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SB-1 Personal income and bank and corporation taxes: electrical windfall profits tax: consumer credit.(2001-2002)



Current Version: 05/03/01 - Amended Senate

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SB1:v94#DOCUMENT

Amended  IN  Senate  February 06, 2001
Amended  IN  Senate  March 01, 2001
Amended  IN  Senate  April 16, 2001
Amended  IN  Senate  April 23, 2001
Amended  IN  Senate  May 03, 2001

CALIFORNIA LEGISLATURE— 2001–2002 1st Ext.

Senate Bill
No. 1

Introduced  by  Senator Soto, Scott

January 17, 2001

An act to amend Section 19221 of, to add Section 17052.75 to, and to add Part 14.5 (commencing with Section 33001) to Division 2 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 1, as amended, Soto. Personal income and bank and corporation taxes: electrical windfall profits tax: consumer credit.
The Personal Income Tax Law authorizes various credits against the taxes imposed by those laws.
This bill, in accordance with the Legislature’s stated intent to provide relief to California consumers of electrical power, would for each taxable year beginning on or after January 1, 2001, authorize a refundable California Electricity Consumers Tax Credit. The allowable credit would be computed in a manner that distributes, in equal amounts among those taxpayers required to file a tax return under the Personal Income Tax Law, a sum that is equal to the total amount due and payable under the Electric Windfall Profits Tax imposed under this bill as reduced by any amounts refunded in that taxable year.
The Personal Income Tax Law and the Bank and Corporation Tax Law impose a tax measured by income upon every individual or corporation doing business in, or deriving income from this state.
This bill would impose the Electric Windfall Profits Tax on sellers of electricity in this state in an amount equal to the portion of the sales price of electricity that exceeds the base price, as defined. This bill would require the California Independent Systems Operator, any utility distribution company, or any other person or entity in this state required to process sales of electricity, to withhold from payments to the seller the entire amount of the Electric Windfall Profits Tax generated from the sale of electricity. The Electric Windfall Profits Tax withheld would be required to be remitted to the Franchise Tax Board in the month immediately following the month in which the sale of electricity that generated the Electric Windfall Profits Tax occurred.
In addition to the remittance of the Electric Windfall Profits Tax, this bill would require the California Independent Systems Operator, any utility distribution company, or any other person or entity in this state required to process sales of electricity, to file a monthly information return with the Franchise Tax Board.
This bill would require sellers of electricity, whose sales are not required to be processed by the California Independent Systems Operator or any other person or entity in this state, to file a return and remit to the Franchise Tax Board the entire Electric Windfall Profits Tax owed in the month immediately following the month in which the sale of electricity that generated the Electric Windfall Profits Tax occurred. This bill would not apply to sales of electricity made pursuant to a binding written contract executed on or before the effective date of this bill.
This bill would take effect immediately as a tax levy, but its operative date would depend upon its effective date.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 (a) It is the intent of the Legislature to provide some relief to California’s consumers of electrical power who have been subjected to unprecedented increases in the rates charged by providers of electrical services. In order to achieve this intent, this bill would impose the Electric Windfall Profits Tax on California taxpayers engaged in the business of generating electrical power and would return the proceeds of this tax to California’s taxpayers in the form of the California Electricity Consumers Credit.
(b) It is the intent of the Legislature that taxpayers engaged in the business of generating and selling electrical power not pass on, in any manner, any increased costs of doing business attributable to the imposition of the Electric Windfall Profits Tax. It is also the intent of the Legislature that the Public Utilities Commission monitor taxpayers engaged in the business of generating and selling electrical power to ensure that any rate increases in the provision of electrical services are not done for the purpose of offsetting the Electric Windfall Profits Tax.

SEC. 2.

 Section 17052.75 is added to the Revenue and Taxation Code, to read:

17052.75.
 (a) For each taxable year beginning on or after January 1, 2001, there shall be allowed, against the “net tax,” as defined in Section 17039, a California Electricity Consumers Credit in an amount as determined by the Franchise Tax Board under subdivision (b).
(b) The allowable credit for each taxable year shall be determined in a manner that distributes, in equal amounts among those individuals required to file an income tax return under this part, a sum that is equal to the total amount due and payable for the same taxable year under the Electric Windfall Profits Tax imposed under Chapter 2.7 (commencing with Section 23471) of Part 11.
(c) The total credit amount available for distribution for each taxable year under subdivision (b) shall be adjusted by reducing the total amount of the Windfall Profits Tax due and payable for that taxable year by the amount of refunds allowed under Section 33006 for that taxable year.
(d) In the case where the credit allowed by this section exceeds the “net tax,” the excess shall be credited against other amounts due, if any, from the taxpayer. The balance, if any, shall be refunded to the taxpayer upon appropriation by the Legislature of the amount necessary to pay that refund.

Section 19221 of the Revenue and Taxation Code is amended to read:

19221.
 (a) If any taxpayer or person fails to pay any liability imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) or under Part 14.5 (commencing with Section 33001), at the time that it becomes due and payable, the amount thereof, (including any interest, additional amount, addition to tax, or penalty, together with any costs that may accrue in addition thereto) shall thereupon be a perfected and enforceable state tax lien. This lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code.
(b) For the purpose of this section, amounts are “due and payable” on the following dates:
(1) For amounts of any liability disclosed on a return filed on or before the date payment is due (with regard to any extension of time to pay), the date the amount is established on the records of the Franchise Tax Board, except that in no case will it be prior to the day after the payment due date;.
(2) For amounts of any liability disclosed on a return filed after the date payment is due (with regard to any extension of time to pay), the date the amount is established on the records of the Franchise Tax Board;.
(3) For amounts of any liability determined under Section 19081 or 19082 (pertaining to jeopardy assessments), the date the notice of the Franchise Tax Board’s finding is mailed or issued;.
(4) For all other amounts of liability, the date the assessment is final.
(c) Notwithstanding subdivision (a), during any period that Section 362 of Title 11 of the United States Code applies, any tax lien that would otherwise attach to property by reason of subdivision (a) shall not take effect, unless the tax is a debt of the debtor that will not be discharged in the bankruptcy proceeding and the property or its proceeds are transferred out of the bankruptcy estate to, or otherwise revested in, the debtor.

Part 14.5 (commencing with Section 33001) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 14.5. ELECTRIC WINDFALL PROFITS TAX

33001.
 (a) In addition to the tax imposed pursuant to this division, there is hereby imposed on sellers of electricity in this state an Electric Windfall Profits Tax in an amount equal to that portion of the sales price of electricity sold in this state that exceeds the base price.
(b) For purposes of this part:
(1) “Base price” means eighty dollars ($80) per megawatt hour of electricity sold, or any subsequent price developed and approved by the California Public Utilities Commission (CPUC) that is based on an industrywide average of the cost of selling electricity, as adjusted for a reasonable allowance for profit margins and maintenance and operational expenses.
(2) “Sellers of electricity” include individuals, partnerships, limited partnerships, joint ventures, trusts, associations, corporations, Subchapter S corporations, or any other entity that is a producer, generator, wholesaler, marketer, broker, or other vendor of electricity.
(c) It shall be presumed that the tax imposed pursuant to this part is the amount of tax withheld and remitted or required to be remitted to the Franchise Tax Board pursuant to Sections 33002 and 33003.

33002.
 (a) Except with respect to a seller of electricity described in Section 33003, the California Independent Systems Operator, any utility distribution company, or any other person or entity in this state that processes or is required to process sales of electricity, shall withhold from payments made to sellers of electricity 100 percent of that portion of the sales price of electricity that is subject to the Electric Windfall Profits Tax imposed by this part.
(b) Any amounts withheld under this section shall be held in a segregated account or fund in trust for the State of California.
(c) Each amount of the Electric Windfall Profits Tax withheld under this section shall be remitted to the Franchise Tax Board on or before the 15th day of the month immediately following the month in which this tax was withheld.
(d) Every person required under this section to withhold and remit the tax imposed under this part is hereby liable for the tax imposed under this part.
(e) If any amount required to be withheld under this section is not remitted to the Franchise Tax Board on or before the due date, interest shall be assessed at the adjusted annual rate established pursuant to Section 19521, computed from the due date to the date payment is received by the Franchise Tax Board.
(f) If any amount required to be remitted under this section is not remitted to the Franchise Tax Board on or before the due date, a penalty may be assessed by the Franchise Tax Board in accordance with the provisions of Section 19132.

33003.
 (a) Any seller of electricity whose sales of electricity are not processed, or required to be processed, through the California Independent Systems Operator, a utility distribution company, or any other person or entity shall, with respect to each of its sales of electricity in this state, remit to the Franchise Tax Board 100 percent of that portion of the sales price of electricity subject to the Electric Windfall Profits Tax imposed by this part.
(b) The tax due under this section shall be remitted to the Franchise Tax Board on or before the 15th day of the month immediately following the month in which the sale of the electricity which generated the tax imposed under this part occurred.
(c) If any amount required to be remitted under this section is not remitted to the Franchise Tax Board on or before the due date, interest shall be assessed at the adjusted annual rate established pursuant to Section 19521, computed from the due date to the date payment is received by the Franchise Tax Board.
(d) If any amount required to be remitted under this section is not remitted to the Franchise Tax Board on or before the due date, a penalty may be assessed by the Franchise Tax Board in accordance with the provisions of Section 19132.

33004.
 (a) The California Independent Systems Operator, any utility distribution companies, or any other entity required to withhold and remit Electric Windfall Profits Taxes to the Franchise Tax Board under Section 33002 shall prepare and file with the Franchise Tax Board a monthly return showing, for each seller of electricity subject to the tax imposed under this part, the name and tax identification number of the seller on whose behalf the tax was withheld, the amount of tax, the total number of megawatt hours of electricity sold that was subject to the tax, the total amount of kilowatthours of electricity sold, the purchaser of the electricity, and any other information as the Franchise Tax Board deems necessary for the proper administration of this part. The return shall be filed on or before the 15th day of the month following the month in which the tax was withheld. To facilitate the administration of this part, the board may require the filing of the returns for periods other than monthly periods.
(b) Any seller of electricity whose sales of electricity are not processed, or required to be processed, through the California Independent Systems Operator, a utility distribution company, or any other person or entity required to remit electric windfall profits taxes to the Franchise Tax Board under Section 33003 shall prepare and file with the Franchise Tax Board a monthly return showing, the amount of tax remitted, the total number of megawatt hours of electricity sold that was subject to the tax, the total amount of kilowatthours of electricity sold, the purchaser of the electricity, and any other information as the Franchise Tax Board deems necessary for the proper administration of this part. This return shall be filed on or before the 15th day of the month following the month in which the tax was withheld.
(c) If a taxpayer fails to file or make a return as required by this section before the due date of the return or the date as may be extended by the Franchise Tax Board, a penalty may be assessed by the Franchise Tax Board in accordance with the provisions of Section 19131.
(d) In order to facilitate the administration of this part, the Franchise Tax Board may require the filing of the returns for periods other than monthly periods.

33005.
 The California Public Utilities Commission, may by regulation, authorize exemptions from all or a portion of the tax imposed under this part for generators of renewable energy sources.

33006.
 (a) It shall be presumed that the tax required to be withheld and remitted under Sections 33002 and 33003 is the full amount of tax owed by the taxpayer subject to the Electric Windfall Profits Tax imposed under this part. If a taxpayer disputes the actual tax withheld or remitted under this part, the taxpayer may request a refund setting forth the reasons and facts that demonstrate that the tax withheld and remitted under this part does not accurately reflect the tax owed by the taxpayer.
(b) (1) It shall be presumed that any base price developed and approved by the California Public Utilities Commission (CPUC) reflects the taxpayer’s costs of selling electricity, as adjusted for the reasonable allowance of profit margins and maintenance and operational expenses. If a taxpayer contends that the base price, as calculated and approved by the CPUC, does not allow the taxpayer a reasonable allowance for profit margins and maintenance and operational expenses, the taxpayer may file a claim for refund setting forth the reasons and calculations that demonstrate that the base price does not reflect the taxpayer’s actual costs of selling electricity.
(2) A claim for refund filed under this subdivision shall be reviewed by the CPUC and no refund may be issued unless the CPUC determines that the taxpayer has demonstrated that an adjustment should be made to the base price to accurately reflect the taxpayer’s cost of selling electricity. The refund amount, if any, shall be calculated and approved by the CPUC.
(3) In the event the CPUC determines that the taxpayer is not entitled, in whole or part, to a refund claimed under this section, the taxpayer, in accordance with the provisions set forth in Article 3 of Chapter 6 of Part 10.2 (commencing with Section 19381), may bring an action against the Franchise Tax Board upon the grounds set forth in the claim for refund.
(c) Any claim for refund filed under this section shall be filed within four years from the date the tax was required to be remitted or within one year from the date the tax was remitted, whichever period is longer.
(d) Interest shall be allowed on any amount refunded under this section, calculated at the adjusted annual rate established pursuant to Section 19521 and computed from the date of overpayment to the date the refund warrant is issued.

33007.
 The Franchise Tax Board shall administer this part in accordance with its authority set forth in Part 10.2 (commencing with Section 18401).

33008.
 This part does not apply to sales of electricity made pursuant to binding written contracts executed on or before the effective date of this part.

SEC. 4.

SEC. 5.

 This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect. However, the provisions of this act shall become operative on the first day of the first month commencing more than 60 days after the effective date of this act.