AB 2054

Bill Subjects

Abstract

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 require the California Association of Mutual Water Companies Joint Powers Risk and Insurance Management Authority, commencing July 1, 2027, to conduct outreach to eligible mutual ditch or irrigation companies regarding the potential repeal of the exemption. 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 a certification of compliance to the Franchise Tax Board, under penalty of perjury, with the company's initial application for tax-exempt status and each annual exempt organization tax filing. By expanding the crime of perjury, this bill would impose a state-mandated local program. 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. Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. 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. This bill would provide that no reimbursement is required by this act for a specified reason.