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AB-2978 Personal income taxes: Victims of Terrorism Relief Act: federal conformity.(2001-2002)

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Amended  IN  Assembly  May 02, 2002
Amended  IN  Assembly  May 23, 2002

CALIFORNIA LEGISLATURE— 2001–2002 REGULAR SESSION

Assembly Bill
No. 2978

Introduced  by Committee on Revenue and Taxation  (Chavez (Chair), Wyland (Vice Chair), Alquist, and Harman)
(Coauthor(s): Assembly Member Corbett, Koretz, Matthews)

February 27, 2002

An act to amend Sections 17131, 17132.6, 17731, 18572, and 19109 of, to amend and renumber Section 17132.6 of, and to add Section 19559 to, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2978, as amended, Committee on Revenue and Taxation. Personal income taxes: Victims of Terrorism Relief Act: federal conformity.
The Personal Income Tax Law, in conformance with federal law, for purposes of computing income tax liability, excludes income received from specified sources.
This bill, in conformance with the Victims of Terrorism Relief Act of 2001, would exclude from income specified survivor benefits and insurance payments received as compensation for deaths or injuries incurred as a result of terrorist attacks against the United States.
This bill, in conformance with the Victims of Terrorism Relief Act of 2001, would provide that any discharge of indebtedness by reason of the death or injury of a person arising from terrorist attacks occurring on or after September 11, 2001, and before January 1, 2002, would also be excluded from income for the purpose of computing income tax liability.
The Personal Income Tax Law authorizes extensions of time for the payment of tax liabilities owed by persons affected by presidentially declared disasters.
This bill would conform to federal law by allowing extensions of time for the payment of tax liabilities owed by persons affected by terrorist attacks occurring on or after September 11, 2001, as specified.
This bill, in conformance with the Victims of Terrorism Relief Act of 2001, would, subject to certain limitations, authorize the Franchise Tax Board to disclose tax information to federal agencies to the same extent as disclosure of tax information is authorized under that act.
This bill, in conformance with the Victims of Terrorism Relief Act of 2001, would also provide that insurance benefits paid by an exempt charitable organization by reason of terrorist attacks on or after September 11, 2001, and before January 1, 2002, would be treated as payments made in the furtherance of the charitable purpose of that organization.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17131 of the Revenue and Taxation Code is amended to read:

17131.
 Part III of Subchapter B of Chapter 1 of Subtitle A of the Internal Revenue Code, as amended by Sections 111 and 113 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134), relating to items that are specifically excluded from gross income, shall apply, except as otherwise provided.

SEC. 2.Section 17132.6 of the Revenue and Taxation Code is amended to read:
17132.6.

Section 101 of the Internal Revenue Code, relating to certain death benefits, is modified as follows:

(a)Section 101(h) of the Internal Revenue Code, relating to survivor benefits attributable to service by a public safety officer who is killed in the line of duty, is modified to apply to amounts received in taxable years beginning after December 31, 1996, with respect to individuals dying after December 31, 1996.

(b) (1) The amendments made to Section 101 of the Internal Revenue Code by Section 102 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134) shall apply to taxable years ending before, on, or after September 11, 2001.

(2)If a refund or a credit of any overpayment of tax resulting from the amendments made by this section is precluded at any time before the close of the one-year period beginning on the date of enactment of this act by the operation of any law or rule of law, including res judicata, that refund or credit may nevertheless be made or allowed if a claim therefor is filed on or before the close of that one-year period.

Section 17132.6 of the Revenue and Taxation Code, as amended by Section 20 of Chapter 322 of the Statutes of 1998, is amended and renumbered to read:
17132.6.

17132.5.
 Section 101 of the Internal Revenue Code, relating to certain death benefits, is modified as follows:
(a) Section 101(h) of the Internal Revenue Code, relating to survivor benefits attributable to service by a public safety officer who is killed in the line of duty, is modified to apply to amounts received in taxable years beginning after December 31, 1996, with respect to individuals dying after December 31, 1996.
(b) The amendments made by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 1998. (1) The amendments made to Section 101 of the Internal Revenue Code by Section 102 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134) shall apply to taxable years ending before, on, or after September 11, 2001.
(2) If a refund or a credit of any overpayment of tax resulting from the amendments made by the act amending and renumbering this section is precluded at any time before the close of the one-year period beginning on the operative date of that act by the operation of any law or rule of law, including res judicata, that refund or credit may nevertheless be made or allowed if a claim therefor is filed on or before the close of that one-year period.

SEC. 3.

 Section 17731 of the Revenue and Taxation Code is amended to read:

17731.
 (a) Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to estates, trusts, beneficiaries, and decedents, shall apply, except as otherwise provided.
(b) (1) The amendments made to Section 692 of the Internal Revenue Code by Section 101 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134) shall apply to taxable years ending before, on, or after September 11, 2001.
(2) The amendments made to Sections 642 and 692 of the Internal Revenue Code by Sections 113 and 116 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134) shall apply to taxable years ending before, on, or after September 11, 2001.
(3) If a refund or a credit of any overpayment of tax resulting from the amendments made by the act amending and renumbering this section is precluded at any time before the close of the one-year period beginning on the date of enactment of this operative date of that act by the operation of any law or rule of law, including res judicata, such refund or credit may nevertheless be made or allowed if a claim therefor is filed on or before the close of that one-year period.

SEC. 4.

 Section 18572 of the Revenue and Taxation Code is amended to read:

18572.
 (a)  Section 7508A of the Internal Revenue Code, relating to the postponement of certain tax related deadlines shall apply, except as otherwise provided.
(b) The amendments made to Section 7508A of the Internal Revenue Code by Section 112 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134) shall apply to disasters and terroristic or military actions occurring on or after September 11, 2001, with respect to any action of the Secretary of the Treasury, the Secretary of Labor, or the Pension Benefit Guaranty Corporation occurring on or after January 23, 2002.

SEC. 5.

 Section 19109 of the Revenue and Taxation Code is amended to read:

19109.
 (a) If the Franchise Tax Board extends for any period the time for filing a return under Section 18572 or subdivision (a) of Section 18567 and the time for paying the tax under Section 18572 or subdivision (c) of Section 18567 (and waives any penalties relating to the failure to so file or so pay) for any taxpayer located in a presidentially declared disaster area or any county or city in this state which is proclaimed by the Governor to be in a state of disaster who incurred a loss, the Franchise Tax Board shall, notwithstanding subdivision (b) of Section 18572, abate for that period the assessment of any interest prescribed under this article on that tax.
(b) For purposes of subdivision (a), the term “presidentially declared disaster area” means, with respect to any taxpayer, any area which the President has determined warrants assistance by the federal government under the Disaster Relief and Emergency Assistance Act.

SEC. 6.

 Section 19559 is added to the Revenue and Taxation Code, to read:

19559.
 (a) The Franchise Tax Board may disclose returns and return information to federal agencies on the same terms and to the same extent as returns and return information may be disclosed by the Secretary of the Treasury under paragraph (3)(C) or (7) of Section 6103(i) of the Internal Revenue Code, as amended by Section 201 of the Victims of Terrorism Relief Act of 2001 (Public Law 107-134). The Franchise Tax Board shall not disclose any return or return information under this section if the Franchise Tax Board determines that the disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation.
(b) This section shall apply to disclosures made for the period beginning on or after January 23, 2002, and ending on December 31, 2003.

SEC. 7.

 (a) (1) For purposes of the Internal Revenue Code of 1986, as applicable for purposes of Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), and Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code, payments made by an organization described in Section 501(c)(3) of the Internal Revenue Code by reason of the death, injury, wounding, or illness of an individual incurred as the result of the terrorist attacks against the United States on or after September 11, 2001, or an attack involving anthrax occurring on or after September 11, 2001, and before January 1, 2002, shall be treated as related to the purpose or function constituting the basis for that organization’s exemption under Section 501 of the Internal Revenue Code if such payments are made in good faith using reasonable and objective formula which are consistently applied.
(2) This shall apply to payments made on or after September 11, 2001.
(b) For purposes of the Internal Revenue Code of 1986, as applicable for purposes of Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401), and Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code, both of the following shall apply:
(1) Gross income shall not include any amount that, but for this section, would otherwise be includable in gross income by reason of the discharge of indebtedness, in whole or in part, of any taxpayer if the discharge is by reason of the death of an individual incurred as the result of the terrorist attacks against the United States on September 11, 2001, or as a result of illness incurred as a result of an attack involving anthrax occurring on or after September 11, 2001, and before January 1, 2002.
(2) Return requirements under Section 6050P of the Internal Revenue Code shall not apply to any discharge described in paragraph (1).
(3) This subdivision shall apply to discharges made on or after September 11, 2001, and before January 1, 2002.

SEC. 8.

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