California Senate Bill SB1552 Amended / Bill

 BILL NUMBER: SB 1552AMENDED BILL TEXT AMENDED IN SENATE APRIL 17, 2012 INTRODUCED BY Senator Gaines FEBRUARY 24, 2012 An act to amend  Section   Sections  17020.6  , 17085, 18631, and 23045 of  , and to repeal Secti   ons 18037.5 and 24950.5 of,  the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST SB 1552, as amended, Gaines. Taxation: qualified long-term care insurance. The Personal Income Tax Law conforms to the federal Internal Revenue Code with regard to qualified long-term care insurance, with certain exceptions. This bill would remove the exceptions, and would conform the Personal Income Tax Law to the federal income tax law with regard to qualified long-term care insurance, as provided. This bill would take effect immediately as a tax levy. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 17020.6 of the Revenue and Taxation Code is amended to read: 17020.6. For purposes of this part: (a) Section 7702 of the Internal Revenue Code, relating to life insurance contracts, shall apply  , except as otherwise provided  . (b) Section 7702A of the Internal Revenue Code, relating to modified endowment contract defined, shall apply  , except as otherwise provided  . (c) Section 7702B of the Internal Revenue Code, relating to treatment of qualified long-term care insurance, shall apply  , except as otherwise provided  .  (d) The amendments made to this section by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 2012.   SEC. 2.   Section 17085 of the   Revenue and Taxation Code   is amended to read:  17085. Section 72 of the Internal Revenue Code, relating to annuities; certain proceeds of endowment and life insurance contracts, is modified as follows: (a) The amendments and transitional rules made by Public Law 99-514 shall be applicable to this part for the same transactions and the same years as they are applicable for federal purposes, except that the repeal of Section 72(d) of the Internal Revenue Code, relating to repeal of special rule for employees' annuities, shall apply only to the following: (1) Any individual whose annuity starting date is after December 31, 1986. (2) At the election of the taxpayer, any individual whose annuity starting date is after July 1, 1986, and before January 1, 1987. (b) The amount of a distribution from an individual retirement account or annuity or employee trust or employee annuity that is includable in gross income for federal purposes shall be reduced for purposes of this part by the lesser of either of the following: (1) An amount equal to the amount includable in federal gross income for the taxable year. (2) An amount equal to the basis in the account or annuity allowed by Section 17507 (relating to individual retirement accounts and simplified employee pensions), the increased basis allowed by Sections 17504 and 17506 (relating to plans of self-employed individuals), the increased basis allowed by Section 17501, or the increased basis allowed by Section 17551 that is remaining after adjustment for reductions in gross income under this provision in prior taxable years. (c) (1) Except as provided in paragraph (2), the amount of the penalty imposed under this part shall be computed in accordance with Sections 72(m), (q), (t), and (v) of the Internal Revenue Code, as applicable for federal income tax purposes for the same taxable year, using a rate of 21/2 percent, in lieu of the rate provided in those sections. (2) In the case where Section 72(t)(6) of the Internal Revenue Code, relating to special rules for simple retirement accounts, as applicable for federal income tax purposes for the same taxable year, applies, the rate in paragraph (1) shall be 6 percent in lieu of the 21/2 percent rate specified therein. (d) Section 72(f)(2) of the Internal Revenue Code shall be applicable without applying the exceptions which immediately follow that paragraph.  (e) The amendments made by Section 844 of the Pension Protection Act of 2006 (Public Law 109-280) to Section 72(e) of the Internal Revenue Code, shall not apply.   (e) The amendments made to this section by the act amending this subdivision shall apply to taxable years beginning on or after January 1, 2012.   SEC. 3.   Section 18037.5 of the   Revenue and Taxation Code   is repealed.   18037.5. The amendments made by Section 844 of the Pension Protection Act of 2006 (Public Law 109-280) to Section 1035 of the Internal Revenue Code, shall not apply.   SEC. 4.   Section 18631 of the   Revenue and Taxation Code   is amended to read:  18631. (a) This article does not apply to any payment of interest obligations not taxable under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). (b) Except as otherwise provided, every person required to file an information return with the Secretary of the Treasury under any of the federal sections listed in subdivision (c) may be required to file a copy of the federal information return with the Franchise Tax Board at the time and in the manner as it may, by forms and instructions, require. (c) Subdivision (b) shall apply to each of the following: (1) Section 6034A of the Internal Revenue Code, relating to information to beneficiaries of estates and trusts. (2) Section 6039 of the Internal Revenue Code, relating to returns required in connection with certain options. (3) Section 6039C of the Internal Revenue Code, relating to returns with respect to foreign persons holding direct investments in United States real property interests, if that person holds a direct investment in a California real property as defined in Section 18662. (4) Section 6041 of the Internal Revenue Code, relating to information at source. (5) Section 6041A of the Internal Revenue Code, relating to returns regarding payments of remuneration for services and direct sales, except that no return or statement shall be required with respect to direct sales pursuant to Section 6041A(b) of the Internal Revenue Code. (6) Section 6042 of the Internal Revenue Code, relating to returns regarding payments of dividends and corporate earnings and profits. (7) Section 6045 of the Internal Revenue Code, relating to returns of brokers. (8) Section 6049 of the Internal Revenue Code, relating to returns regarding payments of interest. (9) Section 6050H of the Internal Revenue Code, relating to returns relating to mortgage interest received in trade or business from individuals. (10) (A) Section 6050I of the Internal Revenue Code, relating to returns relating to cash received in trade or business, etc., except that Section 6050I(g) of the Internal Revenue Code, relating to cash received by criminal court, shall not apply. (B) (i) The Attorney General shall, upon court order following a showing ex parte to a magistrate of an articulable suspicion that an individual or entity has committed a felony offense to which a federal information return is related, be provided a copy of a federal information return filed with the Franchise Tax Board under this paragraph. The Attorney General may make a return or information therefrom available to a district attorney subject to regulations promulgated by the Attorney General. The regulations shall require the district attorney seeking the return or information to specify in writing the specific reasons for believing that a felony offense has been committed to which the return or information is related. (ii) Any information or return obtained by the Attorney General or a district attorney pursuant to this subparagraph shall be confidential and used only for investigative or prosecutorial purposes. (11) Section 6050J of the Internal Revenue Code, relating to returns relating to foreclosures and abandonments of security. (12) (A) Section 6050K of the Internal Revenue Code, relating to returns relating to exchanges of certain partnership interests. (B) In addition to the general requirement under subparagraph (A), a transferor of a partnership interest shall be required to notify the partnership of that exchange in accordance with Section 6050K(c) of the Internal Revenue Code. (13) Section 6050L of the Internal Revenue Code, relating to returns relating to certain donated property. (14) Section 6050N of the Internal Revenue Code, relating to returns regarding payments of royalties. (15) Section 6050P of the Internal Revenue Code, relating to returns relating to the cancellation of indebtedness by certain entities. (16) Section 6050Q of the Internal Revenue Code, relating to certain long-term care benefits. (17) Section 6050R of the Internal Revenue Code, relating to returns relating to certain purchases of fish. (18) Section 6050S of the Internal Revenue Code, relating to returns relating to higher education tuition and related expenses. (19) Section 6052 of the Internal Revenue Code, relating to returns regarding payment of wages in the form of group-term life insurance. (20) Section 6034(a) of the Internal Revenue Code, relating to returns of split-interest trusts. (21) Section 6039I of the Internal Revenue Code, relating to returns and records with respect to employer-owned life insurance contracts. (22) Section 6039J of the Internal Revenue Code, relating to information reporting with respect to commodity credit corporation transactions.  (23) Section 6050U of the Internal Revenue Code, relating to charges or payments for qualified long-term care insurance contracts under combined arrangements.   (23)   (24)  Section 6050V of the Internal Revenue Code, relating to returns relating to applicable insurance contracts in which certain exempt organizations hold interests.  (24)   (25)  Section 6050W of the Internal Revenue Code, relating to returns relating to payments made in settlement of payment card and third party network transactions.  (25)   (26)  Any information return that is required to be filed with the Secretary of the Treasury pursuant to a provision of Part III of Subchapter A of Chapter 61 of Subtitle F (commencing with Section 6031) of the Internal Revenue Code that is added to the Internal Revenue Code by a public law enacted on or after January 1, 2009. (d) Every person required to make a return under subdivision (b) shall also furnish a statement to each person whose name is required to be set forth in the return, as required to do so by the Internal Revenue Code.  SEC. 5.   Section 23045 of the   Revenue and Taxation Code   is amended to read:  23045. For purposes of this part: (a) Section 7702 of the Internal Revenue Code, relating to life insurance contract defined, shall apply, except as otherwise provided. (b) Section 7702A of the Internal Revenue Code, relating to modified endowment contract defined, shall apply, except as otherwise provided. (c)  (1)    Section 7702B of the Internal Revenue Code, relating to treatment of qualified long-term care insurance, shall apply, except as otherwise provided.  (2) The amendments made by Section 844 of the Pension Protection Act of 2006 (Public Law 109-280) to Section 7702B of the Internal Revenue Code shall not apply.   (d) The amendments made to this section by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 2012.   SEC. 6.   Section 24950.5 of the   Revenue and Taxation Code   is repealed.   24950.5. The amendments made by Section 844 of the Pension Protection Act of 2006 (Public Law 109-280) to Section 1035 of the Internal Revenue Code shall not apply.   SEC. 2.   SEC. 7.  This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.