| Old | New | Differences | |
|---|---|---|---|
| 1 | - | ||
| 1 | + | Amended IN Assembly March 03, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Assembly Bill No. 2054Introduced by Assembly Member Quirk-SilvaFebruary 14, 2022An act to add Section 14308 to the Corporations Code, and to add and repeal Sections 23701m and 24316 of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.LEGISLATIVE COUNSEL'S DIGESTAB 2054, as amended, Quirk-Silva. Corporation taxes: exempt organizations: mutual ditch or irrigation 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, 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. 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.This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water 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.This bill would require a mutual water company to adopt policies to comply with the specified 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 30 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 30 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 30 of each year a list of mutual water companies that have not complied with these provisions for purposes of obtaining the exemption. This bill would require the Franchise Tax Board to notify a mutual water company that is not in compliance with these provisions, but that has received the tax exemption, that it is not in compliance and allow 60 days for the mutual water company to comply. This bill would allow the Franchise Tax Board to revoke the tax exemption for a mutual water company that fails to comply within 60 days.Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. Digest Key Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 14308 is added to the Corporations Code, to read:14308. (a) On or before June 30, 2023, 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.(b) On or before June 30, 2023, 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 for that companys next taxable year.(c) On or before September 30, 2023, 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).(d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code.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, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed.SEC. 3. Section 24316 is added to the Revenue and Taxation Code, to read:24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed.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. | |
| 2 | 2 | ||
| 3 | - | ||
| 3 | + | Amended IN Assembly March 03, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Assembly Bill No. 2054Introduced by Assembly Member Quirk-SilvaFebruary 14, 2022An act to add Section 14308 to the Corporations Code, and to add and repeal Sections 23701m and 24316 of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.LEGISLATIVE COUNSEL'S DIGESTAB 2054, as amended, Quirk-Silva. Corporation taxes: exempt organizations: mutual ditch or irrigation 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, 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. 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.This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water 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.This bill would require a mutual water company to adopt policies to comply with the specified 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 30 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 30 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 30 of each year a list of mutual water companies that have not complied with these provisions for purposes of obtaining the exemption. This bill would require the Franchise Tax Board to notify a mutual water company that is not in compliance with these provisions, but that has received the tax exemption, that it is not in compliance and allow 60 days for the mutual water company to comply. This bill would allow the Franchise Tax Board to revoke the tax exemption for a mutual water company that fails to comply within 60 days.Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. Digest Key Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: NO | |
| 4 | 4 | ||
| 5 | - | ||
| 5 | + | Amended IN Assembly March 03, 2022 | |
| 6 | 6 | ||
| 7 | - | Amended IN Assembly April 19, 2022 | |
| 8 | 7 | Amended IN Assembly March 03, 2022 | |
| 9 | 8 | ||
| 10 | 9 | CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION | |
| 11 | 10 | ||
| 12 | 11 | Assembly Bill | |
| 13 | 12 | ||
| 14 | 13 | No. 2054 | |
| 15 | 14 | ||
| 16 | 15 | Introduced by Assembly Member Quirk-SilvaFebruary 14, 2022 | |
| 17 | 16 | ||
| 18 | 17 | Introduced by Assembly Member Quirk-Silva | |
| 19 | 18 | February 14, 2022 | |
| 20 | 19 | ||
| 21 | - | An act to add Section 14308 to the Corporations Code, and to add and repeal Sections 23701m and 24316 | |
| 20 | + | An act to add Section 14308 to the Corporations Code, and to add and repeal Sections 23701m and 24316 of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor. | |
| 22 | 21 | ||
| 23 | 22 | LEGISLATIVE COUNSEL'S DIGEST | |
| 24 | 23 | ||
| 25 | 24 | ## LEGISLATIVE COUNSEL'S DIGEST | |
| 26 | 25 | ||
| 27 | 26 | AB 2054, as amended, Quirk-Silva. Corporation taxes: exempt organizations: mutual ditch or irrigation companies: public water system: mutual water companies. | |
| 28 | 27 | ||
| 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. 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.This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water 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 | |
| 28 | + | 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. 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.This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water 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.This bill would require a mutual water company to adopt policies to comply with the specified 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 30 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 30 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 30 of each year a list of mutual water companies that have not complied with these provisions for purposes of obtaining the exemption. This bill would require the Franchise Tax Board to notify a mutual water company that is not in compliance with these provisions, but that has received the tax exemption, that it is not in compliance and allow 60 days for the mutual water company to comply. This bill would allow the Franchise Tax Board to revoke the tax exemption for a mutual water company that fails to comply within 60 days.Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. | |
| 30 | 29 | ||
| 31 | 30 | 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. | |
| 32 | 31 | ||
| 33 | 32 | 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 | 33 | ||
| 35 | - | This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water 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. | |
| 34 | + | This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company that operates a public water 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 | 35 | ||
| 37 | - | This bill would require a mutual water company to adopt policies to comply with the specified 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 30 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 30 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 30 of each year a list of mutual water companies that have not complied with these provisions for purposes of obtaining the exemption. This bill would require the Franchise Tax Board to notify a mutual water company that is not in compliance with these provisions, but that has received the tax exemption, that it is not in compliance and allow 60 days for the mutual water company to comply. This bill would allow the Franchise Tax Board to revoke the tax exemption for a mutual water company that fails to comply within 60 days. | |
| 36 | + | This bill would require a mutual water company to adopt policies to comply with the specified 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 30 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 30 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 30 of each year a list of mutual water companies that have not complied with these provisions for purposes of obtaining the exemption. This bill would require the Franchise Tax Board to notify a mutual water company that is not in compliance with these provisions, but that has received the tax exemption, that it is not in compliance and allow 60 days for the mutual water company to comply. This bill would allow the Franchise Tax Board to revoke the tax exemption for a mutual water company that fails to comply within 60 days. | |
| 38 | 37 | ||
| 39 | - | The bill would authorize the Franchise Tax Board to request additional information necessary to ensure the accuracy of a certification and would require the Franchise Tax Board to develop necessary forms and schedules to implement the certification requirement. | |
| 40 | - | ||
| 41 | - | Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions expenditures to contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements. | |
| 38 | + | Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements. | |
| 42 | 39 | ||
| 43 | 40 | This bill would include additional information required for any bill authorizing a new tax expenditure. | |
| 44 | - | ||
| 45 | - | 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. | |
| 46 | - | ||
| 47 | - | This bill would provide that no reimbursement is required by this act for a specified reason. | |
| 48 | 41 | ||
| 49 | 42 | ## Digest Key | |
| 50 | 43 | ||
| 51 | 44 | ## Bill Text | |
| 52 | 45 | ||
| 53 | - | The people of the State of California do enact as follows:SECTION 1. Section 14308 is added to the Corporations Code, to read:14308. (a)On or before June 30, 2023, 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.(b)On or before June 30, 2023, 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 for that companys next taxable year.(c)On or before September 30, 2023, 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).(d)(1)The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2)The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3)In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code.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, 2023, and before January 1, 2028, 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. | |
| 46 | + | The people of the State of California do enact as follows:SECTION 1. Section 14308 is added to the Corporations Code, to read:14308. (a) On or before June 30, 2023, 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.(b) On or before June 30, 2023, 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 for that companys next taxable year.(c) On or before September 30, 2023, 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).(d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code.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, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed.SEC. 3. Section 24316 is added to the Revenue and Taxation Code, to read:24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed.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. | |
| 54 | 47 | ||
| 55 | 48 | The people of the State of California do enact as follows: | |
| 56 | 49 | ||
| 57 | 50 | ## The people of the State of California do enact as follows: | |
| 58 | 51 | ||
| 59 | - | SECTION 1. Section 14308 is added to the Corporations Code, to read:14308. (a)On or before June 30, 2023, 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.(b)On or before June 30, 2023, 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 for that companys next taxable year.(c)On or before September 30, 2023, 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).(d)(1)The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2)The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3)In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 52 | + | SECTION 1. Section 14308 is added to the Corporations Code, to read:14308. (a) On or before June 30, 2023, 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.(b) On or before June 30, 2023, 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 for that companys next taxable year.(c) On or before September 30, 2023, 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).(d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 60 | 53 | ||
| 61 | 54 | SECTION 1. Section 14308 is added to the Corporations Code, to read: | |
| 62 | 55 | ||
| 63 | 56 | ### SECTION 1. | |
| 64 | 57 | ||
| 65 | - | 14308. (a)On or before June 30, 2023, 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.(b)On or before June 30, 2023, 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 for that companys next taxable year.(c)On or before September 30, 2023, 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).(d)(1)The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2)The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3)In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 58 | + | 14308. (a) On or before June 30, 2023, 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.(b) On or before June 30, 2023, 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 for that companys next taxable year.(c) On or before September 30, 2023, 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).(d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 66 | 59 | ||
| 67 | - | 14308. (a)On or before June 30, 2023, 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.(b)On or before June 30, 2023, 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 for that companys next taxable year.(c)On or before September 30, 2023, 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).(d)(1)The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2)The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3)In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 60 | + | 14308. (a) On or before June 30, 2023, 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.(b) On or before June 30, 2023, 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 for that companys next taxable year.(c) On or before September 30, 2023, 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).(d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 68 | 61 | ||
| 69 | - | 14308. (a)On or before June 30, 2023, 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.(b)On or before June 30, 2023, 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 for that companys next taxable year.(c)On or before September 30, 2023, 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).(d)(1)The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2)The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3)In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 62 | + | 14308. (a) On or before June 30, 2023, 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.(b) On or before June 30, 2023, 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 for that companys next taxable year.(c) On or before September 30, 2023, 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).(d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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).(2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list.(3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 70 | 63 | ||
| 71 | 64 | ||
| 72 | 65 | ||
| 73 | 66 | 14308. (a) On or before June 30, 2023, 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. | |
| 74 | 67 | ||
| 75 | 68 | (b) On or before June 30, 2023, 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 for that companys next taxable year. | |
| 76 | 69 | ||
| 77 | - | ||
| 78 | - | ||
| 79 | 70 | (c) On or before September 30, 2023, 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). | |
| 80 | - | ||
| 81 | - | ||
| 82 | 71 | ||
| 83 | 72 | (d) (1) The State Water Resources Control Board shall charge a mutual water company that does not comply with subdivision (b) by the June 30 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). | |
| 84 | 73 | ||
| 85 | - | ||
| 86 | - | ||
| 87 | - | (2)The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list. | |
| 88 | - | ||
| 89 | - | ||
| 74 | + | (2) The State Water Resources Control Board shall revise the list submitted to the Franchise Tax Board pursuant to subdivision (c). (c) with respect to any mutual water companies that come into compliance pursuant to subdivision (b) to remove those mutual water companies from the list. | |
| 90 | 75 | ||
| 91 | 76 | (3) In any year in which Section 23701m of the Revenue and Taxation Code is operative, the Franchise Tax Board shall notify a mutual water company that is included on the list received pursuant to subdivision (c), and that has obtained a tax exemption pursuant to Section 23701m of the Revenue and Taxation Code, that the company has not complied with subdivision (b) of this section. That mutual water company shall then have 60 days to submit its policies and certification pursuant to subdivision (b). If the mutual water company fails to do so, the Franchise Tax Board may revoke that companys tax exemption pursuant to Section 23701m of the Revenue and Taxation Code. | |
| 92 | 77 | ||
| 93 | - | ||
| 94 | - | ||
| 95 | - | 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, 2023, and before January 1, 2028, 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. Code. For purposes of this section, the term mutual ditch or irrigation companies shall have the same meaning as mutual water company, as defined in Section 14300 of the Corporations 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.(c) To confirm compliance with the requirements referenced in subdivision (b), a mutual ditch or irrigation company shall provide certification, under penalty of perjury, in connection with its initial application for tax-exempt status filed with the Franchise Tax Board and with each annual exempt organization tax filing, including that:(1) The company is exempt for federal tax purposes.(2) The company has fulfilled all filing and reporting requirements with the State Water Resources Control Board or any local primacy agency with jurisdiction over the company.(3) The company is in compliance with the requirements referenced in subdivision (b).(d) The Franchise Tax Board may request any additional information it deems necessary to ensure the accuracy of a certification made by a mutual ditch or irrigation company pursuant to subdivision (c).(e) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary to implement this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. (d)(f) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.(g) Commencing on July 1, 2027, the California Association of Mutual Water Companies Joint Powers Risk and Insurance Management Authority shall conduct outreach to any mutual ditch or irrigation companies with tax-exempt status under this section regarding the potential repeal of this section. | |
| 78 | + | 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, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 96 | 79 | ||
| 97 | 80 | SEC. 2. Section 23701m is added to the Revenue and Taxation Code, to read: | |
| 98 | 81 | ||
| 99 | 82 | ### SEC. 2. | |
| 100 | 83 | ||
| 101 | - | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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 | |
| 84 | + | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 102 | 85 | ||
| 103 | - | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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 | |
| 86 | + | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 104 | 87 | ||
| 105 | - | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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 | |
| 88 | + | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 106 | 89 | ||
| 107 | 90 | ||
| 108 | 91 | ||
| 109 | - | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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. | |
| 92 | + | 23701m. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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. | |
| 110 | 93 | ||
| 111 | 94 | (b) This section shall not apply to a mutual ditch or irrigation company that does any of the following: | |
| 112 | 95 | ||
| 113 | 96 | (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. | |
| 114 | 97 | ||
| 115 | 98 | (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. | |
| 116 | 99 | ||
| 117 | 100 | (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. | |
| 118 | 101 | ||
| 102 | + | (d) This section shall remain in effect only until December 1, 2028, and as of that date is repealed. | |
| 119 | 103 | ||
| 104 | + | SEC. 3. Section 24316 is added to the Revenue and Taxation Code, to read:24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 120 | 105 | ||
| 121 | - | ||
| 106 | + | SEC. 3. Section 24316 is added to the Revenue and Taxation Code, to read: | |
| 122 | 107 | ||
| 123 | - | ||
| 108 | + | ### SEC. 3. | |
| 124 | 109 | ||
| 125 | - | ( | |
| 110 | + | 24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 126 | 111 | ||
| 127 | - | ( | |
| 112 | + | 24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 128 | 113 | ||
| 129 | - | (d) The Franchise Tax Board may request any additional information it deems necessary to ensure the accuracy of a certification made by a mutual ditch or irrigation company pursuant to subdivision (c). | |
| 130 | - | ||
| 131 | - | (e) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary to implement this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section. | |
| 132 | - | ||
| 133 | - | (d) | |
| 114 | + | 24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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, 2028, and as of that date is repealed. | |
| 134 | 115 | ||
| 135 | 116 | ||
| 136 | 117 | ||
| 137 | - | (f) This section shall remain in effect only until December 1, 2028, and as of that date is repealed. | |
| 138 | - | ||
| 139 | - | (g) Commencing on July 1, 2027, the California Association of Mutual Water Companies Joint Powers Risk and Insurance Management Authority shall conduct outreach to any mutual ditch or irrigation companies with tax-exempt status under this section regarding the potential repeal of this section. | |
| 140 | - | ||
| 141 | - | ||
| 142 | - | ||
| 143 | - | ||
| 144 | - | ||
| 145 | - | (a)For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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. | |
| 146 | - | ||
| 147 | - | ||
| 118 | + | 24316. (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, 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. | |
| 148 | 119 | ||
| 149 | 120 | (b) This section shall remain in effect only until December 1, 2028, and as of that date is repealed. | |
| 150 | 121 | ||
| 122 | + | 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. | |
| 151 | 123 | ||
| 124 | + | 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. | |
| 152 | 125 | ||
| 126 | + | SEC. 4. (a) It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code. | |
| 153 | 127 | ||
| 128 | + | ### SEC. 4. | |
| 154 | 129 | ||
| 155 | - | (a)It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code. | |
| 156 | - | ||
| 157 | - | ||
| 158 | - | ||
| 159 | - | (b) | |
| 160 | - | ||
| 161 | - | ||
| 162 | - | ||
| 163 | - | SEC. 3. (a) For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 23701m and 24316 Section 23701m 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 are 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 Section 23701m of the Revenue and Taxation Code, as added by the act adding this section, achieves its intended purpose, the Franchise Tax Board shall annually annually, commencing June 1, 2025, for the 2023 tax year, 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.(b) The disclosure provisions of this section shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code. | |
| 164 | - | ||
| 165 | - | SEC. 3. (a) For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 23701m and 24316 Section 23701m 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 are 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 Section 23701m of the Revenue and Taxation Code, as added by the act adding this section, achieves its intended purpose, the Franchise Tax Board shall annually annually, commencing June 1, 2025, for the 2023 tax year, 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.(b) The disclosure provisions of this section shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code. | |
| 166 | - | ||
| 167 | - | SEC. 3. (a) For the purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 23701m and 24316 Section 23701m of the Revenue and Taxation Code, as added by the act adding this section, the Legislature finds and declares as follows: | |
| 168 | - | ||
| 169 | - | ### SEC. 3. | |
| 130 | + | (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: | |
| 170 | 131 | ||
| 171 | 132 | (1) The specific goals, purposes, and objectives of the act are as follows: | |
| 172 | 133 | ||
| 173 | - | (A) | |
| 134 | + | (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. | |
| 174 | 135 | ||
| 175 | 136 | (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. | |
| 176 | 137 | ||
| 177 | - | ||
| 178 | - | ||
| 179 | - | (2) (A)To allow the Legislature to measure whether the exemption authorized under Sections 23701m and 24316 Section 23701m of the Revenue and Taxation Code, as added by the act adding this section, achieves its intended purpose, the Franchise Tax Board shall annually annually, commencing June 1, 2025, for the 2023 tax year, determine the number of corporations that have applied for the exemption and shall annually calculate the tax revenue lost due to the exemption. | |
| 138 | + | (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. | |
| 180 | 139 | ||
| 181 | 140 | (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. | |
| 182 | - | ||
| 183 | - | ||
| 184 | - | ||
| 185 | - | (b) The disclosure provisions of this section shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code. | |
| 186 | - | ||
| 187 | - | SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution. | |
| 188 | - | ||
| 189 | - | SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution. | |
| 190 | - | ||
| 191 | - | SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution. | |
| 192 | - | ||
| 193 | - | ### SEC. 4. |