raise up to $500 million for small business relief and recovery.
Status: Referred to the Senate Government and Finance Committee