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SB-1004 Income taxes: exclusions: wildfires.(2023-2024)



Current Version: 06/26/24 - Amended Assembly

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SB1004:v97#DOCUMENT

Amended  IN  Assembly  June 26, 2024
Amended  IN  Senate  March 14, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 1004

Introduced by Senator Wilk
(Coauthor: Senator Dahle)

February 01, 2024

An act to add and repeal Sections 17138.7 and 24309.2 of the Revenue and Taxation Code, relating to taxation. taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 1004, as amended, Wilk. Income taxes: exclusions: wildfires.
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, 2020, 2024, and before January 1, 2034, 2029, would provide an exclusion from gross income for any qualified taxpayer, as defined, for amounts received for costs and losses associated with wildfires, as provided.
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 make findings and declarations related to a gift of public funds.

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 17138.7 is added to the Revenue and Taxation Code, to read:

17138.7.
 (a) For taxable years beginning on or after January 1, 2020, 2024, and before January 1, 2034, 2029, gross income does not include any qualified amount received by a qualified taxpayer.
(b) For purposes of this section:
(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer to replace property damaged or destroyed by wildfire if the property damaged or destroyed is located in an area of California damaged by the wildfire.
(2) “Qualified taxpayer” means any of the following:
(A) Any taxpayer that owns real property located in an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(B) Any taxpayer that resides within an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(C) Any taxpayer that has a place of business within an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(3) “Settlement entity” means the entity, approved by a class action settlement administrator, making the settlement payment to a qualified taxpayer.
(c) The settlement entity shall provide, upon request by the Franchise Tax Board or qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax 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, as it relates to the exclusion provided by this section and Section 24309.2, the Legislature finds and declares that the purpose of the exclusion is to provide essential relief to individuals who have suffered injury, loss, inconvenience, and expenses resulting from devastating wildfires.
(2) (A) By November 1, 2027, and annually thereafter, the Franchise Tax Board shall deliver to the Legislature a written report, in accordance with Section 9795 of the Government Code, that includes both of the following:
(i) The number of qualified taxpayers that excluded qualified amounts from gross income as a result of the exclusion allowed by this section and Section 24309.2.
(ii) The aggregate amount of those settlement payments arising out of the wildfires.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(e) This section shall remain in effect only until December 1, 2034, 2029, and as of that date is repealed.

SEC. 2.

 Section 24309.2 is added to the Revenue and Taxation Code, to read:

24309.2.
 (a) For taxable years beginning on or after January 1, 2020, 2024, and before January 1, 2034, 2029, gross income does not include any qualified amount received by a qualified taxpayer.
(b) For purposes of this section:
(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer to replace property damaged or destroyed by wildfire if the property damaged or destroyed is located in an area of California damaged by the wildfire.
(2) “Qualified taxpayer” means either of the following:
(A) Any taxpayer that owns real property located in an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(B) Any taxpayer that has a place of business within an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(3) “Settlement entity” means the entity, approved by a class action settlement administrator, making the settlement payment to a qualified taxpayer.
(c) The settlement entity shall provide, upon request by the Franchise Tax Board or qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax 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, 2034, 2029, and as of that date is repealed.

SEC. 3.

The Legislature hereby finds and declares that the exclusions authorized by Sections 17138.7 and 24309.2 of the Revenue and Taxation Code, as added by this act, are necessary for the public purpose of preventing undue hardship to taxpayers who reside, or used to reside, in a part of California devastated by wildfires, and do not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.

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.