California Senate Bill SB681 Amended / Bill

 BILL NUMBER: SB 681AMENDED BILL TEXT AMENDED IN SENATE AUGUST 31, 2015 AMENDED IN SENATE JULY 16, 2015 AMENDED IN SENATE JUNE 29, 2015 AMENDED IN SENATE JUNE 3, 2015 AMENDED IN SENATE MAY 5, 2015 INTRODUCED BY Senator Hill (Principal coauthor: Assembly Member Mullin) FEBRUARY 27, 2015 An act to add Section 24446 to the Revenue and Taxation Code, relating to income taxation, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 681, as amended, Hill. Corporation taxes: deduction:  public utilities.  gas corporations.  Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations. The Corporation Tax Law allows various deductions in computing the income that is subject to the taxes imposed by those laws, and in modified conformity with federal law, allows a deduction for ordinary and necessary expenses carrying on a trade or business. Existing law provides that no deduction is allowed for any fine or similar penalty paid to a government for the violation of any law.  This   For the taxable year beginning on January 1, 2015, this  bill would not allow a deduction under the Corporation Tax Law for expenses or expenditures by  Pacific Gas and Electric Company   a gas corporation  that the Public Utilities Commission identified in a  specific decision relative to the operation of its natural gas transmission system pipelines.   decision to penalize the gas corporation for a natural gas safety violation.  For any taxable year for which those expenses or expenditures are paid or incurred, the bill would require  Pacific Gas and Electric Company   a gas corporation  to provide with the return a certification, under penalty of perjury, that none of those expenses or expenditures were taken into account, directly or indirectly, in determining the amount of income of the  company,   gas corporation,  or any other related taxpayer, that is subject to tax under the Corporation Tax Law, for that taxable year. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   The Legislature finds and declares both of the following:   (a) A fine or similar penalty paid at the direction of the government, where the government has determined the fine or similar penalty to be punitive, is not an ordinary and necessary business expense and, therefore, no deduction shall be allowed for any fine or similar penalty paid at the direction of the government for the violation of any law.   (b) Subdivision (a) does not constitute a change in, but is declaratory of, existing law.   SECTION 1.   SEC. 2. Section 24446 is added to the Revenue and Taxation Code, to read: 24446. (a)  No   For the taxable year beginning January 1, 2015, no  deduction shall be allowed for any amount paid or incurred by  Pacific Gas and Electric Company   a gas corporation, as defined in Section 222 of the Public Utilities Code,  for expenses or expenditures identified by the Public Utilities Commission in  Decision 15-04-024 (April 9, 2015), "Decision on Fines and Remedies to be Imposed on Pacific Gas and Electric Company for Specific Violations in Connection with the Operation and Practices of its Natural Gas Transmission System Pipelines," relating to   a decision to penalize the gas corporation for a natural gas safety violation, including  any of the following: (1)  Up to eight hundred fifty million dollars ($850,000,000) in future   Future  gas infrastructure improvements related to transmission pipeline safety to be paid for by  Pacific Gas and Electric Company shareholders.   shareholders of the gas corporation.  (2)  Four hundred million dollars ($400,000,000) in bill   Bill credits for the gas ratepayers of  Pacific Gas and Electric Company.   the gas corporation.  (3)  Approximately fifty million dollars ($50,000,000) to implement 75 remedies, including, but not limited to,   Th   e implementation of pipeline safety remedies and reimbursement of the Public Utilities Commission for its costs incurred in investigating and enforcing violations of law relating to the public safety by  Pacific Gas and Electric Company.   the gas corporation.  (b) For any taxable year for which expenses or expenditures identified in subdivision (a) are paid or incurred,  Pacific Gas and Electric Company   the gas corporation  shall provide with the return, for that taxable year, a certification, under penalty of perjury, that none of those expenses or expenditures were taken into account, directly or indirectly, in determining the amount of income of  Pacific Gas and Electric Company,   the gas corporation,  or any other related taxpayer, that is subject to tax under this part, for that taxable year.  SEC. 2.   SEC. 3.  No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.  SEC. 3.   SEC. 4.  This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order for the provisions of this act to be applicable to the current tax year and to better ensure the effectiveness of decisions of the Public Utilities Commission protecting the public safety, it is necessary that this act take effect immediately.