Happy Trailers: High Stakes & Trailer Bills in Final Leg. Session.

• Author: Fox, Jason
• Position: Capitol Beat

August and September will be a busy time in Sacramento as the Legislature wraps up its final weeks of the first year of the 2019-20 session. With the budget passed, the focus returns to the many pieces of legislation that are still pending. This includes a number of high, profile items such as AB 5, which overhauls the tests for determining whether someone should be classified as an independent contractor or an employee. While the current version of the bill does have an exemption for certain professionals, like CPAs, it can have a cross-cutting impact on the entire business community.

A number of bills are being pushed for by the business community to clean up and clarify provisions of the California Consumer Privacy Act that is set to take effect Jan. 1, 2020. These important changes can drastically impact how the business community complies with the new privacy act.

SB 468 would create a board to review the efficacy and recommend to changes or repeals of state tax credits.

AB 1270 would extend the state False Claims Act to tax disputes, which could significantly impact how tax disputes are handled by the state.

These are just some of the major policy issues that will come to a head in the final weeks of the Legislature.

Governor Signs Tax Items

With the signing of the state budget, Gov. Newsom also signed a number of budget trailer bills, which included a number of changes to tax provisions.

AB 91 enacted The Loophole Closure and Small Business and Working Families Tax Relief Act of 2019. This bill selectively conformed state tax law to some provisions of the Federal Tax Cuts and Jobs Act as well as expanded the current California Earned Income Tax Credit (EITC). The expanded credit increased the income range for those that qualify for the EITC and the credit amount available for certain taxpayers. To offset the revenue impact of the expanded credit, the bill conformed portions of the state tax law to the federal tax laws. The conformity package, outlined below, is anticipated to increase revenues by approximately $1.6 billion:

* Achieving a Better Life Experience (ABLE) Accounts: Eliminates differences in qualification criteria for ABLE accounts between federal and California tax law to increase contribution limits and allow taxpayers to roll-over Section 529 plans to ABLE accounts.

* Student Loan Debt: Excludes from an individual's gross income the amount of student loan indebtedness discharged after Dec. 31, 201 7, due to death or...