Taxation: administration: earnings withholding: water's edge elections.

Existing law allows the Franchise Tax Board, by notice, to require any person, officer, department of the state, or political subdivision or agency of the state, a city organized under a freeholder's charter, or a political body not a subdivision or agency of the state, to withhold the amount of any income tax, interest, or penalties due from a taxpayer, or the amount representing income tax due from an employer or person who has failed to withhold, from any payments due or becoming due to the taxpayer, employer, or person. Existing law allows that notice to be served personally or by first-class mail. This bill would additionally allow that notice to be served by electronic transmission or other electronic technology, as provided. The bill would also allow any notice or document required to be served or provided in connection with the notice to withhold to be served personally, by first-class mail, or by electronic transmission or other electronic technology. Existing law, the Wage Garnishment Law, among other things, allows the Franchise Tax Board to issue an earnings withholding order to collect any liability under the Personal Income Tax Law or Corporation Tax Law. The Wage Garnishment Law requires service of an earnings withholding order for taxes or of any other notice or document required in connection to that order to be made by first-class mail or served personally. Existing law requires any employer who is served with an earnings withholding order to, among other things, deliver to the person from whom the income tax is sought to be collected a copy of the earnings withholding order and to complete the employer's return provided by the Franchise Tax Board and return by first-class mail. This bill would allow the Franchise Tax Board under the Wage Garnishment Law to serve earnings withholding orders for taxes and any other notice or document required to be served or provided in connection with an earnings withholding order for taxes to government and private employers by electronic transmission or other electronic technology upon consent of the party served. The bill would allow the Franchise Tax Board to receive the employer's return by electronic transmission or other electronic technology. The Corporation Tax Law imposes on every corporation doing business in the state, as defined, a tax according to or measured by net income and, in the case of a corporation with income derived from or attributable to sources both within and without this state, apportions the income between this state and other states and foreign countries in accordance with a single sales formula based on the sales within and without this state, except that in the case of an apportioning trade or business that derives more than 50% of its gross business receipts from conducting one or more qualified business activities, as defined, business income is apportioned in accordance with a specified 3-factor formula. The Corporation Tax Law, for taxable years beginning on or after January 1, 2003, for purposes of determining its income derived from or attributable to sources within this state, allows corporations to make a statutory election as to whether their income is determined on a "water's-edge" basis or on a worldwide unitary basis. Under existing law, the election to report income on a water's-edge basis is made by contract between the taxpayer and the Franchise Tax Board for an initial term of 84 months, except as specified, and the water's edge election is effective only if every member of the self-assessed combined reporting group that is subject to tax under the Corporation Tax Law makes the election, except as specified. This bill would provide, if a unitary corporation not incorporated in the United States that is not itself subject to taxation under the Corporation Tax Law in the year for which the valid water's-edge election is made, but subsequently becomes subject to taxation under the Corporation Tax Law solely due to it becoming engaged in business in this state in a taxable year beginning on or after January 1, 2021, that corporation is deemed to have elected with the other members of the unitary combined reporting group.