Taxation.

Existing law requires a person to pay a penalty as specified, if he or she has a duty to file information returns as a material advisor on certain reportable transactions and fails to keep the records. This bill would repeal that provision. Existing law requires a voluntary disclosure agreement entered into by the Franchise Tax Board and a qualified entity, qualified shareholder, qualified member, or qualified beneficiary to specify that the Franchise Tax Board is required to, with respect to the qualified entity, qualified shareholder, qualified member, or qualified beneficiary for each of the 6 taxable years ending immediately preceding the signing date of the agreement, waive specified penalties, including a specified penalty for a partnership failing to make certain returns. This bill would expand the types of partnership penalties waived to include a penalty related to a limited liability company classified as a partnership that fails to make specified returns and would waive a penalty related to "S" corporations that fail to make specified returns. The bill would apply these provisions to voluntary disclosure agreements entered into on or after January 1, 2017. The Corporation Tax Law requires the termination or revocation of an election to be a real estate investment trust for federal purposes to be treated as a termination or revocation for state purposes. The Internal Revenue Code provides for an exception to the termination of an election to be a real estate investment trust if the corporation, trust, or association meets specified requirements, including paying a $50,000 penalty. This bill would provide that the requirement to pay that penalty does not apply for state purposes of meeting this exception for taxable years beginning on or after January 1, 2005. The bill would state that the Legislature finds and declares that this change serves a public purpose and does not constitute a prohibited gift of public funds.