California Tax Changes - October 2024
Week Of 10.07.2024
State-Designated Fairgrounds Provisions Amended:
- Effective Date: January 1, 2025.
- Statute Consolidation: The provisions related to state-designated fairgrounds have been moved from the Business and Professions Code and other codes and consolidated into the Food and Agricultural Code.
- Terminology Changes:
- "Division of Fairs and Expositions" is replaced with "Department of Food and Agriculture."
- "State-designated fair" is replaced with "fair" for reporting gross receipts for sales and use tax purposes.
Donated Medicinal Cannabis Use Tax Exemption Extended:
- Effective Date: September 29, 2024.
- Exemption Extension: The use tax exemption for donated medicinal cannabis has been extended to January 1, 2030.
- Exemption Applicability: The exemption applies to donations of medicinal cannabis or medicinal cannabis products by a licensed cannabis retailer to a medicinal cannabis patient or to another cannabis retailer for subsequent donation to a medicinal cannabis patient.
Wildfire Loss Mitigation Payments:
- Effective Date: September 29, 2024, for taxable years beginning on or after January 1, 2024, and before January 1, 2029.
- Exclusion from Gross Income: Amounts received through the California Wildfire Mitigation Financial Assistance Program for residential property owners or occupants are excluded from gross income. This applies to expenses paid or obligations incurred for wildfire loss mitigation, which includes activities reducing wildfire risks to a residential structure or its contents.
California HOPE Program:
- Effective Date: January 1, 2025.
- Tax Information Disclosure: The California State Treasurer is authorized to disclose tax information to the California Franchise Tax Board (FTB) to determine eligibility for the California HOPE for Children Trust Account Program.
- Information Disclosed: Limited to information necessary to verify eligibility, including name, ITIN or social security number, date of birth, and income information.
- FTB Disclosure: The FTB must disclose federal adjusted gross income (AGI) to the Treasurer through information-sharing agreements or data interfaces.
California Protect Our Coast and Oceans Voluntary Tax Contribution Fund:
- Effective Date: September 30, 2024.
- Checkoff Amended: The checkoff on personal income tax returns for the California Protect Our Coast and Oceans Voluntary Tax Contribution Fund has been amended.
- Minimum Contribution Amount: The minimum contribution amount for the calendar year is now 200,000∗∗,downfrom∗∗200,000∗∗,downfrom∗∗250,000.
- Inoperative Provision: If the California Franchise Tax Board (FTB) determines that estimated contributions for a calendar year will not reach the minimum amount, the provision becomes inoperative for taxable years beginning on or after January 1 of that year and is repealed on December 1 of that year.
Wildfire Loss Mitigation Payments:
- Effective Date: September 29, 2024, for taxable years beginning on or after January 1, 2024, and before January 1, 2029.
- Exclusion from Gross Income: Amounts received through the California Wildfire Mitigation Financial Assistance Program for residential property owners or occupants are excluded from gross income. This applies to expenses paid or obligations incurred for wildfire loss mitigation, which includes activities reducing wildfire risks to a residential structure or its contents.
Week Of 09.30.2024
California Tax Updates: Wildlife, Property, Sales & Use Tax Changes
California has recently made changes to several tax laws, impacting individuals and businesses alike. Here's a breakdown of the key updates:
1. Wildlife Preservation and Rehabilitation Tax Checkoffs Extended:
- Good news for wildlife lovers! The California Rare and Endangered Species Preservation Voluntary Tax Contribution Program and the Native California Wildlife Rehabilitation Voluntary Tax Contribution Fund checkoffs on personal income tax returns have been extended.
- The new deadlines are:
- Rare and Endangered Species: January 1, 2032 (previously January 1, 2025)
- Native California Wildlife Rehabilitation: January 1, 2031 (previously January 1, 2025)
Important Note: These programs will only remain active if the estimated contributions received in a calendar year reach at least $250,000. The California Franchise Tax Board (FTB) will assess this annually by September 1st.
2. Property Tax Exemptions Amended:
- Low-Value Property Exemption: The $10,000 value limitation on county boards' authority to exempt low-value property has been extended:
- For possessory interests, the deadline to increase the limitation to $50,000 is now before January 1, 2030 (previously January 1, 2025).
- For possessory interests for temporary or transitory use in publicly owned fairgrounds, conventions, or cultural facilities, the deadline is now on or after January 1, 2030 (previously January 1, 2025).
- Tribal Housing Exemption: The definition of "tribal housing exemption property" has been clarified to include:
- Property owned and operated by a federally recognized Indian tribe, its tribally designated housing entity, or a limited partnership that includes a federally recognized Indian tribe or its tribally designated housing entity as the sole general partner (for properties receiving a reservation of low-income housing tax credits pursuant to IRC § 42).
- Net earnings of the housing entity that inure to the benefit of a limited partner in a property that has received a reservation of the federal credit do not violate the state exemption requirements.
3. Changes to California Department of Tax and Fee Administration (CDTFA) Provisions:
- Sales and Use Tax Prepayment Relief: The CDTFA can now relieve sales and use tax prepayment requirements for dealers who:
- Are required to pay tax to the Department of Motor Vehicles.
- Derive more than 75% of their gross receipts during the prior calendar year from retail sales of registered motor vehicles (excluding certain recreational vehicles).
- Electronic Notice of Determination: The CDTFA is authorized to deliver a notice of determination electronically if requested by the taxpayer or if the CDTFA has evidence that the taxpayer no longer receives mail at the address of record and has previously provided an address for electronic mail.
- Penalties:
- A 10% penalty of the determination amount is imposed if a deficiency is due to negligence or intentional disregard, or 25% if due to fraud or intent to evade, plus interest.
- The penalty of 40% of an amount not timely remitted does not apply if a taxpayer has unremitted sales tax reimbursement averaging **1,500∗∗(previously,1,500∗∗(previously,1,000) or less per month or not exceeding 25% (previously, 5%) of the total measure of tax reimbursement collected for the period in which tax was due, if greater.
These updates are effective as follows:
- Wildlife Preservation Checkoff Extensions: Effective January 1, 2025.
- Low-Value Property and Tribal Housing Exemption Amendments: Effective September 22, 2024.
- CDTFA Provisions Amendments: Effective January 1, 2025.
For complete details, please refer to the relevant California legislation:
- L. 2024, A1828 (c. 360): Wildlife Preservation Checkoff Extensions
- L. 2024, S1527 (c. 498): Low-Value Property and Tribal Housing Exemption Amendments
- L. 2024, S1528 (c. 499): CDTFA Provisions Amendments
Week Of 10.07.2024
California Corporate Income Tax—Gross income exclusion provided for California qualified wildfire loss mitigation payments.
L. 2024, S946 (c. 987), effective 09/29/2024, and applicable to taxable years beginning on or after 01/01/2024, and before 01/01/2029, provides an exclusion from gross income for amounts received as California qualified wildfire loss mitigation payments. “California qualified wildfire loss mitigation payment” means any amount which is received through the California Wildfire Mitigation Financial Assistance Program for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation. “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both.
California Personal Income Tax—California HOPE program disclosure of tax information authorized.
L. 2024, S242 (c. 1010), effective 01/01/2025, authorizes the California State Treasurer to disclose to the California Franchise Tax Board (FTB) tax information for purposes of determining eligibility for the California Hope, Opportunity, Perseverance, and Empowerment (HOPE) for Children Trust Account Program. The information authorized to be disclosed is limited to information necessary to verify eligibility, including, but not limited to, name, individual taxpayer identification number (ITIN) or social security number, date of birth, and other needed information to verify the income of individuals. The FTB, after receipt of the information, must disclose to the Treasurer, through information-sharing agreements or data interfaces, the amounts of the federal adjusted gross income (AGI) as reported by the taxpayer to the FTB.
California Personal Income Tax—California Protect Our Coast and Oceans Voluntary Tax Contribution Fund checkoff amended.
L. 2024, A178 (c. 1000), effective 09/30/2024, amends the California Protect Our Coast and Oceans Voluntary Tax Contribution Fund checkoff on personal income tax returns. By September 1 of each calendar year that the checkoff appears on the tax return, the California Franchise Tax Board (FTB) must determine whether the amount of contributions estimated to be received during the calendar year will equal or exceed the minimum contribution amount for the calendar year, which is $200,000 (previously, $250,000). The FTB must estimate the amount of contributions to be received by using the actual amounts received and an estimate of the contributions that will be received by the end of that calendar year. If the FTB determines that the amount of the contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount for the calendar year, this provision becomes inoperative with respect to taxable years beginning on or after January 1 of that calendar year, and repeals on December 1 of that year.
California Personal Income Tax—Gross income exclusion provided for California qualified wildfire loss mitigation payments.
L. 2024, S946 (c. 987), effective 09/29/2024, and applicable to taxable years beginning on or after 01/01/2024, and before 01/01/2029, provides an exclusion from gross income for amounts received as California qualified wildfire loss mitigation payments. “California qualified wildfire loss mitigation payment” means any amount which is received through the California Wildfire Mitigation Financial Assistance Program for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation. “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both.
California Sales & Use Taxes—California sales on state-designated fairgrounds provisions amended.
L. 2024, A2143 (c. 559), effective 01/01/2025, amends the state-designated fairgrounds provisions. The related statutes are moved from the Business and Professions Code and other codes and consolidated into the Food and Agricultural Code. References to the “Division of Fairs and Expositions” are replaced with the “Department of Food and Agriculture.” For reporting of gross receipts for sales and use tax purposes, the term “state-designated fair” is replaced with the term “fair.”
California Sales & Use Taxes—California donated medicinal cannabis use tax exemption extended.
L. 2024, A2555 (c. 920), effective 09/29/2024, extends the use tax exemption for donated medicinal cannabis to January 1, 2030. The exemption applies to the donation by a licensed cannabis retailer of medicinal cannabis or medicinal cannabis product to a medicinal cannabis patient or to a cannabis retailer for subsequent donation to a medicinal cannabis patient.
Week Of 09.30.2024
California Personal Income Tax—California wildlife preservation and rehabilitation funds voluntary tax contribution checkoffs extended.
L. 2024, A1828 (c. 360), effective 01/01/2025, extends the California Rare and Endangered Species Preservation Voluntary Tax Contribution Program personal income tax return contribution checkoff to January 1, 2032 (previously, January 1, 2025), and Native California Wildlife Rehabilitation Voluntary Tax Contribution Fund checkoff to January 1, 2031 (previously, January 1, 2025), except as otherwise provided. For each checkoff, by September 1 of each calendar year that the checkoff appears on the tax return, the California Franchise Tax Board (FTB) must determine whether the amount of contributions estimated to be received during the calendar year will equal or exceed the minimum contribution amount for the calendar year (i.e., $250,000). The FTB must estimate the amount of contributions to be received by using the actual amounts received and an estimate of the contributions that will be received by the end of that calendar year. If the FTB determines that the amount of the contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount for the calendar year, the provision becomes inoperative with respect to taxable years beginning on or after January 1 of that calendar year, and repeals on December 1 of that year.
California Property Tax—California low-value property and tribal housing exemptions amended.
L. 2024, S1527 (c. 498), effective 09/22/2024, amends the low-value property and tribal housing exemptions. Regarding the $10,000 value limitation on a county board’s authority to exempt low-value property, the applicable lien date for increasing the limitation to $50,000, for possessory interests, is extended to before January 1, 2030 (previously, January 1, 2025), and for possessory interests for temporary or transitory use in a publicly owned fairground, convention, or cultural facility, to on or after January 1, 2030 (previously, January 1, 2025). Tribal housing exemption property is clarified to mean property owned and operated by a federally recognized Indian tribe, its tribally designated housing entity, or, for a property that has received a reservation of low-income housing tax credits pursuant to IRC § 42, a limited partnership that includes a federally recognized Indian tribe or its tribally designated housing entity as the sole general partner (previously, a federally recognized Indian tribe or its tribally designated housing entity). Net earnings of the housing entity that inure to the benefit of a limited partner in a property that has received a reservation of the federal credit do not violate the state exemption requirements.
California Sales & Use Taxes—California Department of Tax and Fee Administration provisions amended.
L. 2024, S1528 (c. 499), effective 01/01/2025, amends several provisions relating to the California Department of Tax and Fee Administration (CDTFA). The CDTFA can relieve sales and use tax prepayment requirements if a dealer is required to pay tax to the Department of Motor Vehicles and more than 75% of the gross receipts during the prior calendar year are from retail sales of registered motor vehicles except for certain recreational vehicles. The CDTFA is authorized to deliver a notice of determination electronically if requested by the taxpayer in this manner or the CDTFA has evidence that the taxpayer no longer receives mail at the address of record and has previously provided an address for electronic mail. A 10% penalty of the determination amount is imposed if a deficiency is due to negligence or intentional disregard, or 25% if due to fraud or intent to evade, plus interest. The penalty of 40% of an amount not timely remitted does not apply if a taxpayer has unremitted sales tax reimbursement averaging $1,500 (previously, $1,000) or less per month or not exceeding 25% (previously, 5%) of the total measure of tax reimbursement collected for the period in which tax was due, if greater.
Week Of 10.07.2024
California Corporate Income Tax—Gross income exclusion provided for California qualified wildfire loss mitigation payments.
L. 2024, S946 (c. 987), effective 09/29/2024, and applicable to taxable years beginning on or after 01/01/2024, and before 01/01/2029, provides an exclusion from gross income for amounts received as California qualified wildfire loss mitigation payments. “California qualified wildfire loss mitigation payment” means any amount which is received through the California Wildfire Mitigation Financial Assistance Program for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation. “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both.
California Personal Income Tax—California HOPE program disclosure of tax information authorized.
L. 2024, S242 (c. 1010), effective 01/01/2025, authorizes the California State Treasurer to disclose to the California Franchise Tax Board (FTB) tax information for purposes of determining eligibility for the California Hope, Opportunity, Perseverance, and Empowerment (HOPE) for Children Trust Account Program. The information authorized to be disclosed is limited to information necessary to verify eligibility, including, but not limited to, name, individual taxpayer identification number (ITIN) or social security number, date of birth, and other needed information to verify the income of individuals. The FTB, after receipt of the information, must disclose to the Treasurer, through information-sharing agreements or data interfaces, the amounts of the federal adjusted gross income (AGI) as reported by the taxpayer to the FTB.
California Personal Income Tax—California Protect Our Coast and Oceans Voluntary Tax Contribution Fund checkoff amended.
L. 2024, A178 (c. 1000), effective 09/30/2024, amends the California Protect Our Coast and Oceans Voluntary Tax Contribution Fund checkoff on personal income tax returns. By September 1 of each calendar year that the checkoff appears on the tax return, the California Franchise Tax Board (FTB) must determine whether the amount of contributions estimated to be received during the calendar year will equal or exceed the minimum contribution amount for the calendar year, which is $200,000 (previously, $250,000). The FTB must estimate the amount of contributions to be received by using the actual amounts received and an estimate of the contributions that will be received by the end of that calendar year. If the FTB determines that the amount of the contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount for the calendar year, this provision becomes inoperative with respect to taxable years beginning on or after January 1 of that calendar year, and repeals on December 1 of that year.
California Personal Income Tax—Gross income exclusion provided for California qualified wildfire loss mitigation payments.
L. 2024, S946 (c. 987), effective 09/29/2024, and applicable to taxable years beginning on or after 01/01/2024, and before 01/01/2029, provides an exclusion from gross income for amounts received as California qualified wildfire loss mitigation payments. “California qualified wildfire loss mitigation payment” means any amount which is received through the California Wildfire Mitigation Financial Assistance Program for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation. “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both.
California Sales & Use Taxes—California sales on state-designated fairgrounds provisions amended.
L. 2024, A2143 (c. 559), effective 01/01/2025, amends the state-designated fairgrounds provisions. The related statutes are moved from the Business and Professions Code and other codes and consolidated into the Food and Agricultural Code. References to the “Division of Fairs and Expositions” are replaced with the “Department of Food and Agriculture.” For reporting of gross receipts for sales and use tax purposes, the term “state-designated fair” is replaced with the term “fair.”
California Sales & Use Taxes—California donated medicinal cannabis use tax exemption extended.
L. 2024, A2555 (c. 920), effective 09/29/2024, extends the use tax exemption for donated medicinal cannabis to January 1, 2030. The exemption applies to the donation by a licensed cannabis retailer of medicinal cannabis or medicinal cannabis product to a medicinal cannabis patient or to a cannabis retailer for subsequent donation to a medicinal cannabis patient.
Week Of 09.30.2024
California Personal Income Tax—California wildlife preservation and rehabilitation funds voluntary tax contribution checkoffs extended.
L. 2024, A1828 (c. 360), effective 01/01/2025, extends the California Rare and Endangered Species Preservation Voluntary Tax Contribution Program personal income tax return contribution checkoff to January 1, 2032 (previously, January 1, 2025), and Native California Wildlife Rehabilitation Voluntary Tax Contribution Fund checkoff to January 1, 2031 (previously, January 1, 2025), except as otherwise provided. For each checkoff, by September 1 of each calendar year that the checkoff appears on the tax return, the California Franchise Tax Board (FTB) must determine whether the amount of contributions estimated to be received during the calendar year will equal or exceed the minimum contribution amount for the calendar year (i.e., $250,000). The FTB must estimate the amount of contributions to be received by using the actual amounts received and an estimate of the contributions that will be received by the end of that calendar year. If the FTB determines that the amount of the contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount for the calendar year, the provision becomes inoperative with respect to taxable years beginning on or after January 1 of that calendar year, and repeals on December 1 of that year.
California Property Tax—California low-value property and tribal housing exemptions amended.
L. 2024, S1527 (c. 498), effective 09/22/2024, amends the low-value property and tribal housing exemptions. Regarding the $10,000 value limitation on a county board’s authority to exempt low-value property, the applicable lien date for increasing the limitation to $50,000, for possessory interests, is extended to before January 1, 2030 (previously, January 1, 2025), and for possessory interests for temporary or transitory use in a publicly owned fairground, convention, or cultural facility, to on or after January 1, 2030 (previously, January 1, 2025). Tribal housing exemption property is clarified to mean property owned and operated by a federally recognized Indian tribe, its tribally designated housing entity, or, for a property that has received a reservation of low-income housing tax credits pursuant to IRC § 42, a limited partnership that includes a federally recognized Indian tribe or its tribally designated housing entity as the sole general partner (previously, a federally recognized Indian tribe or its tribally designated housing entity). Net earnings of the housing entity that inure to the benefit of a limited partner in a property that has received a reservation of the federal credit do not violate the state exemption requirements.
California Sales & Use Taxes—California Department of Tax and Fee Administration provisions amended.
L. 2024, S1528 (c. 499), effective 01/01/2025, amends several provisions relating to the California Department of Tax and Fee Administration (CDTFA). The CDTFA can relieve sales and use tax prepayment requirements if a dealer is required to pay tax to the Department of Motor Vehicles and more than 75% of the gross receipts during the prior calendar year are from retail sales of registered motor vehicles except for certain recreational vehicles. The CDTFA is authorized to deliver a notice of determination electronically if requested by the taxpayer in this manner or the CDTFA has evidence that the taxpayer no longer receives mail at the address of record and has previously provided an address for electronic mail. A 10% penalty of the determination amount is imposed if a deficiency is due to negligence or intentional disregard, or 25% if due to fraud or intent to evade, plus interest. The penalty of 40% of an amount not timely remitted does not apply if a taxpayer has unremitted sales tax reimbursement averaging $1,500 (previously, $1,000) or less per month or not exceeding 25% (previously, 5%) of the total measure of tax reimbursement collected for the period in which tax was due, if greater.