Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
One of three California bills to allow taxpayers to make charitable contributions to get around the new $10,000 federal cap on state and local tax deductions advanced through its first Assembly committee.
S.B. 227 by Sen. Kevin de Leon (D) would allow taxpayers to contribute to county-level education offices, which would issue certifications to taxpayers and notify the California Franchise Tax Board of the donations. The taxpayers would receive an 85 percent state tax credit for their contributions. The county offices would then distribute funds to the intended recipients.
The bill passed the Assembly Revenue and Taxation Committee 6-3 June 25 with little debate and will be considered next in the Assembly Education Committee.
De Leon noted to the committee that he also recently amended S.B. 539 to expand an existing College Access Tax Credit through which taxpayers would contribute to the California Educational Facilities Authority and receive a 75 percent state tax credit rather than the current 50 percent. The bill is awaiting a hearing in the Assembly Revenue and Taxation Committee.
Under a third bill, A.B. 2217 by Assemblywoman Autumn Burke (D), California nonprofit organizations, school districts, community colleges, and colleges and universities that serve students who receive state grants could buy Golden State Credits from the California treasury for 90 cents.
They would sell the credits for $1 to any interested buyers. Those who buy the credits would get a state tax credit equal to 80 percent of their purchase amount, and the purchases would be considered a charitable donation for federal tax purposes.
Burke’s bill is awaiting a hearing in the Senate Governance and Finance Committee.
The three bills together will “offer a menu of options to taxpayers,” De Leon said.
They must pass both houses by Aug. 31 to reach the desk of Gov. Jerry Brown (D).
The bills are among a number of controversial approaches California and other high-tax states controlled by Democrats are trying to get around the SALT deduction limit. New York, New Jersey, and Connecticut have already enacted laws.
It is unclear whether the IRS will allow the state programs. The U.S. Treasury Department and the IRS said in a May 23 notice that the agency will issue proposed regulations on the issue. Notice 2018-54 also informs taxpayers that federal law controls the characterization of the payments for federal income tax purposes regardless of the characterization of the payments under state law.
To contact the reporter on this story: Laura Mahoney in Sacramento, Calif., at email@example.com
To contact the editor responsible for this story: Ryan C. Tuck at firstname.lastname@example.org
More information about the bills is at http://src.bna.com/zTK.
Copyright © 2018 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)