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SB-927 Income taxes: gross income exclusions: state of emergency: natural disaster settlements.(2023-2024)

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Date Published: 03/14/2024 09:00 PM
SB927:v98#DOCUMENT

Amended  IN  Senate  March 14, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 927

Introduced by Senator Dahle
(Coauthors: Senators Jones, Limón, Nguyen, Ochoa Bogh, and Seyarto)

January 12, 2024

An act to add and repeal Sections 17139.4 and 24309.8 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 927, as amended, Dahle. Income taxes: gross income exclusions: state of emergency: natural disaster settlements.
The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.
This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2033, would provide an exclusion from gross income for amounts received in settlement by a taxpayer from a settlement entity, as defined, by a qualified taxpayer, as defined, to replace property damaged or destroyed by a natural disaster that was declared a state of emergency by both the Governor and the President of the United States.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
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 17139.4 is added to the Revenue and Taxation Code, to read:

17139.4.
 (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2033, gross income does not include any qualified amount received by a qualified taxpayer.
(b) For purposes of this section, “qualified the following definitions shall apply:
(1) “Qualified amount” means any amount received in settlement by a from a settlement entity by a qualified taxpayer to replace property damaged or destroyed by a natural disaster that was declared a state of emergency by both the Governor and the President of the United States.
(2) “Qualified taxpayer” means any of the following:
(A) Any taxpayer that owns real property located in an area damaged by a natural disaster who paid or incurred expenses, and received amounts from a settlement entity, arising out of or pursuant to the natural disaster.
(B) Any taxpayer that resides within an area damaged by a natural disaster who paid or incurred expenses, and received amounts from a settlement entity, arising out of or pursuant to the natural disaster.
(C) Any taxpayer that has a place of business within an area damaged by a natural disaster who paid or incurred expenses, and received amounts from a settlement entity, arising out of or pursuant to the natural disaster.
(3) “Settlement entity” means the entity, approved by a class action settlement administrator, making the settlement payment to a qualified taxpayer.
(c) The taxpayer settlement entity shall provide, upon request by the Franchise Tax Board, Board or the qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board. Board or the qualified taxpayer, who may provide the documentation to the Franchise Tax Board upon request.
(d) (1) For the purpose of complying with Section 41 in regards to the exclusion provided by this section and Section 24309.8, the Legislature finds and declares the following:
(A) The specific goal, purpose, and objective of the exclusion is to provide essential relief to individuals who have suffered injury, loss, inconvenience, and expenses resulting from natural disasters.
(B) The performance indicators for the Legislature to use in determining whether the exclusion achieves the stated goal, purpose, and objective shall be the number of taxpayers that excluded qualified amounts from gross income.
(2) (A) On December 1, 2028, and every five years thereafter, the Franchise Tax Board shall deliver to the Legislature a written report that includes, to the extent feasible, the number of taxpayers that excluded qualified amounts from gross income as a result of the exclusion.
(B) The report required by this paragraph shall be delivered to the Legislature in compliance with Section 9795 of the Government Code.
(C) The disclosure provisions of this subdivision shall be treated as an exception to Section 19542.
(e) This section shall remain in effect only until December 1, 2033, and as of that date is repealed.

SEC. 2.

 Section 24309.8 is added to the Revenue and Taxation Code, to read:

24309.8.
 (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2033, gross income does not include any qualified amount received by a qualified taxpayer.
(b) For purposes of this section, “qualified the following definitions shall apply:
(1) “Qualified amount” means any amount received in settlement by a from a settlement entity by a qualified taxpayer to replace property damaged or destroyed by a natural disaster that was declared a state of emergency by both the Governor and the President of the United States.
(2) “Qualified taxpayer” means any of the following:
(A) Any taxpayer that owns real property located in an area damaged by a natural disaster who paid or incurred expenses, and received amounts from a settlement entity, arising out of or pursuant to the natural disaster.
(B) Any taxpayer that resides within an area damaged by a natural disaster who paid or incurred expenses, and received amounts from a settlement entity, arising out of or pursuant to the natural disaster.
(C) Any taxpayer that has a place of business within an area damaged by a natural disaster who paid or incurred expenses, and received amounts from a settlement entity, arising out of or pursuant to the natural disaster.
(3) “Settlement entity” means the entity, approved by a class action settlement administrator, making the settlement payment to a qualified taxpayer.
(c) The taxpayer settlement entity shall provide, upon request by the Franchise Tax Board, Board or the qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board. Board or the qualified taxpayer, who may provide the documentation to the Franchise Tax Board upon request.
(d) This section shall remain in effect only until December 1, 2033, and as of that date is repealed.

SEC. 3.

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