Governor Signs Two Important Tax Bills


This article is reproduced with permission from Spidell Publishing, Inc.

Governor Brown has signed AB 2503, which makes a domestic corporation and a limited liability company subject to voluntary or involuntary administrative dissolution or administrative cancellation if:

  • the entity either never conducted business, filed returns or paid tax when it was operating and has no remaining business assets; or
  • the entity’s powers are, and have been, suspended by the Franchise Tax Board (FTB) for a specified period of time.

This means that taxpayers do not need to wait for years for the FTB to try to come after them, and the share-holders/members will not have to go through the Ralite process.

To view the full text of AB 2503, go to:
http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB2503

Governor Brown also signed SB 274, which generally conforms to the new federal centralized partnership audit regime. The new regime allows the IRS to conduct audits, make adjustments and assessments, and collect tax at the partnership level (rather than at the partner level), and generally applies to returns filed for partnership taxable years beginning after 2017.

Under SB 274, partnerships must report each partnership item change or correction to the FTB within six months of the date of each final federal determination if the partnership is issued an adjustment under IRC §6225 or makes a push-out election as part of an IRS partnership level audit.

To view the full text of SB 274, go to:
http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB274

For more information about this article, please contact our tax professionals at taxalerts@windes.com or toll free at 844.4WINDES.

Learn more about our Tax & Accounting Services practice