From an updated taxpayer’s bill of rights to W-2 information, click below to find a news summary from the Franchise Tax Board for March 2010.

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Here’s a piece from today’s Sacramento Bee:

Legislators were apparently all too aware. The record shows that 1,321 “regular” bills were introduced between last Tuesday and Friday, 888 in the Assembly and 433 in the Senate. That breaks down to:

* 330.3 a day
* 13.8 an hour
*1.15 every five minutes

It’s also an average of 11 bills for each lawmaker, and it does not include bills introduced before last Tuesday. Nor does it include resolutions, proposed constitutional amendments or measures proposed in any of the eight special sessions that have run or are running concurrently with the regular session.

According to legislative staffers, this year’s crop was actually not too big, probably owing to the paucity of state funds. See? There’s always a silver lining…

SACRAMENTO, CA – State Senator Lou Correa (Orange County) today announced a comprehensive bipartisan legislative jobs package that contains bills separately sponsored by the Senate Democratic Caucus, Republican Governor Arnold Schwarzenegger and members of the Orange County legislative delegation.

Declaring that “We need to get Californians back to work”, Senator Correa introduced Senate Bill 1010 in the regular session, Senate Bill 967, Senate Bill 42, in the eighth special session, Senate Bill 1 in the sixth special session, and jointly introduced Senate Bills 965 and 968 in the regular session.

The package’s positive impact is both statewide and focused on Orange County job retention and development, each impacting a targeted challenge.

SB 1010 and SBX8-42 would allow twenty-five (ten of which have to be in Southern California) public and private projects to apply for a “safe haven” from time consuming litigation if they have completed the California Environmental Quality Act (CEQA) process after public hearings are held in the region that the project is proposed and, upon approval of the Secretary of Business Transportation and Housing Agency.

According to the Senator, the criteria in selecting these projects shall consider the following determinants: the number and quality of jobs that will be created by the project; the amount of capital investment made by the project; and, striking a balance between projects sponsored by public and private entities.

The Orange County Senator continued by adding that the measure would not exempt the projects from the CEQA but rather helps to reduce the lengthy litigation while respecting our environmental responsibilities.

Continuing with the package’s description, Senator Correa went on to describe Senate Bill 967, a measure dubbed “California First!” which will provide employers with a five percent bid preference in exchange for ensuring that ninety percent of their workers on that contract will be California residents and taxpayers.

Senator Correa added that the measure begins to provide a level playing field with other states that provide the same incentives, and provides greater opportunities for Californians to have good paying jobs that keep tax dollars here in California.

Continuing the discussion of jobs development, the Orange County Senator who also sits on the Senate’s Business and Professions committee, jointly introduced Senate Bill 968, with Senator Negrete McLeod, (Chino) a measure which helps streamline the current process used in retraining unemployed workers to receive skills in emerging or expanding technologies and industries, while ensuring the unemployed worker continues to coordinate their unemployment funds into a seamless process. In highlighting the proposal, Senator Correa stated that “in this challenging environment, our state must be vigilant in ensuring that the labor force be prepared with the skills necessary to take this state out of this deep recession”.

Senator Correa closed out his package with a duo of bills directly impacting Orange County; Senate Bills SB 1 in the 6th special session and SB 965 in the regular session. If enacted, SB 1 would complement central Orange County’s supportive jobs development climate by further adding an additional Enterprise Zone for Orange County in Anaheim. The bill would provide for the California Department of Housing and Community Development to establish such a zone to encourage and stimulate job growth, development, and investment in the community. According to Senator Correa, the measure would provide taxpayers who invest, operate, or locate a trade or business in the targeted area with the ability to receive special tax incentives. This measure is sponsored in part by the Anaheim Chamber of Commerce and the Orange County Business Council.

The Orange County Senator went on to state that, “While the latest jobs report is encouraging, we still have nearly one in every ten adults unemployed in Orange County. It’s our job to do all we can to help grow opportunities for more and better jobs here in Orange County.”

The series of Correa employment measures will begin to be considered this week.

Senator Lou Correa represents the 34th District, which includes the cities of Anaheim, Buena Park, Fullerton, Garden Grove, Santa Ana, Stanton and Westminster.

The Sacramento Bee broke the story this morning regarding he senate committees limit on NOLs and getting rid of the ability to transfer tax credits between affiliated companies. Below is the story:

Democratic gas tax plan rolls back corporate tax benefits
The Senate Budget Committee on Tuesday approved rollbacks of two corporate tax benefits as part of a complex gas-tax swap to help close the state’s $19.9 billion deficit.

The committee also approved a 4.8 percent surcharge on residential and commercial property insurance, which would raise roughly $200 million for the general fund.

The Democratic proposal allows companies to apply only 68 percent of past operating losses against their income in 2010, shrinking that tax benefit and increasing state revenues from corporate taxes. Existing state law allows companies to apply 100 percent of certain past operating losses against income in 2010.

The proposal also would prevent corporations from assigning tax credits in 2010 to affiliated corporations or subsidiaries. Current state law allows that practice to occur starting this year.

Those two changes would allow the state to raise $655 million for the general fund. Democrats believe they can pass the changes on a majority-vote basis because they are decreasing taxes on gasoline by a comparable amount, theoretically making the change “revenue neutral.” Gov. Arnold Schwarzenegger had proposed suspending those two tax benefits — among others — but only if the state failed to get enough federal help.

The California Teachers Association is gathering signatures to place an initiative on the November ballot that would block those tax benefits permanently.

The Senate Budget Committee passed the changes Tuesday on an 8-2 party-line vote. The full Senate and Assembly would still have to approve the plan.

The thrust of the gas-tax plan is the elimination of state sales tax on gasoline, replacing that sales tax with an excise tax on gas. That would allow the state to account for gasoline taxes in a different way that saves the state $920 million in general fund dollars. All told, the proposal would cut the deficit by nearly $1.6 billion. Drivers would save roughly 3 cents per gallon in 2010–11.

Transit agencies would lose out under the Democratic plan, but not by as much as under Schwarzenegger’s proposal. Democrats would preserve sales tax on diesel fuel, generating an estimated $313 million annually. The state also would give transit agencies $400 million for operations out of an existing transportation account.

The Democratic plan would allow local governments to place on the ballot an additional fee on gasoline to pay for transit. Voters would have to approve any such fee by a majority vote.

Republicans questioned that part of the proposal, suggesting that it was a back-door way of raising revenues without meeting requirements for a tax hike. Democrats responded by saying they were only expanding the authority of local officials.

Categories: State budget, Taxes

Posted by Kevin Yamamura

The Sacramento Bee had this article today:

Senate President Pro Tem Darrell Steinberg today unveiled a Democratic plan he said would create an estimated 140,600 to 197,600 jobs inCalifornia.

Steinberg, D-Sacramento, said the Democratic Caucus in the Legislature is introducing 27 bills that are part of an employment plan “that is real, not partisan, not hype.”

He said every measure to be introduced can be approved with a majority vote, and that the jobs-creation ideas could have a “multiplier effect” by creating even more jobs.

“I think people want to see something tangible,” Steinberg said.

Among the proposals:

• — A fee stabilization bill for California’s higher education systems that would set a 5 percent cap on tuition fee hikes in any given year and require students to be given an estimated cost schedule for what it will take for them to finish their degrees.

• — A bill to promote the Employment Development Department’s “work-share program,” which allows hard-hit companies to keep some employees on at reduced salaries with the EDD makes salaries whole in anticipation of an economic recovery and re-hiring.

California companies are not participating much in this EDD program, according to Sen. Mark Leno, D-San Francisco, who accompanied Steinberg and is author of this bill. The state of New York promoted its program last year, increasing business participation by more than 500 percent and reducing the number of workers needing full unemployment benefits.

• — A bill to restructure the furlough polices imposed by the governor to save money. The bill would exempt employees at the Franchise Tax Board, the State Board of Equalization and those in jobs funded at least 95 percent by sources other than the General Fund.

Steinberg hopes to revive a bill that Gov. Arnold Schwarzenegger vetoed last year requiring a mandatory level of renewable energy to be purchased inside California to help create jobs. The bill last year was based on a 33 percent renewable energy goal for public and private utilities by the year 2020. Last year’s proposal would have limited renewable energy credits purchased outside California to more than 25 to 30 percent of the renewable total.

The governor vetoed the bill, saying it could increase energy costs, but Steinberg said he plans to try to convince the governor to work with legislators on reviving a version this year he estimates could create 20,000 jobs.

Other proposals include:

• — A bill to fast track renewable energy projects eligible for stimulus funds. At least 11 projects are waiting for permits from state energy agencies.

• — A bill to streamline obtaining multiple permits to start businesses by starting “one-stop” permit centers through Cal-EPA. Such agencies existed in the mid-1990s to help speed up business and job creation during a an economic downturn.

• — A bill to grant a 5 percent bid preference to a company that can certify that 90 percent of employees on a government contract will be California residents. In an average year, California spends nearly $35 billion on service and consulting contracts.

Some of the bills would authorize the spending of federal funds and bond money for projects already on the books:

• — A high-speed rail bill would authorize investing $2.25 billion in recently granted federal funds to develop such a system in California, creating an estimated 50,625 jobs.

• — Two bills would authorize the state to spend $773 million in federal Qualified School Construction bonds to build schools in 43 school districts, creating an estimated 11,400 jobs.

Top 12 tax scams

It’s a new year and a good time to remind your clients about the top tax scams. / more+

Pass-through entities must timely file original tax returns claiming new jobs tax credit in order for owners to claim the credit

A new jobs tax credit of $3,000 is available to small businesses with 20 or less employees for each additional net full-time employee hired and employed in California for tax years beginning on or after January 1, 2009. The total amount of the credit that we can allocate may not exceed $400 million, and claims must be made before a statutorily provided “cut-off” filing date. / more+

Using the Annualization Method in 2009 and 2010

Estimated tax payments have undergone many changes since we started filing season one year ago. / more+

Small Business

Timing is everything

Is your client considering making an S corporation election? Selling or exchanging 50 percent or more of the total interests in an LLC or limited partnership? / more+

Ask the Advocate

Withholding and estimate tax payment changes

This summer the California legislature again revised the estimated tax payment percentages, and also passed some clean-up legislation to clear up confusion on how wage earners with only wage withholding would meet the new estimated tax payment requirements. / more+

Inside FTB

Take a look at the changes happening here at FTB. / more+

Criminal Corner

Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time. / more+

Big Business

California code of civil procedure and foreclosures

Will you clarify how California civil procedures interact with the Internal Revenue Code (IRC)? Specifically how does California Civil Procedure Code (CCP) Sections interact with IRC Section 108, Income from Discharge Indebtedness? / more+

Here’s a nice summary of tax changes from the FTB:

Sacramento – The Franchise Tax Board (FTB) today updated state taxpayers on several law changes for the upcoming filing season, and outlined a variety of services provided by the tax department.

Law Changes

Temporary increase in personal income tax rates – A new tax law raises California’s personal income tax rates by .25 percent for 2009 and 2010.

Standard deduction – The standard deduction for single or filing separately decreased from $3,692 to $3,637. For joint, surviving spouse, or head of household filers, it changed from $7,384 to $7,274.

Personal exemption credit – The personal exemption amount for single, filing separately, and head of household filers is reduced from $99 to $98. For joint or surviving spouses, it decreased from $198 to $196. The dependent exemption credit decreased from $309 to $98 per dependent.

New estimated tax payment percentages – Effective January 1, 2010, the quarterly estimated payment schedule percentages are changed for both corporate and personal income taxes to 30 percent, 40 percent, zero, and 30 percent for the first through the fourth quarter installments, respectively.

New backup withholding requirements – Effective January 1, 2010, generally payers that are required to withhold and send backup withholding to the IRS are also required to withhold and send seven percent to FTB except for:

·         Payment of interest and dividends.

·         Any release of loan funds made by a financial institution in the normal course of business.

Small business new jobs tax credit – For 2009 new hires, provides a $3,000 tax credit for each additional qualified full-time employee hired by a qualified small business employer. Qualified employers need to act fast as the credit funding is limited to $400 million. The credit must be claimed on a timely-filed original (not amended) 2009 return received before the $400 million limit is reached. This credit is not subject to the 50 percent limitation for business credits in 2009.

Generally speaking, employers qualify for the credit if they employed 20 or fewer employees on the last day of the preceding taxable year (for calendar taxpayers this would be December 31, 2008). And, they have a net increase in qualified full-time employees in 2009 compared to the number of full-time employees employed in the preceding taxable year.

Military spouses residency relief –Effective January 1, 2009, federal law provides that civilian spouses of military personnel who are in California only because of their spouses’ military orders, do not become California residents. They are also exempt from state income tax on their “service income” earnings such as wages, commissions, or other personal service income earned in California. To qualify, civilian spouses must have the same “domicile” as their military spouses. One’s “domicile” is generally the place they consider to be their true home and where they intend to return to make their permanent home.

540NR booklets –Booklets for FTB Form 540NR, California Nonresident or Part-Year Resident Income Tax Return, will no longer be mailed directly to taxpayers. The 540NR Booklet and any other related tax forms and instructions are available online at ftb.ca.gov.

Net operating losses suspended – For 2009, net operating losses from prior years cannot be deducted by taxpayers whose net business income is $500,000 or more. Instead, they will need to carry them forward. The time limit to carry forward net operating losses increases from 10 to 20 years. New with 2011 net operating losses, taxpayers can carry back those losses for two years. Taxpayers with net business income of less than $500,000 or with disaster loss carryovers are not affected by the net operating loss suspension rules.

Business tax credit limitations – For 2009, tax credits are limited to 50 percent of the net tax for taxpayers with net business income of $500,000 or more. Be sure to review our tax forms instructions for more details.

Taxpayer Assistance

Self Services

FTB encourages taxpayers and practitioners to explore its many self-service applications. In addition to the interactive voice response options available through FTB’s call center phone lines, there are also several online web-based applications that provide useful information and services during the filing season. Some of these applications are discussed below.

Voluntary Income Tax Assistance – Starting February 1, more than 1,000 centers statewide open through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These sites offer free help with tax form preparation.Some offer services in Spanish, Chinese, Vietnamese, and Korean. For information on locations throughout California, visit ftb.ca.gov and click on the free filing assistance link.

Phone service –FTB provides 24-hour toll-free automated phone service at 800.338.0505. To speak with a customer service representative, FTB staffs its general toll-free phone line,      800.852.5711, from 8 a.m. to 5 p.m., weekdays excluding state holidays.

Field Offices – FTB has six regional field offices that provide walk-in service from 8 a.m. to         4 p.m., weekdays in Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and Santa Ana. For directions, visit ftb.ca.gov and click on theContact Us tab.

Customer Service Availability – Due to limited resources, reaching a customer service representative in the call center or in an FTB field office may be more difficult this upcoming filing season. If you need to speak to a representative, the best times to call are Tuesday through Friday and either before or after lunch. FTB suggests you contact them early in the tax filing season to avoid the crowd of last-minute tax filers.

ReadyReturn –Sometaxpayers qualify for FTB’s online ReadyReturn program that completes the tax return for the taxpayer. It is based on information already collected from employers such as W-2s. More than 2 million taxpayers will qualify who last year:

·         Earned wages from a single employer.

·         Filed either as single or head of household.

·         Took the standard deduction.

·         Claimed no more than five dependents.

Taxpayers who are renters and who can be claimed as a dependent are also eligible.

CalFile – More than 6.5 million taxpayers are qualified to use CalFile, FTB’s no-cost, direct-to- FTB, online filing program. Taxpayers type in their tax return information on FTB’s website and transmit their return directly to FTB. CalFileaccepts taxpayers with income of up to $321,483, itemized deductions, and some tax credits.

My FTB Account – This online service allows taxpayers to get information such as estimated tax payments, any balances due, state W-2 information, or FTB issued 1099 forms. Use this information to avoid claiming the wrong amount of estimated tax payments, which is the top error made on returns.

Answers to Frequently Asked Questions – Find answers to questions about various tax topics such as return filing requirements, tax credits and the requirements to be able to use the Head of Household filing status online atftb.ca.gov.

Pay Taxes Online – FTB’s Web Pay allows taxpayers to authorize a payment from their bank account to pay their return balance due or extension payment. Payment must be made on or before April 15 to avoid penalties and interest. Taxpayers can also make estimated tax or any bill payments online, and sign up for email reminders of upcoming estimate payment due dates. Taxpayers can schedule estimated tax payments up to one year in advance. For a fee, taxpayers can pay their taxes with their American Express, Discover/NOVUS, MasterCard, and Visa cards. FTB also accepts payments made via Western Union.

Can’t Pay Your Taxes Timely? –ftb.ca.gov and select payment options andinstallment agreement request. Monthly installment payment plans are available to people who cannot pay what they owe when it is due. Generally taxpayers who owe less than $25,000 and can repay the tax within five years qualify for a payment plan. Sign up online at

Tax Tips

Federal Earned Income Tax Credit – This is a federal incentive for low-income individuals and families. Taxpayers earning less than $48,279 can qualify for a “refundable” credit that can total up to $5,657. “Refundable” means that you do not have to have a tax liability to get a refund check from the government. If you think you might qualify, visit the IRS website at irs.gov and search for EITC Assistant.California has no comparable state credit.

Recordkeeping – Keep a copy of your state tax returns and all supporting records. FTB may request information from you regarding your tax return at any time within the California statute of limitations period, which is generally four years from the return’s due date.

California recognizes out-of-state same-sex marriages

On October 11, 2009, the Governor signed Senate Bill 54, which provides that a marriage between two persons who have entered into a same-sex marriage outside the State of California prior to November 5, 2008, that was valid by the laws of the jurisdiction in which the marriage was contracted, is valid in California. / more+

Military Spouses Residency Relief Act

The Military Spouses Residency Relief Act (MSRRA) was signed into law by the President on November 11, 2009. For taxable years beginning on or after January 1, 2009, a service member’s spouse is considered a nonresident for tax purposes if the servicemember and spouse have the same legal residence or domicile outside of California and the spouse is in California solely to be with the service member who is serving in compliance with military orders. / more+

Mandatory e-pay penalty update: Not assessed in 2010

When you are required to make electronic payments but pay by other means, we can assess a penalty equal to one percent of the amount paid, unless your failure to pay electronically was for reasonable cause and not willful neglect. / more+

Luxury Auto Pilot Program

Each year, we receive and process millions of income information records. The nonfiler program uses federal tax return information, information from other California state agencies, third-party data, and income estimates from self-employed activities to determine if a taxpayer has a filing requirement. / more+

EITC Awareness Day is January 29, 2010

The IRS in partnership with local organizations in your area will kick off of the Earned Income Tax Credit (EITC) Awareness Day event on January 29 to promote the federal tax credit. / more+

Consultants wanted: California seeks experts knowledgeable in abusive tax shelter transactions

Abusive Tax Avoidance Transactions (ATAT) cost California billions of dollars each year. In 2004, we collected a record $1.4 billion from taxpayers participating in tax shelters during our Voluntary Compliance Initiative. / more+

Get ready for the filing season with e-Services

During these difficult times, it is increasingly important to work both smart and efficiently. / more+

Head of Household guidelines

Our filing season is just around the corner. Some of your clients may inquire about claiming our head of household filing status. This filing status provides a lower tax liability and a higher standard deduction than the single filing status. / more+

California’s Enterprise Zones Wage Credit

In our June 2009 issue of Tax News we asked the question, “Are you familiar with California’s Enterprise Zones?”

We now ask, “Are you aware some taxpayers who work in an Enterprise Zone may be entitled to a credit for the wages they earned?”  / more+

Small business

Misleading letter schemes target corporations and LLCs

Your business clients may receive a misleading letter to file board minutes and/or a statement of information for a fee. Because the letters look and sound official, your clients may be quick to send payment. But wait! Read the fine print, “…products or services being offered are not approved or endorsed by any government agency.” / more+

Ask the advocate

Taxpayers’ Bill of Rights Hearing

The Annual Taxpayers’ Bill of Rights Hearing was held December 3, 2009, at FTB headquarters in the Gerald H. Goldberg Auditorium. We received four proposals in advance and representatives from two organizations made presentations. We are in the process of preparing responses to the proposals we received. / more+

Inside FTB

Take a look at the changes happening here at FTB. / more+

Criminal corner

Our monthly summary of bringing tax criminals to justice and closing the tax gap one case at a time. / more+

Here is a statement from the Governor’s office about his job creation goals in 2010:

State Of The State 2010:

The Governor’s Number One Priority Is Creating Jobs And Getting California’s Economy Back On Track

“First, you will receive a $500 million jobs package that we estimate could train up to 140,000 workers and help create 100,000 jobs.” (Gov. Arnold Schwarzenegger, State of the State Speech, 1/6/10)

Governor Schwarzenegger’s  proposals to foster a more business-friendly economy and create new jobs will:

1. Create 100,000 New Jobs And Train An Additional 140,000 Californians With A New Job Creation Initiative
2. Streamline Regulations To Get Shovels In The Ground Creating Jobs And Spurring Economic Activity
3. Extend The Home Buyer Tax Credit To Encourage Homeownership
4. Eliminate Sales Taxes On Green Tech Manufacturing Equipment To Increase Investment In California’s Fastest Growing Economy
5. Eliminate Frivolous Lawsuits That Punish California’s Small Businesses

The Governor will introduce a package of five bills for legislative approval, called the California Jobs Initiative, which will create or retain at least 100,000 jobs. The Employment Training Panel (ETP) will partner with Community Colleges and other workforce development organizations to deliver training focused on green jobs and other key industries prioritized by ETP. These include manufacturing, goods movement, biotechnology, information technology services, multi-media, healthcare and construction.

• The Governor’s initiative provides up to $200 million to employers to pay for training new employees or retraining an existing employee for a new job. Employers will be reimbursed for training expenditures through the ETP after the person has been gainfully employed for three months.  The average reimbursement for each employee is approximately $1400.
• An additional $300 million will be available to employers for every individual they train who was previously unemployed. Employers will receive $3,000 for each unemployed worker who completes ETP training and stays on the job for nine months.

The combined funding for training and new hire grants is equivalent to the State paying half the payroll tax for each new employee for a year. The California Jobs Initiative will result in up 100,000 new or retained jobs created and to provide training to 140,000 individuals to enable.

• It will be funded by a loan from the Unemployment Compensation Disability Fund, which currently has a surplus sufficient to fund this program after covering claims and will not include general fund allocations. Employers will be reimbursed after the ETP has confirmed nine months of continuous employment.

“Second, you will receive a measure to streamline the permitting of construction projects that already have a completed environmental report.” (Gov. Arnold Schwarzenegger, State of the State Speech, 1/6/10)

The Governor’s proposal would grant the Business, Housing, and Transportation Agency the right to select a specified number of projects that have completed environmental impact reviews (EIRs) and deem those projects as approved and not subject to legal challenge – expediting the ground breaking of these projects and creating jobs. Jumpstarting construction projects create jobs and boost local economies. Statewide, projects are ready to break ground but become delayed due to unnecessary litigation surrounding EIRs.

Too often, projects that have completed an EIR are delayed because of frivolous lawsuits challenging the validity of the EIR. The new NFL stadium in Los Angeles County is an example of such a project. Despite years of environmental review – and despite a design that makes the stadium the “greenest” in the country – the project was held up by needless lawsuits brought by a tiny group of individuals. Legislative intervention was necessary to get the project approved and put 18,000 Californians to work.

This proposal will not exempt projects from the California Environmental Quality Act (CEQA) and will expedite shovel-ready projects that have followed environmental law, not provide a way for projects to circumvent California’s strong environmental protection law.

“Third, to stimulate other construction jobs, you will receive a proposal for homebuyer tax credits of up to $10,000 for the purchase of new or existing homes.” (Gov. Arnold Schwarzenegger, State of the State Speech, 1/6/10)

To continue encouraging homeownership among Californians, the Governor will propose to extend and expand the $10,000 homebuyer tax credit to include the purchase of existing homes in addition to new residences for first-time homebuyers. The buyer must not be a dependant and must be purchasing a home that does not belong to a relative. Under the Governor’s proposal, the Franchise Tax Board will extend the credit to buyers who purchase homes until $200 million dollars in tax credits have been granted to eligible.

“And fourth, since we want California to be the dynamo of green technology, I ask you to pass our proposal exempting the purchase of green tech manufacturing equipment from the sales tax.” (Gov. Arnold Schwarzenegger, State of the State Speech, 1/6/10)

California leads the world in environmental technology. Our state is home to 10,209 clean tech companies and home base to the innovative minds and year-round sunshine powers the clean technology industry. To maintain our competitive edge the Governor will continue to support providing a sales tax exemption on the purchase of manufacturing equipment for advanced transportation, renewable energy and other clean technology projects.

Assembly Bill 1111, co-sponsored by the Governor and the Treasurer and authored by Assemblymember Sam Blakeslee, will codify the existing authority of the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to exempt zero emission vehicle manufacturers from sales tax on the purchase of new manufacturing equipment.

This targeted sales tax exemption for the purchase of clean-tech manufacturing equipment would not cost the state precious tax dollars; it would increase revenue by expanding the number of clean technology manufacturing companies that locate in California.

Reforming The Legal Climate For California’s Businesses

To foster an atmosphere where businesses can thrive, the Governor will propose a series of changes to regulations governing class action law suits, products liability suits and seek to cap punitive damage awards. Unfair and frivolous suits impact where companies locate or expand. California’s current litigation laws lead to large settlements with little value to consumers but become worth millions to lawyers at the expense of California businesses. Current statute also impedes growth by holding businesspersons liable for defective products – even if the seller had no knowledge or control over the defect – and allowing for punitive damage awards that are wildly unpredictable among similar cases.

The Governor will propose a set of statutory changes that will set forth clear guidelines for class action lawsuits improve California’s litigation climate by allowing defendants to appeal class action certifications and by requiring the plaintiff rather than the defendant to pay for notification to other potential class members.  In addition, these reforms will provide for limitations on the scope of damages assessed against business persons for defective products and eliminate unreasonable and excessive noneconomic and punitive damages awards.