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AB-1258 Personal income taxes: exclusion: servicemembers.(2019-2020)

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Date Published: 04/11/2019 09:00 PM
AB1258:v96#DOCUMENT

Amended  IN  Assembly  April 11, 2019
Amended  IN  Assembly  April 09, 2019
Amended  IN  Assembly  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1258


Introduced by Assembly Member Salas

February 21, 2019


An act to add and repeal Section 17140.7 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1258, as amended, Salas. Personal income taxes: exclusion: servicemembers.
The Personal Income Tax Law imposes a tax on individual taxpayers measured by the taxpayer’s taxable income for the taxable year, but, in modified conformity with federal income tax laws, allows various exclusions from gross income, including an exclusion for military compensation of a servicemember not domiciled in this state for services performed or from sources within this state. Existing law limits the collection and use of taxpayer information and provides that any unauthorized use of this information is punishable as a misdemeanor.
This bill, for taxable years beginning on or after January 1, 2020, and before January 1, 2030, would exclude from gross income all income from any source active duty pay received by active duty servicemembers a servicemember while on active duty in this state and all income for an military retirement pay received during the applicable time period, as defined, after being honorably discharged.
This bill would require the Department of Veterans Affairs to compile specified information relating to the exclusion, in an aggregate manner, and report to the Legislative Analyst’s Office on or before December 1, 2030, to allow the Legislature to measure whether the exclusion is meeting specified goals of the bill, as provided. This bill would require the Franchise Tax Board to provide specified information to the department for purposes of the report and would make taxpayer information received by the department subject to limitation on the collection and use of that information. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Section 17140.7 is added to the Revenue and Taxation Code, to read:

17140.7.
 (a) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, gross income shall not include any income from any source active duty pay received by a servicemember, while on active duty in this state, in the United States Armed Forces, in the reserve components of the United States Armed Forces, or in the National Guard.
(b) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, gross income shall not include, for the applicable time period, any income from any source received include military retirement pay received during the applicable time period by a servicemember who has been honorably discharged from the United States Armed Forces, the reserve components of the United States Armed Forces, or the National Guard.
(c) For purposes of this section, “applicable time period” means the period of time beginning on the date a servicemember in the United States Armed Forces, in the reserve components of the United States Armed Forces, or in the National Guard is honorably discharged and ends after a period of time equal to that of the servicemember’s cumulative days of active duty service prior to the honorable discharge. The applicable time period shall be confirmed by the Secretary of Veterans Affairs.
(d) The Department of Veterans Affairs may adopt rules and regulations for the purpose of confirming the applicable time period pursuant to subdivision (c).
(e) This section shall be repealed on December 1, 2030.

SEC. 2.

 (a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.
(b) The goal of this act adding Section 17140.7 to the Revenue and Taxation Code is to honor the service of California’s service members and veterans, provide fiscal relief to service members and veterans, and to incentivize veterans to remain in California upon their honorable discharge.
(c) The Legislature will measure the success of this act in meeting that goal by evaluating the number of active duty service members and veterans taking advantage of the income tax exclusion program, the economic stability of California’s veterans population, and whether there is a decrease in the number of veterans leaving California by the date of the bill’s inoperative date.
(d) The Department of Veterans Affairs shall compile the information detailed in subdivision (c) and report to the Legislative Analyst’s Office on or before December 1, 2030. The Legislative Analyst’s Office shall report it to the Legislature. The information in the report shall be compiled in an aggregate manner to preserve taxpayer confidentiality.
(e) Notwithstanding Section 19542 of the Revenue and Taxation Code, the Franchise Tax Board shall provide the Department of Veterans Affair with any information necessary to compile the information for the report required pursuant to this section. Taxpayer information received pursuant to this section by the Department of Veterans Affairs is subject to Section 19542 of the Revenue and Taxation Code.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 4.

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