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| 1 | + | Amended IN Senate May 07, 2019 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 775Introduced by Senator RubioFebruary 22, 2019An act to amend Section 24473 of, and to add Section Sections 23701m to, and 24316 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTSB 775, as amended, Rubio. Corporation taxes: exempt organizations: mutual ditch or irrigation companies. companies: public water system: mutual water companies.The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law. law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met. This bill, in further conformity with federal income tax laws, for taxable years beginning on or after January 1, 2019, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company, company that operates a public water system, as provided. This bill would make additional conforming changes. The bill would provide that gross income does not include specified funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company that operates a public water system or to specified mutual water companies. This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 23701m is added to the Revenue and Taxation Code, to read:23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.SEC. 2. Section 24316 is added to the Revenue and Taxation Code, to read:24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.SEC. 2.Section 24473 of the Revenue and Taxation Code is amended to read:24473.Notwithstanding any other provision of law, for taxable years beginning before January 1, 2019, the contribution or other transfer of the assets of a mutual water company established prior to September 26, 1977, that is tax exempt under Section 501(c)(12) of the Internal Revenue Code, but is a taxable entity under California Law, including its lands, easements, rights, and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of a water system and facilities serving the customers of the company, to a community services district formed pursuant to Part 1 (commencing with Section 61000) of Division 3 of Title 6 of the Government Code, is not a transfer subject to taxes imposed by this part if all of the following requirements are met:(a)The consideration for the transfer of all or substantially all of the assets is the assumption by the district of the companys liability to provide service to the companys stockholders.(b)The legal or beneficial title to all or substantially all of the companys assets is vested in the district on or before January 1, 2008.(c)For the one-year period immediately prior to commencement of the transfer and continuing until the transfer is completed, 85 percent or more of the companys income consists of amounts collected from stockholders for the sole purpose of meeting losses and expenses.SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
| 2 | 2 | ||
| 3 | - | ||
| 3 | + | Amended IN Senate May 07, 2019 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 775Introduced by Senator RubioFebruary 22, 2019An act to amend Section 24473 of, and to add Section Sections 23701m to, and 24316 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTSB 775, as amended, Rubio. Corporation taxes: exempt organizations: mutual ditch or irrigation companies. companies: public water system: mutual water companies.The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law. law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met. This bill, in further conformity with federal income tax laws, for taxable years beginning on or after January 1, 2019, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company, company that operates a public water system, as provided. This bill would make additional conforming changes. The bill would provide that gross income does not include specified funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company that operates a public water system or to specified mutual water companies. This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO | |
| 4 | 4 | ||
| 5 | - | ||
| 5 | + | Amended IN Senate May 07, 2019 | |
| 6 | 6 | ||
| 7 | - | Amended IN Assembly July 03, 2019 | |
| 8 | 7 | Amended IN Senate May 07, 2019 | |
| 9 | 8 | ||
| 10 | 9 | CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION | |
| 11 | 10 | ||
| 12 | - | Senate Bill | |
| 13 | - | ||
| 14 | - | No. 775 | |
| 11 | + | Senate Bill No. 775 | |
| 15 | 12 | ||
| 16 | 13 | Introduced by Senator RubioFebruary 22, 2019 | |
| 17 | 14 | ||
| 18 | 15 | Introduced by Senator Rubio | |
| 19 | 16 | February 22, 2019 | |
| 20 | 17 | ||
| 21 | - | An act to | |
| 18 | + | An act to amend Section 24473 of, and to add Section Sections 23701m to, and 24316 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. | |
| 22 | 19 | ||
| 23 | 20 | LEGISLATIVE COUNSEL'S DIGEST | |
| 24 | 21 | ||
| 25 | 22 | ## LEGISLATIVE COUNSEL'S DIGEST | |
| 26 | 23 | ||
| 27 | - | SB 775, as amended, Rubio. Corporation taxes: exempt organizations: mutual ditch or irrigation companies: public water system: mutual water companies. | |
| 24 | + | SB 775, as amended, Rubio. Corporation taxes: exempt organizations: mutual ditch or irrigation companies. companies: public water system: mutual water companies. | |
| 28 | 25 | ||
| 29 | - | The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met. | |
| 26 | + | The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law. law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met. This bill, in further conformity with federal income tax laws, for taxable years beginning on or after January 1, 2019, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company, company that operates a public water system, as provided. This bill would make additional conforming changes. The bill would provide that gross income does not include specified funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company that operates a public water system or to specified mutual water companies. This bill would take effect immediately as a tax levy. | |
| 30 | 27 | ||
| 31 | - | The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met. | |
| 28 | + | The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law. law, including an exemption for transfers of assets by specified mutual water companies that are tax exempt under federal income tax laws, but are a taxable entity under state law when certain conditions are met. | |
| 32 | 29 | ||
| 33 | - | Existing law requires mutual water companies that operate a public water system to comply with various open meeting and record accessibility requirements for eligible persons, defined to include shareholders, specified persons receiving drinking water from that public water system, and elected officials of a city or county who represent those persons receiving drinking water from the public water system. | |
| 34 | - | ||
| 35 | - | This bill, for taxable years beginning on or after January 1, 2019, and before January 1, 2024, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water system, as provided. system if the company complies with specified requirements, including those open meeting and record accessibility requirements for eligible persons. The bill would provide that gross income does not include specified funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company that operates a public water system or to specified mutual water companies. | |
| 36 | - | ||
| 37 | - | This bill would require a mutual water company to adopt policies to comply with the open meeting and record accessibility requirements described above and to submit the policies and a certification of compliance to the State Water Resources Control Board by June 30th of each year. The bill would require the State Water Resources Control Board to charge a specified compliance fee to any company that does not comply with these provisions by June 30th of each year but subsequently submits its policies and certification. By requiring the board to charge a specified fee for use by the board to administer these provisions, this bill would make an appropriation. The bill would require the State Water Resources Control Board to submit to the Franchise Tax Board by September 30th of each year a list of mutual water companies that have complied with these provisions for purposes of obtaining the exemption. | |
| 30 | + | This bill, in further conformity with federal income tax laws, for taxable years beginning on or after January 1, 2019, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company, company that operates a public water system, as provided. This bill would make additional conforming changes. The bill would provide that gross income does not include specified funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company that operates a public water system or to specified mutual water companies. | |
| 38 | 31 | ||
| 39 | 32 | This bill would take effect immediately as a tax levy. | |
| 40 | - | ||
| 41 | - | ||
| 42 | 33 | ||
| 43 | 34 | ## Digest Key | |
| 44 | 35 | ||
| 45 | 36 | ## Bill Text | |
| 46 | 37 | ||
| 47 | - | The people of the State of California do enact as follows:SECTION 1 | |
| 38 | + | The people of the State of California do enact as follows:SECTION 1. Section 23701m is added to the Revenue and Taxation Code, to read:23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.SEC. 2. Section 24316 is added to the Revenue and Taxation Code, to read:24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.SEC. 2.Section 24473 of the Revenue and Taxation Code is amended to read:24473.Notwithstanding any other provision of law, for taxable years beginning before January 1, 2019, the contribution or other transfer of the assets of a mutual water company established prior to September 26, 1977, that is tax exempt under Section 501(c)(12) of the Internal Revenue Code, but is a taxable entity under California Law, including its lands, easements, rights, and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of a water system and facilities serving the customers of the company, to a community services district formed pursuant to Part 1 (commencing with Section 61000) of Division 3 of Title 6 of the Government Code, is not a transfer subject to taxes imposed by this part if all of the following requirements are met:(a)The consideration for the transfer of all or substantially all of the assets is the assumption by the district of the companys liability to provide service to the companys stockholders.(b)The legal or beneficial title to all or substantially all of the companys assets is vested in the district on or before January 1, 2008.(c)For the one-year period immediately prior to commencement of the transfer and continuing until the transfer is completed, 85 percent or more of the companys income consists of amounts collected from stockholders for the sole purpose of meeting losses and expenses.SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
| 48 | 39 | ||
| 49 | 40 | The people of the State of California do enact as follows: | |
| 50 | 41 | ||
| 51 | 42 | ## The people of the State of California do enact as follows: | |
| 52 | 43 | ||
| 53 | - | SECTION 1. Section | |
| 44 | + | SECTION 1. Section 23701m is added to the Revenue and Taxation Code, to read:23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 54 | 45 | ||
| 55 | - | SECTION 1. Section | |
| 46 | + | SECTION 1. Section 23701m is added to the Revenue and Taxation Code, to read: | |
| 56 | 47 | ||
| 57 | 48 | ### SECTION 1. | |
| 58 | 49 | ||
| 59 | - | ||
| 50 | + | 23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 60 | 51 | ||
| 61 | - | ||
| 52 | + | 23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 62 | 53 | ||
| 63 | - | ||
| 54 | + | 23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 64 | 55 | ||
| 65 | 56 | ||
| 66 | 57 | ||
| 67 | - | 14308. (a) On or before June 30, 2020, a mutual water company that operates a public water system shall adopt policies to comply with Sections 14305 to 14307, inclusive, and shall update the policies as necessary to remain in compliance. | |
| 68 | - | ||
| 69 | - | (b) On or before June 30, 2020, and annually thereafter, the mutual water company shall submit to the Division of Drinking Water of the State Water Resources Control Board the policies adopted or updated pursuant to subdivision (a) and a certification that the mutual water company is in compliance with, and will remain in compliance with, those policies. | |
| 70 | - | ||
| 71 | - | (c) On or before September 30, 2020, and annually thereafter in any year in which Section 23701m of the Revenue and Taxation Code is operative, the Division of Drinking Water of the State Water Resources Control Board shall submit to the Franchise Tax Board a list of mutual water companies that have not complied with subdivision (b). | |
| 72 | - | ||
| 73 | - | (d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30th deadline and subsequently wants to comply a compliance fee in an amount not to exceed the reasonable regulatory costs incurred by the board to ensure the mutual water company is in compliance with subdivision (b). | |
| 74 | - | ||
| 75 | - | (2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). | |
| 76 | - | ||
| 77 | - | SECTION 1.SEC. 2. Section 23701m is added to the Revenue and Taxation Code, to read:23701m. (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, mutual ditch or irrigation companies, as described in Section 501(c)(12) of the Internal Revenue Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.(d) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 78 | - | ||
| 79 | - | SECTION 1.SEC. 2. Section 23701m is added to the Revenue and Taxation Code, to read: | |
| 80 | - | ||
| 81 | - | ### SECTION 1.SEC. 2. | |
| 82 | - | ||
| 83 | - | 23701m. (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, mutual ditch or irrigation companies, as described in Section 501(c)(12) of the Internal Revenue Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.(d) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 84 | - | ||
| 85 | - | 23701m. (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, mutual ditch or irrigation companies, as described in Section 501(c)(12) of the Internal Revenue Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.(d) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 86 | - | ||
| 87 | - | 23701m. (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, mutual ditch or irrigation companies, as described in Section 501(c)(12) of the Internal Revenue Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code.(b) This section shall not apply to a mutual ditch or irrigation company that does any of the following:(1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code.(2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code.(c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.(d) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 88 | - | ||
| 89 | - | ||
| 90 | - | ||
| 91 | - | 23701m. (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, mutual ditch or irrigation companies, as described in Section 501(c)(12) of the Internal Revenue Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code. | |
| 58 | + | 23701m. (a) For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and companies, as described in Section 501(c)(12) of the Internal Revenue Code. Code, that operate a public water system, as defined in Section 116275 of the Health and Safety Code. | |
| 92 | 59 | ||
| 93 | 60 | (b) This section shall not apply to a mutual ditch or irrigation company that does any of the following: | |
| 94 | 61 | ||
| 95 | 62 | (1) Fails to comply with Sections 14301.1, 14301.2, 14301.3, 14305, 14306, or 14307 of the Corporations Code or Section 116755 of the Health and Safety Code. | |
| 96 | 63 | ||
| 97 | 64 | (2) Does not provide information to a local agency formation commission upon request, as authorized by subdivision (d) of Section 56430 of the Government Code. | |
| 98 | 65 | ||
| 99 | 66 | (c) Notwithstanding subdivision (b), gross income does not include funding provided by the State Water Resources Control Board to a mutual ditch or irrigation company operating a public water system pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual ditch or irrigation companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 100 | 67 | ||
| 101 | - | ||
| 68 | + | SEC. 2. Section 24316 is added to the Revenue and Taxation Code, to read:24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 102 | 69 | ||
| 103 | - | SEC. 2 | |
| 70 | + | SEC. 2. Section 24316 is added to the Revenue and Taxation Code, to read: | |
| 104 | 71 | ||
| 105 | - | SEC. 2. | |
| 72 | + | ### SEC. 2. | |
| 106 | 73 | ||
| 107 | - | ||
| 74 | + | 24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 108 | 75 | ||
| 109 | - | 24316. | |
| 76 | + | 24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 110 | 77 | ||
| 111 | - | 24316. Gross (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.(b) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 112 | - | ||
| 113 | - | 24316. Gross (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code.(b) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 78 | + | 24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 114 | 79 | ||
| 115 | 80 | ||
| 116 | 81 | ||
| 117 | - | 24316. Gross (a) For taxable years beginning on or after January 1, 2019, and before January 1, 2024, gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 118 | - | ||
| 119 | - | (b) This section shall remain in effect only until December 1, 2024, and as of that date is repealed. | |
| 120 | - | ||
| 121 | - | SEC. 4. (a) It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code.(b) For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 23701m and 24316 of the Revenue and Taxation Code, as added by the act adding this section, the Legislature finds and declares as follows:(1) The specific goals, purposes, and objectives of the act are as follows:(A) To clarify existing state tax laws by conforming to an exemption authorized under the federal Internal Revenue Code to allow for small water systems to declare themselves to be tax-exempt entities under state law for purposes of potentially receiving grant funding.(B) To allow public water systems to utilize grant funds for necessary improvements to their systems in order to provide clean, safe, and affordable drinking water in accordance with state law, and without the potential of significant taxes becoming due.(2) (A) To allow the Legislature to measure whether the exemption authorized under Sections 23701m and 24316 of the Revenue and Taxation Code, as added by the act adding this section, achieves its intended purpose, the Franchise Tax Board shall annually determine the number of corporations that have applied for the exemption and shall annually calculate the tax revenue lost due to the exemption.(B) The State Water Resources Control Board shall annually inform the Legislature of the grant funds distributed to mutual water companies that operate a public water system. | |
| 122 | - | ||
| 123 | - | SEC. 4. (a) It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code.(b) For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 23701m and 24316 of the Revenue and Taxation Code, as added by the act adding this section, the Legislature finds and declares as follows:(1) The specific goals, purposes, and objectives of the act are as follows:(A) To clarify existing state tax laws by conforming to an exemption authorized under the federal Internal Revenue Code to allow for small water systems to declare themselves to be tax-exempt entities under state law for purposes of potentially receiving grant funding.(B) To allow public water systems to utilize grant funds for necessary improvements to their systems in order to provide clean, safe, and affordable drinking water in accordance with state law, and without the potential of significant taxes becoming due.(2) (A) To allow the Legislature to measure whether the exemption authorized under Sections 23701m and 24316 of the Revenue and Taxation Code, as added by the act adding this section, achieves its intended purpose, the Franchise Tax Board shall annually determine the number of corporations that have applied for the exemption and shall annually calculate the tax revenue lost due to the exemption.(B) The State Water Resources Control Board shall annually inform the Legislature of the grant funds distributed to mutual water companies that operate a public water system. | |
| 124 | - | ||
| 125 | - | SEC. 4. (a) It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code. | |
| 126 | - | ||
| 127 | - | ### SEC. 4. | |
| 128 | - | ||
| 129 | - | (b) For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 23701m and 24316 of the Revenue and Taxation Code, as added by the act adding this section, the Legislature finds and declares as follows: | |
| 130 | - | ||
| 131 | - | (1) The specific goals, purposes, and objectives of the act are as follows: | |
| 132 | - | ||
| 133 | - | (A) To clarify existing state tax laws by conforming to an exemption authorized under the federal Internal Revenue Code to allow for small water systems to declare themselves to be tax-exempt entities under state law for purposes of potentially receiving grant funding. | |
| 134 | - | ||
| 135 | - | (B) To allow public water systems to utilize grant funds for necessary improvements to their systems in order to provide clean, safe, and affordable drinking water in accordance with state law, and without the potential of significant taxes becoming due. | |
| 136 | - | ||
| 137 | - | (2) (A) To allow the Legislature to measure whether the exemption authorized under Sections 23701m and 24316 of the Revenue and Taxation Code, as added by the act adding this section, achieves its intended purpose, the Franchise Tax Board shall annually determine the number of corporations that have applied for the exemption and shall annually calculate the tax revenue lost due to the exemption. | |
| 138 | - | ||
| 139 | - | (B) The State Water Resources Control Board shall annually inform the Legislature of the grant funds distributed to mutual water companies that operate a public water system. | |
| 82 | + | 24316. Gross income does not include funding provided by the State Water Resources Control Board to a mutual water company, formed under Section 14300 of the Corporations Code, pursuant to subdivision (a) of Section 79712 or Section 79724 of the Water Code, subdivisions (e) or (f) of Section 116682, Section 116686, or Section 116687 of the Health and Safety Code, nor shall that funding impact the mutual water companys tax-exempt status, as described in Section 501(c)(12) of the Internal Revenue Code. | |
| 140 | 83 | ||
| 141 | 84 | ||
| 142 | 85 | ||
| 143 | - | This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
| 86 | + | ||
| 87 | + | ||
| 88 | + | Notwithstanding any other provision of law, for taxable years beginning before January 1, 2019, the contribution or other transfer of the assets of a mutual water company established prior to September 26, 1977, that is tax exempt under Section 501(c)(12) of the Internal Revenue Code, but is a taxable entity under California Law, including its lands, easements, rights, and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of a water system and facilities serving the customers of the company, to a community services district formed pursuant to Part 1 (commencing with Section 61000) of Division 3 of Title 6 of the Government Code, is not a transfer subject to taxes imposed by this part if all of the following requirements are met: | |
| 89 | + | ||
| 90 | + | ||
| 91 | + | ||
| 92 | + | (a)The consideration for the transfer of all or substantially all of the assets is the assumption by the district of the companys liability to provide service to the companys stockholders. | |
| 93 | + | ||
| 94 | + | ||
| 95 | + | ||
| 96 | + | (b)The legal or beneficial title to all or substantially all of the companys assets is vested in the district on or before January 1, 2008. | |
| 97 | + | ||
| 98 | + | ||
| 99 | + | ||
| 100 | + | (c)For the one-year period immediately prior to commencement of the transfer and continuing until the transfer is completed, 85 percent or more of the companys income consists of amounts collected from stockholders for the sole purpose of meeting losses and expenses. | |
| 101 | + | ||
| 102 | + | ||
| 103 | + | ||
| 104 | + | SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
| 105 | + | ||
| 106 | + | SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
| 107 | + | ||
| 108 | + | SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. | |
| 109 | + | ||
| 110 | + | ### SEC. 3. |