The Franchise Tax Board (FTB) recently published its updated lists of California's top 500 individual and top 500 business tax debtors, who now collectively owe the state more than $581 million in income tax. Since October 2007, this list is updated twice annually. Taxpayers who receive notice of the FTB's intent to include them on the list and then make arrangements to pay their tax debt are removed from the publication.
While the federal penalty for failure by individuals to access health insurance under the Patient Protection and Affordable Care Act (also known as Obamacare) was eliminated by the Tax Cuts and Jobs Act of 2017, several states, including California, have instituted similar penalties. In California, Assembly Bill 414 (AB 414) (Bonta, Chaptered October 12, 2019) which takes effect on January 1, 2020, requires Californians to have qualifying health insurance coverage throughout the year.
California Governor Gavin Newsom recently signed AB 37 into law, which legalizes licensed state cannabis businesses including marijuana growers, processors, and sellers to take deductions for their business expenses on state income tax returns. It exempts these businesses from federal law section 280E, which categorizes cannabis sales under the "illegal sale of drugs" and therefore prohibits these businesses from writing off expenses as any other business would. To read AB 37 in full, click here.
The California Department of Tax and Fee Administration (CDTFA) recently released its Initial Discussion Paper for the Interested Parties Meeting it is hosting on October 15, 2019, in Sacramento to discuss and clarify the Marketplace Facilitator Act established in April by Assembly Bill 147. The main goal of the meeting is to determine what, if any, regulations may be adopted to make new registration requirements clear for business owners.
On October 2, 2019, the Governor of California approved Assembly Bill 170, which details the alternative test for workers to be classified as Independent Contractors within professions that are specifically excluded from the provisions of Assembly Bill 5, which was approved last month. Workers under AB 5 are presumed to be employees unless the hiring entity demonstrates that their workers pass the 3-part "ABC" test from Dynamex Operations W. Inc. v. Superior Court, (2018) 4 Cal.5th 903, as discussed previously here. Certain professions, however, such as licensed insurance agents, direct sales salespersons, and real estate licensees, are excluded from the ABC test, and instead worker classification in those professions will be determined by conditions set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations, (1989) 48 Cal.3d 341, namely:
With the California Governor's approval of Assembly Bill No. 5 on September 18, 2019, worker classification law in the state has changed significantly by codifying the "ABC" test established in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018). A person who provides labor or services for remuneration is now presumed to be an employee for purposes of claims for wages and benefits, unless the hiring entity can demonstrate that:
The California Legislature recently passed Assembly Bill No. 321, which adds an exemption until January 1, 2024, to existing state sales and use tax laws related to "the sale of, or the storage, use, or consumption of, a new, used, or remanufactured truck with an unladen weight of 6,000 pounds or more that is purchased for use without this state." To claim the exemption, the taxpayer must provide:
For months, many out-of-state retailers have been working to determine the extent to which they may owe tax to California for sales made in prior years, even though they had no physical nexus in California. Following the U.S. Supreme Court's decision in Wayfair v. South Dakota, California took the position that out-of-state retailers who utilize Amazon to hold inventory and make sales to customers in California have sufficient nexus to meet the requirements to collect and pay sales/use tax to California. This was true even if the business sent inventory to Amazon outside of California and Amazon made the determination to store inventory in California.
The California Franchise Tax Board (FTB) recently issued a news blast that many payments sent by mail to the state tax agency in June were delayed significantly due to post office issues. When the mail finally caught up on June 9th, the FTB received some 115,000 payments for estimated taxes and other purposes. The agency is working to process all the backlogged payments now and will post them with a timely date of June 15, 2019. However, this should serve as a reminder to try to issue online payments to tax agencies whenever possible!
The California Franchise Tax Board (FTB) recently released some initial data on the 2019 tax filing season. As of June 1st, the FTB had processed 17.4 million personal income tax returns, a vast majority (88%) of which were e-filed. A total of $11.7 billion in personal income tax refunds were issued to 12 million individual taxpayers, 98% of whom received their refunds within 30 days of filing. The FTB also received 1.1 million business entity returns and issued 92,000 refunds to business taxpayers, totaling $553 million. To read the full update, click here.