New Laws Archives

California "Goes Criminal" with the Revenue Recovery and Collaborative Enforcement Team

On October 7, 2013, Governor Jerry Brown signed Assembly Bill 576 into law, authorizing a pilot program to create the "Revenue Recovery and Collaborative Enforcement Team" (RRCET) consisting of an alliance primarily between the California Department of Justice (DOJ), the Franchise Tax Board (FTB), the State Board of Equalization (BOE), and the Employment Development Department (EDD) in an effort to combat "criminal tax evasion associated with the underground economy."

New Guidance on Federal Bank Secrecy Act Expectations Regarding Marijuana-Related Businesses

Today the Financial Crimes Enforcement Network (FinCEN) issued guidance for financial institutions who seek to provide services to marijuana-related businesses in light of recent state initiatives to legalize certain marijuana-related activities. See FIN-2014-G001. A stated goal of today's guidance is to "enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses."

Governor Signs Bill to Reduce Excise Tax Penalty, Clarifies use of Motion Picture Tax Credit and Simplifies Tax-Exempt Process for some Nonprofits

Governor Brown signed AB 1173 by Assemblymember Raul Bocanegra (D-Los Angeles) which reduces the excise tax penalty from 20% to 5% for taxable years beginning January 1, 2013, amounts deferred under a nonqualified deferred compensation plan that does not meet the requirements of Internal Revenue Code. This bill also clarifies the scope of the California Motion Picture Tax Credit utilization and simplifies the process by which certain nonprofit organizations may obtain tax-exempt status in California.  To read more, Click here

California FTB Provides Non-California Businesses with Information on Income Apportioning

The complexity of California income tax laws for non-California businesses is not new. Whenever nonresident businesses have income sourced to California, California will assess income tax in many cases. Public Law (PL) 86-272 still exempts out-of-state businesses from California income tax if their California activities qualify. This generally means the business' only connection to California is that of soliciting orders for sales of tangible personal properties, in which the orders are sent outside of California for approval and filled from inventory maintained outside of California (and not shipped into California by the out-of-state business' own vehicles into California). Beginning with taxable years on or after January 1, 2013, all apportioning trades or businesses must assign sales of "other than tangible personal property" under the new market-based rules. Some industries will follow the special industry apportionment and allocation regulations.

Two New Bills Alter California Enterprise Zone Credit Program

The California Enterprise Zone credit program will see significant changes beginning January 1, 2014 due to two bills signed by Governor Jerry Brown on July 11, 2013: Assembly Bill 93 and Senate Bill 90. A partial sales and use tax exemption of approximately 4.19% is available on up to $200 million of qualified manufacturing and research and development equipment for certain manufacturers as well as Biotechnology, Physical, Engineer and Life Science companies that conduct research and development. The partial exemption applies to purchases made on or after July 1, 2014 and will expire on July 1, 2022.

Affordable Care Act or "Obamacare" Tax Considerations

The Affordable Care Act ("the Act," commonly referred to as "Obamacare") contains currently implemented tax provisions, as well as other that will be implemented during the next several years. According to the Internal Revenue Service, the following are some examples of the Act's tax provisions:

California Court Holds Reasonable Cause for Penalty Abatement due to the Advice of a Professional only Qualifies when Ambiguity Exists for the Taxpayer

The Ninth Circuit Court of Appeals held that erroneous advice from an accountant that an estate tax return (IRS Form 706) could be extended for filing and payment purposes by one year did not qualify for penalty abatement as "reasonable cause."

Tax Court Holds Against IRS on First-Time Homebuyer Credit Issue

On November 5, 2012, the Tax Court ruled on case involving the first-time homebuyer credit overruling the Internal Revenue Service (IRS) that had consistently held that both spouses had to qualify individually for the credit. The Court noted Congress enacted the long-time homebuyer provision to expand qualification for the credit and disagreed with the IRS that the plain language of the statute required that both spouses had to meet the same criteria.

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