Income taxes: net operating losses: carrybacks: overpayments: estimated tax.
The bill modifies existing tax provisions in several ways, such as allowing for net operating losses incurred after January 1, 2013, to be carried back to offset tax liabilities in the two preceding years. It also introduces procedures under which the Governor can suspend tentative carryback adjustments during an economic emergency, thereby granting the state flexibility in fiscal management. Such provisions are expected to help stabilize revenue inflows during challenging economic periods by accommodating taxpayers' needs for relief.
Assembly Bill 2855, introduced by Assembly Member Brough, aims to amend provisions related to taxation in California's Revenue and Taxation Code. Specifically, the bill aligns California's laws with updated federal regulations concerning net operating losses, allowing taxpayers to offset their liabilities from past taxable years by carrying back losses. This mechanism is particularly essential for businesses seeking relief during economic downturns, as it provides them with potential refunds on taxes previously paid, extending the period for tax carrybacks and associated adjustments.
General sentiment around AB 2855 appears to be supportive, particularly among business interests and tax advocacy groups, as it enhances taxpayers' ability to navigate financial hardships by utilizing losses more effectively. However, there are potential concerns regarding the authority granted to the Governor for declaring economic emergencies, as this could lead to extensive executive power in fiscal matters, prompting debate on the proper balance between state control and taxpayers' rights.
Notable points of contention include the implications of enabling the Governor to suspend tax adjustments. Critics may argue that this could lead to unpredictability in tax policy and may disadvantage certain taxpayer groups, especially smaller businesses that rely on consistent tax regulations. Moreover, discussions around the broader economic effects and how such tax policies integrate with overall fiscal health are likely to be contentious areas in legislative discussions surrounding the bill.