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AB-989 Income tax: health savings accounts. (2017-2018)

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Date Published: 04/07/2017 04:00 AM
AB989:v98#DOCUMENT

Amended  IN  Assembly  April 06, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 989

Introduced by Assembly Member Cooper Assembly Members Cooper and Obernolte
(Coauthor: Assembly Member Ridley-Thomas)

February 16, 2017

An act to amend Section 17072 of, to amend and repeal Sections 17131.4, 17131.5, 17215.1, and 17215.4 of, and to add Section 17217 to, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 989, as amended, Cooper. Income tax: health savings accounts.
The Personal Income Tax Law authorizes various deductions in computing income that is subject to tax under that law.
This bill, for taxable years beginning on or after January 1, 2019, would allow a deduction in computing adjusted gross income in connection with health savings accounts in conformity with federal law. In general, the deduction would be an amount equal to the aggregate amount paid in cash during the taxable year by, or on behalf of, an eligible individual, as defined, to a health savings account of that individual, as provided. The bill, for taxable years beginning on or after January 1, 2019, would also provide related conformity to that federal law with respect to the allowance of rollovers from Archer Medical Savings Accounts, health flexible spending arrangements, or health reimbursement accounts to a health savings account, and penalties in connection therewith. The bill would make these provisions operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax board for its costs to administer these provisions.
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 17072 of the Revenue and Taxation Code is amended to read:

17072.
 (a) Section 62 of the Internal Revenue Code, relating to adjusted gross income defined, shall apply, except as otherwise provided.
(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to certain expenses of elementary and secondary school teachers, shall not apply.
(c) Section 62(a)(21) of the Internal Revenue Code, relating to attorneys fees relating to awards to whistleblowers, shall not apply.
(d) For taxable years beginning on or after January 1, 2019, Section 62(a)(19) of the Internal Revenue Code, relating to health savings accounts, shall apply, as modified by Section 17217.
(e) The amendments made to this section by the act adding this subdivision shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer those amendments.

SEC. 2.

 Section 17131.4 of the Revenue and Taxation Code is amended to read:

17131.4.
 (a) Section 106(d) of the Internal Revenue Code, relating to contributions to health savings accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2019.
(c) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.
(d) The amendments made to this section by the act adding this subdivision shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer that act.

SEC. 3.

 Section 17131.5 of the Revenue and Taxation Code is amended to read:

17131.5.
 (a) Section 125(d)(2)(D) of the Internal Revenue Code, relating to exception for health savings accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2019.
(c) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.
(d) The amendments made to this section by the act adding this subdivision shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer that act.

SEC. 4.

 Section 17215.1 of the Revenue and Taxation Code is amended to read:

17215.1.
 (a) Section 220(f)(5) of the Internal Revenue Code, relating to rollover contributions, shall not apply.
(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2019.
(c) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.
(d) The amendments made to this section by the act adding this subdivision shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer that act.

SEC. 5.

 Section 17215.4 of the Revenue and Taxation Code is amended to read:

17215.4.
 (a) Section 223 of the Internal Revenue Code, relating to health savings accounts, shall not apply.
(b) This section shall apply to taxable years beginning on or after January 1, 2005, and before January 1, 2019.
(c) This section shall remain in effect only until January 1, 2024, and as of that date is repealed.
(d) The amendments made to this section by the act adding this subdivision shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer that act.

SEC. 6.

 Section 17217 is added to the Revenue and Taxation Code, to read:

17217.
 For taxable years beginning on or after January 1, 2019, all of the following shall apply:
(a) Section 223 of the Internal Revenue Code, relating to health savings accounts, shall apply, except as otherwise provided.
(b) Section 223(e)(1) of the Internal Revenue Code shall be modified by substituting the phrase “Section 17651” for the phrase “Section 511 (relating to imposition of tax of unrelated business income of charitable, etc. organizations),” contained therein.
(c) Section 223(f)(4)(A) of the Internal Revenue Code shall be modified by substituting “2.5 percent” for “20 percent,” contained therein.
(d) This section shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer this section.

SEC. 7.

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