State taxes and charges.

(1) Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law generally provides that the taxes are due and payable to the California Department of Tax and Fee Administration quarterly on or before the last day of the month next succeeding each quarterly period and requires, for purposes of sales tax, a return to be filed by a seller that contains, among other information, the gross receipts of the seller during the preceding reporting period. This bill, when a vehicle required to be registered under the Vehicle Code is sold at retail on and after January 1, 2021, by any dealer holding a license issued pursuant to the Vehicle Code, except a new motor vehicle dealer, as specified, would require the dealer to pay the applicable sales tax to the Department of Motor Vehicles acting for and on behalf of the California Department of Tax and Fee Administration within 30 days from the date of the sale. The bill would impose specified penalties if the dealer makes an application to the Department of Motor Vehicles that is not timely and imposes penalties and interest if the dealer fails to make an application to the Department of Motor Vehicles, fails to pay the sales tax, or fails to timely file the return required by the Sales and Use Tax Law with the California Department of Tax and Fee Administration. Existing law generally requires the registration of vehicles by the Department of Motor Vehicles and requires that department to issue a certificate of ownership to the legal owner and a registration card to the owner, as specified, upon registering that vehicle. Existing law requires the Department of Motor Vehicles to develop a system for dealers and lessor-retailers to electronically report the sale of a vehicle before the vehicle is delivered to the purchaser, and requires the dealers and lessor-retailers to take specified actions after providing information to the reporting system, including submitting to the Department of Motor Vehicles an application accompanied by all fees and penalties due for registration or transfer of registration of the vehicle within a specified period. This bill would require, for retail sales of vehicles occurring on and after January 1, 2021, a dealer, other than a new motor vehicle dealer, as specified, to also submit with the application payment of the applicable sales tax to the Department of Motor Vehicles. The bill would require the Department of Motor Vehicles to transmit to the California Department of Tax and Fee Administration all collections of sales tax and penalty within 30 days, as specified. The bill would require the Department of Motor Vehicles to withhold the registration or the transfer of registration of any vehicle sold at retail on and after January 1, 2021, to any applicant by any dealer holding a license issued pursuant to the Vehicle Code, other than a new motor vehicle dealer, as specified, until the dealer pays to the Department of Motor Vehicles the sales tax and any penalties, except as specified. The bill would require the California Department of Tax and Fee Administration to reimburse the Department of Motor Vehicles for its costs incurred. (2) Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including, until January 1, 2022, an exemption for the sale of, or the storage, use, or other consumption of, diapers for infants, toddlers, and children and menstrual hygiene products, as defined. In compliance with a state constitutional requirement, existing law requires the Department of Finance, beginning on May 15, 2020, to estimate the total dollar amount of revenue that would have been credited to the Local Revenue Fund 2011 for a fiscal year if not otherwise exempted under the sales and use tax exemptions for diapers for infants, toddlers, and children and menstrual hygiene products and requires the Controller to transfer that amount from the General Fund to the Local Revenue Fund 2011, a continuously appropriated fund, no later than June 30 of each fiscal year. This bill would extend the sales and use tax exemptions for the sale of, or the storage, use, or other consumption of, diapers for infants, toddlers, and children and menstrual hygiene products until July 1, 2023. By extending the above-described transfers of estimated total dollar amount of revenues that would have been credited to the Local Revenue Fund 2011 by the Controller from the General Fund to the Local Revenue Fund 2011, a continuously appropriated fund, the bill would make an appropriation. Existing law requires the Legislative Analyst's Office, on or before January 1, 2021, to submit specified reports to the Assembly Committee on Revenue and Taxation and to the Senate Governance and Finance Committee relating to the effectiveness of the sales and use tax exemptions for diapers for infants, toddlers, and children and menstrual hygiene products. This bill would extend the due date of those reports to July 1, 2022. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws. Existing law requires the state to reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions. This bill would provide that, notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill as required by that section. (3) The Sales and Use Tax Law, in lieu of specified credits allowed under the Personal Income Tax Law and the Corporation Tax Law for qualified expenditures paid or incurred by a taxpayer for the production of a qualified motion picture, allows a qualified taxpayer or affiliate to make an irrevocable election to (1) claim a refund of qualified sales and use taxes previously paid during a specified period not exceeding the income tax credit amount and (2) apply that income tax credit amount against qualified sales and use taxes imposed on the qualified taxpayer in the reporting periods in the 5 years following the reporting period for which the claimant was required to file its most recent sales and use tax return, as specified. This bill would prohibit the total amount of refunds or credit offsets claimed in lieu of qualified motion picture tax credits that would otherwise be allowed for a taxable year beginning on or after January 1, 2020, and before January 1, 2023, from exceeding $5,000,000. This bill would provide, that for those amounts for which an irrevocable election is made in lieu of those qualified motion picture tax credits that would otherwise be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2023, that are in excess of $5,000,000 for that taxable year, the claimant may offset that excess credit amount, or assigned portion, against the qualified sales and use taxes imposed during the reporting periods in the 5 years following and including the reporting period beginning on and after January 1, 2024. The bill would not apply to irrevocable elections made before the operative date of the bill. Existing state constitutional law governing insurance taxation imposes an annual tax on the gross premiums of an insurer, as defined, doing business in this state at specified rates. Existing law governing the taxation of insurers allows as credits against the taxes imposed by those laws a low-income housing tax credit allocated by the California Tax Credit Allocation Committee, a College Access Tax Credit allocated and certified by the California Educational Facilities Authority, and a credit in an amount equal to the amount of the gross premiums tax due from an insurer on account of pilot project insurance for previously uninsured motorists, as defined. Existing law allows any excess low-income housing tax credit and College Access Tax Credit to be carried over to reduce the tax in a succeeding year, as specified. This bill would provide that for the years 2020, 2021, and 2022, the total amount of all those insurance tax credits otherwise allowable, including any credit amount allowed to be carried over, may not reduce the annual tax by more than $5,000,000 for a given year. The bill would provide that the amount of the College Access Tax Credit otherwise allowable that is not allowed due to the application of this bill will remain a credit carryover amount, and would also provide that the carryover period for any credit that is not allowed due to the application of this bill will be increased by the number of taxable years the credit or any portion thereof was not allowed. The bill would provide that this limitation does not apply to the low-income housing tax credit allocated by the California Tax Credit Allocation Committee. The bill would provide that the amount of any credit of gross premiums tax due from an insurer on account of pilot project insurance for previously uninsured motorists otherwise allowable for a year that was not allowed due to the application of this bill may be carried over to reduce the annual tax in succeeding years if necessary, until the credit amount or any portion thereof that was not allowed is exhausted. The Personal Income Tax Law and the Corporation Tax Law authorize various credits against the taxes imposed by those laws. This bill would provide that for each taxable year beginning on or before January 1, 2020, and before January 1, 2023, the total credits otherwise allowable under those laws, except as specified, for the taxable year may not reduce the taxes imposed by those laws by more than $5,000,000, as provided. The bill would provide that the amount of any credit otherwise allowable that is not allowed due to the application of this bill will remain a credit carryover amount. The bill would also provide that the carryover period for any credit that is not allowed due to the application of this bill will be increased by the number of taxable years the credit or any portion thereof was not allowed. (4) The Personal Income Tax Law and the Corporation Tax Law allow motion picture credits for taxable years beginning on or after January 1, 2016, to be allocated by the California Film Commission on or after July 1, 2015, and before July 1, 2020. Existing law, in the case where the credits allowed pursuant to these provisions exceed the tax liability of the taxpayer, allows a taxpayer to carryover the credit amount to reduce tax liability in the following 6 taxable years, until the credit has been exhausted. This bill would, under both laws, extend the carryover period from 6 taxable years to 9 taxable years. (5) The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal income tax laws, allow various deductions in computing the income that is subject to the taxes imposed by those laws, including a deduction for a net operating loss, as specified. This bill would, subject to certain exceptions related to a taxpayer's income, disallow, under both laws, a net operating loss deduction for any taxable year beginning on or after January 1, 2020, and before January 1, 2023, and would extend the carryover period for a net operating loss deduction disallowed by that provision, as specified. (6) The Corporation Tax Law imposes an annual minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or doing business in this state, and exempts a corporation that incorporates or qualifies to do business in this state from the payment of the minimum franchise tax in its first taxable year. Existing law imposes an annual tax in an amount equal to the minimum franchise tax on every limited partnership, limited liability partnership, and limited liability company doing business in this state, as specified. This bill, for taxable years beginning on or after January 1, 2020, and before January 1, 2024, in which a specified appropriation is made in any budget measure, would exempt a limited partnership, a limited liability partnership, and limited liability company that files, registers, or organizes to do business in this state, as provided, from the payment of the annual tax in its first taxable year. (7) The Corporation Tax Law, for taxable years beginning on or after January 1, 2016, and before January 1, 2030, allows, with regard to the manufacture of a new advanced strategic aircraft for the United States Air Force, a credit against the taxes imposed under that law for 1712% of qualified wages, as defined, paid or incurred by the qualified taxpayer to qualified full-time employees, subject to specified limitations. The Corporation Tax Law provides for an alternative minimum tax and provides that, except for specified credits, no credit shall reduce the regular tax, as defined, below the tentative minimum tax. This bill, for taxable years beginning on or after January 1, 2020, and before January 1, 2026, would allow the above-described strategic aircraft credit to reduce the regular tax below the tentative minimum tax. (8) Existing federal law, the Patient Protection and Affordable Care Act (PPACA) , enacts various health care coverage market reforms. PPACA generally requires an individual, and their dependents, to maintain minimum essential coverage, as defined, and, if an individual fails to maintain minimum essential coverage, PPACA imposes on the individual taxpayer a penalty. This provision is referred to as the individual mandate. Existing law authorizes the California Health Benefit Exchange to provide advanced premium assistance subsidies to help Californians access affordable health care coverage. Existing law generally requires a responsible individual to enroll in and maintain minimum essential coverage for themselves, and their spouse or dependent, and imposes the Individual Shared Responsibility Penalty for the failure to maintain minimum essential coverage. Under existing law, the penalty amount is determined and collected by the Franchise Tax Board, based on the number of applicable household members who failed to enroll in and maintain minimum essential coverage. Existing law specifies an order of priority for debts if a debtor has more than one debt being collected by the Franchise Tax Board and the amount collected is insufficient to satisfy the total amount owed, with payment of the Individual Shared Responsibility Penalty and payment of advanced premium subsidies in excess of the allowed amount at the end of that order. This bill would limit the maximum monthly penalty for a responsible individual with an applicable household size of 5 or more individuals to the maximum monthly penalty for a responsible individual with an applicable household size of 5 individuals. The bill would require the Franchise Tax Board to apply funds collected from a debtor toward payment of the Individual Shared Responsibility Penalty and overpaid advanced premium subsidies as a first priority. The bill would also make additional clarifying changes. (9) This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. (10) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.