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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2025-02-21</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Castillo</ns0:AuthorText>
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<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Castillo</ns0:Name>
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<ns0:Title> An act to amend Sections 17215.1, 17551, 18631, 18663, and 19183 of, to add Section 17132.6 to, and to add and repeal Section 17131.18.5 of, the Revenue and Taxation Code, and to amend, repeal, and add Sections 940, 13009, and 13009.5 of, and to repeal and add Sections 927, 987.7, 13027, and 13055 of, the Unemployment Insurance Code, relating to taxation.</ns0:Title>
<ns0:RelatingClause>taxation</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Personal income taxes: unemployment insurance: tips.</ns0:Subject>
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<html:p>The Personal Income Tax Law, in modified conformity with federal law, provides various exclusions from gross income in computing tax liability. Existing law requires employers to make specified payments and withholdings from wages paid for employment to, and to file reports of wages and make contributions for unemployment insurance and the employment training tax with, the Employment Development Department. The department is charged with administering the state’s payroll taxes.</html:p>
<html:p>This bill, for taxable years beginning on or after January 1, 2026, and before January 1, 2031, would exclude tips, as defined, from gross income for the purposes of the Personal Income Tax Law. The bill, on and after January 1, 2026, and until January 1, 2031, would also exclude tips from the definition of wages paid for employment for purposes of
income tax withholding and for purposes of unemployment insurance and the employment training tax. This bill would also make related changes to other provisions.</html:p>
<html:p>Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.</html:p>
<html:p>This bill would include additional information required for any bill authorizing a new tax expenditure.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 17131.18.5 is added to the
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, to read:
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<ns0:Num>17131.18.5.</ns0:Num>
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(a)
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For taxable years beginning on or after January 1, 2026, gross income does not include tips.
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(b)
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For purposes of this section, “tips” includes any gratuity provided by a customer or client of the employer’s business.
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(c)
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(1)
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For purposes of complying with Section 41, the Legislature finds and declares as follows:
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(A)
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The goal of the exclusion provided by this section is to assist individuals with retaining more of their earnings.
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(B)
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The performance indicators for the Legislature to use in determining whether the exclusion
achieves its goal shall be the number of returns claiming the exemption.
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(2)
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(A)
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The Franchise Tax Board, no later than December 1, 2036, shall provide a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing, to the extent data is available, the number of returns claiming the exemption.
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(B)
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The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
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(C)
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The requirement for submitting a report imposed under subparagraph (A) shall become inoperative on December 1, 2040, pursuant to Section 10231.5 of the Government Code.
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(d)
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This section shall remain in effect only until January 1, 2031, and as of that date is repealed, unless a later enacted statute that is
enacted before January 1, 2031, deletes or extends that date.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 17132.6 is added to the
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, to read:
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<ns0:Num>17132.6.</ns0:Num>
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<html:p>For taxable years beginning on or after January 1, 2026, and before January 1, 2031, Section 102(a) of the Internal Revenue Code is modified to treat tips as property transferred by gift.</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 17215.1 of the
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is amended to read:
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<ns0:Num>17215.1.</ns0:Num>
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(a)
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Section 220(f)(5) of the Internal Revenue Code, relating to rollover contributions, shall not apply.
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<html:p>
(b)
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For taxable years beginning on or after January 1, 2026, and before January 1, 2031, Section 220(b)(4)(A) of the Internal Revenue Code is modified to strike out “tips.”
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 17551 of the
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is amended to read:
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<ns0:Num>17551.</ns0:Num>
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<html:p>
(a)
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Subchapter E of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to accounting periods and methods of accounting, shall apply, except as otherwise provided.
</html:p>
<html:p>
(b)
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Section 444(c)(1) of the Internal Revenue Code, relating to effect of election, shall not apply.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding the specified date contained in paragraph (1) of subdivision (a) of Section 17024.5, Section 457 of the Internal Revenue Code, relating to deferred compensation plans of state and local governments and tax-exempt organizations, shall apply, except as otherwise provided, without regard to taxable year to the same extent as applicable for federal income tax purposes.
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(2)
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The maximum deferred compensation for the taxable year that may be excluded from gross income under Section 457 of the Internal Revenue Code, as applicable for state purposes, shall not exceed the amount of deferred compensation that may be excluded from gross income under Section 457 of the Internal Revenue Code, as in effect on January 1, 2010, including additional elective deferrals under Section 414(v) of the Internal Revenue Code, as in effect on January 1, 2010.
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<html:p>
(d)
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(1)
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For taxable years beginning on or after January 1, 2002, the basis of any person in the plan shall be increased by the amount of compensation not allowed to be excluded under subdivision (a).
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<html:p>
(2)
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Any basis described in paragraph (1) shall be recovered in the manner specified in Section 17085.
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<html:p>
(e)
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Notwithstanding the limitations provided in subdivision (a), any income attributable to compensation deferred in a plan in taxable years beginning on or after January 1, 2002, in conformance with Section 457 of the Internal Revenue Code, as applicable for federal and state purposes, shall not be includable in the gross income of the individual for whose benefit the plan was established until distributed pursuant to the provisions of the plan or by operation of law.
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<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Section 451(i) of the Internal Revenue Code, relating to special rule for sales or dispositions to implement Federal Energy Regulatory Commission or state electric restructuring policy, shall not apply.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2031, Section 451(e) of the Internal Revenue Code, relating to special rule for employee tips, shall not apply.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Section 457A of the Internal Revenue Code, relating to nonqualified deferred compensation from certain tax indifferent parties, shall not apply.
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<ns0:Num>SEC. 5.</ns0:Num>
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Section 18631 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:Num>18631.</ns0:Num>
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<html:p>
(a)
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This article does not apply to any payment of interest obligations not taxable under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).
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<html:p>
(b)
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Except as otherwise provided, every person required to file an information return with the Secretary of the Treasury under any of the federal sections listed in subdivision (c) may be required to file a copy of the federal information return with the Franchise Tax Board at the time and in the manner as it may, by forms and instructions, require.
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<html:p>
(c)
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Subdivision (b) shall apply to each of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Section 6034A of the Internal Revenue Code, relating to
information to beneficiaries of estates and trusts.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Section 6039 of the Internal Revenue Code, relating to returns required in connection with certain options.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section 6039C of the Internal Revenue Code, relating to returns with respect to foreign persons holding direct investments in United States real property interests, if that person holds a direct investment in a California real property as defined in Section 18662.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Section 6041 of the Internal Revenue Code, relating to information at source.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Section 6041A of the Internal Revenue Code, relating to returns regarding payments of remuneration for services and direct sales, except that no return or statement shall be required with respect to direct sales pursuant to Section 6041A(b) of
the Internal Revenue Code.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Section 6042 of the Internal Revenue Code, relating to returns regarding payments of dividends and corporate earnings and profits.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Section 6045 of the Internal Revenue Code, relating to returns of brokers.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Section 6049 of the Internal Revenue Code, relating to returns regarding payments of interest.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
Section 6050H of the Internal Revenue Code, relating to returns relating to mortgage interest received in trade or business from individuals.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Section 6050I of the Internal Revenue Code, relating to returns relating to cash received in trade or business, etc., except that Section 6050I(g) of the Internal Revenue Code,
relating to cash received by criminal court, shall not apply.
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<html:p>
(B)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
The Attorney General shall, upon court order following a showing ex parte to a magistrate of an articulable suspicion that an individual or entity has committed a felony offense to which a federal information return is related, be provided a copy of a federal information return filed with the Franchise Tax Board under this paragraph. The Attorney General may make a return or information therefrom available to a district attorney subject to regulations promulgated by the Attorney General. The regulations shall require the district attorney seeking the return or information to specify in writing the specific reasons for believing that a felony offense has been committed to which the return or information is related.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Any information or return obtained by the Attorney General or a district
attorney pursuant to this subparagraph shall be confidential and used only for investigative or prosecutorial purposes.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
Section 6050J of the Internal Revenue Code, relating to returns relating to foreclosures and abandonments of security.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Section 6050K of the Internal Revenue Code, relating to returns relating to exchanges of certain partnership interests.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In addition to the general requirement under subparagraph (A), a transferor of a partnership interest shall be required to notify the partnership of that exchange in accordance with Section 6050K(c) of the Internal Revenue Code.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
Section 6050L of the Internal Revenue Code, relating to returns relating to certain donated property.
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
Section 6050N of the Internal Revenue Code, relating to returns regarding payments of royalties.
</html:p>
<html:p>
(15)
<html:span class="EnSpace"/>
Section 6050P of the Internal Revenue Code, relating to returns relating to the cancellation of indebtedness by certain entities.
</html:p>
<html:p>
(16)
<html:span class="EnSpace"/>
Section 6050Q of the Internal Revenue Code, relating to certain long-term care benefits.
</html:p>
<html:p>
(17)
<html:span class="EnSpace"/>
Section 6050R of the Internal Revenue Code, relating to returns relating to certain purchases of fish.
</html:p>
<html:p>
(18)
<html:span class="EnSpace"/>
Section 6050S of the Internal Revenue Code, relating to returns relating to higher education tuition and related expenses.
</html:p>
<html:p>
(19)
<html:span class="EnSpace"/>
Section 6052 of the Internal Revenue Code, relating to returns
regarding payment of wages in the form of group-term life insurance.
</html:p>
<html:p>
(20)
<html:span class="EnSpace"/>
Section 6034(a) of the Internal Revenue Code, relating to returns of split-interest trusts.
</html:p>
<html:p>
(21)
<html:span class="EnSpace"/>
Section 6039I of the Internal Revenue Code, relating to returns and records with respect to employer-owned life insurance contracts.
</html:p>
<html:p>
(22)
<html:span class="EnSpace"/>
Section 6039J of the Internal Revenue Code, relating to information reporting with respect to commodity credit corporation transactions.
</html:p>
<html:p>
(23)
<html:span class="EnSpace"/>
Section 6050V of the Internal Revenue Code, relating to returns relating to applicable insurance contracts in which certain exempt organizations hold interests.
</html:p>
<html:p>
(24)
<html:span class="EnSpace"/>
Section 6050W of the Internal Revenue Code, relating to returns relating to
payments made in settlement of payment card and third party network transactions.
</html:p>
<html:p>
(25)
<html:span class="EnSpace"/>
Any information return that is required to be filed with the Secretary of the Treasury pursuant to a provision of Part III of Subchapter A of Chapter 61 of Subtitle F (commencing with Section 6031) of the Internal Revenue Code that is added to the Internal Revenue Code by a public law enacted on or after January 1, 2009.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Every person required to make a return under subdivision (b) shall also furnish a statement to each person whose name is required to be set forth in the return, as required to do so by the Internal Revenue Code.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2031, Section 6041(e) of the
Internal Revenue Code shall not apply.
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<ns0:Num>SEC. 6.</ns0:Num>
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Section 18663 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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(a)
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(1)
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The Franchise Tax Board shall annually (or more often if necessary) prepare and make available to the Employment Development Department, wage withholding tables that shall be used by every employer making payment of any wages to a resident employee for services performed either within or without this state; or to a nonresident employee for services performed in this state, to deduct and withhold from those wages for each payroll period, a tax computed in a manner as to produce, so far as practicable, with due regard to the credits for personal exemptions allowable under Section 17054, a sum that is substantially equivalent to the amount of tax reasonably estimated to be due under Part 10 (commencing with Section 17001) resulting from the inclusion in the gross income of the employee the wages that were subject to withholding.
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<html:p>
(2)
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For wages paid on or after November 1, 2009, wage withholding tables prepared by the Franchise Tax Board pursuant to this subdivision shall produce, so far as practicable, with due regard to the credits for personal exemptions allowable under Section 17054, a sum that will significantly prevent underwithholding by using an amount equal to 10 percent more than the sum described in paragraph (1).
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For supplemental wages paid on or after January 1, 1992, the rate of withholding that may be applied to supplemental wages in lieu of the wage withholding tables specified in subdivision (a) shall be 6 percent.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For supplemental wages paid on or after November 1, 2009, the rate of withholding shall be 6.6 percent.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of this subdivision:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
“Supplemental wages” includes, but is not limited to, bonus payments, overtime payments, commissions, sales awards, back pay
including retroactive wage increases, and reimbursements for nondeductible moving expenses that are paid for the same or a different period, or without regard to a particular period.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2031, “supplemental wages” does not include tips.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
For purposes of this subparagraph, “tips” means any gratuity provided by a customer or client of the employer’s business.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For stock options and bonus payments that constitute wages paid on or after January 1, 2002, the rate of withholding that may be applied to those stock options and bonus payments in lieu of the wage withholding tables
specified in subdivision (a) shall, notwithstanding subdivision (b), be 9.3 percent.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For stock options and bonus payments that constitute wages paid on or after November 1, 2009, the rate of withholding shall be 10.23 percent.
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<ns0:BillSection id="id_67B0B020-07F0-47B3-9AB3-65F5292FBB39">
<ns0:Num>SEC. 7.</ns0:Num>
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Section 19183 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:Num>19183.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
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(1)
<html:span class="EnSpace"/>
A penalty shall be imposed for failure to file correct information returns, as required by this part, and that penalty shall be determined in accordance with Section 6721 of the Internal Revenue Code, relating to failure to file correct information returns.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Section 6721(e) of the Internal Revenue Code, relating to penalty in case of intentional disregard, is modified to the extent that the reference to Section 6041A(b) of the Internal Revenue Code, relating to direct sales of five thousand dollars ($5,000) or more, does not apply.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section 6721(f)(1) of the Internal Revenue Code is modified to substitute the phrase “For each fifth calendar year beginning after 2014”
for the phrase “In the case of any failure relating to a return required to be filed in a calendar year beginning after 2014.”
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A penalty shall be imposed for failure to furnish correct payee statements as required by this part, and that penalty shall be determined in accordance with Section 6722 of the Internal Revenue Code, relating to failure to furnish correct payee statements.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Section 6722(c) of the Internal Revenue Code, relating to exception for de minimis failures, is modified to the extent that the references to Sections 6041A(b) and 6041A(e) of the Internal Revenue Code, relating to direct sales of five thousand dollars ($5,000) or more, and statements to be furnished to persons with respect to whom information is required to be furnished, does not apply.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section
6722(f)(1) of the Internal Revenue Code is modified to substitute the phrase “For each fifth calendar year beginning after 2014” for the phrase “In the case of any failure relating to a return required to be filed in a calendar year beginning after 2014.”
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A penalty shall be imposed for failure to comply with other information reporting requirements under this part, and that penalty shall be determined in accordance with Section 6723 of the Internal Revenue Code, relating to failure to comply with other information reporting requirements.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The provisions of Section 6724 of the Internal Revenue Code, relating to waiver; definitions, and special rules, apply, except as otherwise provided.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Section 6724(d)(1) of the Internal Revenue Code, relating to information return, is modified as
follows:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The following references are substituted:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Subdivision (a) of Section 18640, in lieu of Section 6044(a)(1) of the Internal Revenue Code.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Subdivision (a) of Section 18644, in lieu of Section 6050A(a) of the Internal Revenue Code, relating to reports.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
References to Sections 4101(d), 6041(b), 6041A(b), 6045(d), 6051(d), and 6053(c)(1) of the Internal Revenue Code do not apply.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The term “information return” also includes both of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The return required by paragraph (1) of subdivision (g) of Section 18662.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The return
required by subdivision (a) of Section 18631.7.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2031, Section 6724(d)(1)(B)(xvi) of the Internal Revenue Code shall not apply.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section 6724(d)(2) of the Internal Revenue Code, relating to payee statement, is modified as follows:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The following references are substituted:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Subdivision (b) of Section 18640, in lieu of Section 6044(e) of the Internal Revenue Code, relating to statements to be furnished to persons with respect to whom information is required.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Subdivision (b) of Section 18644, in lieu of Section 6050A(b) of the Internal Revenue Code, relating to written statement.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
References to Sections 6031(b), 6037(b), 6041A(e), 6045(d), 6051(d), 6053(b), and 6053(c) of the Internal Revenue Code shall not apply.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The term “payee statement” shall also include the statement required by paragraph (2) of subdivision (g) of Section 18662.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2026, and before January 1, 2031, Section 6724(d)(2)(X) of the Internal Revenue Code shall not apply.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
In the case of each failure to provide a written
explanation as required by Section 402(f) of the Internal Revenue Code, relating to written explanation to recipients of distributions eligible for rollover treatment, at the time prescribed therefor, unless it is shown that the failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Franchise Tax Board and in the same manner as tax, by the person failing to provide that written explanation, an amount equal to ten dollars ($10) for each failure, but the total amount imposed on that person for all those failures during any calendar year shall not exceed five thousand dollars ($5,000).
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Any penalty imposed by this part shall be paid on notice and demand by the Franchise Tax Board and in the same manner as tax.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The amendments made to this section by Chapter 359 of the Statutes of 2015 apply to information returns required
to be filed on or after January 1, 2016.
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<ns0:BillSection id="id_82D740A4-A916-40CA-AB69-59221EEFCB42">
<ns0:Num>SEC. 8.</ns0:Num>
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Section 927 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_D5B65887-ED0F-4633-AE85-D032372E38A1">
<ns0:Num>SEC. 9.</ns0:Num>
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Section 927 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_027DCB5C-532D-4D87-B372-08076E1D6B31">
<ns0:Num>927.</ns0:Num>
<ns0:LawSectionVersion id="id_E045E5C0-D6D8-48D9-AF12-F61F31F400C1">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
“Wages” also means all tips received while performing services that constitute employment and that are included in a written statement furnished to the employer pursuant to Section 6053(a) of the Internal Revenue Code.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The changes in law made in this section by Chapter 1461 of the Statutes of 1985 shall apply with respect to wages earned on and after January 1, 1986, in conformity with the provisions of federal law.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
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</ns0:LawSection>
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<ns0:BillSection id="id_3EEBC1B7-9291-486F-B66A-F9A5AD28B062">
<ns0:Num>SEC. 10.</ns0:Num>
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Section 940 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_D3257289-3B24-4DD6-BD06-6F0FB7672143">
<ns0:Num>940.</ns0:Num>
<ns0:LawSectionVersion id="id_B313E4D5-7191-4B11-A1A1-146FF447A1C6">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For the purposes of this section, of Sections 977 and 977.5 to the extent specified by those sections, and of Sections 1026, 1088, 1280, 1281, 1282, 2652, 2654, 2655, and 2657, “wages” means taxable wages as well as wages that would be taxable except for the limitations on taxable wages provided under Sections 930 and 985.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
On and after January 1, 2026, “wages” shall not include tips.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of this subdivision, “tips” means any gratuity provided by a customer or client of the employer’s business.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This section shall remain in effect only until January 1, 2031, and as of that date is repealed.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_FCD442C5-A604-4CD4-A040-9005679D3F63">
<ns0:Num>SEC. 11.</ns0:Num>
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Section 940 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_710AF02F-A1F5-458A-B788-F740840E4A12">
<ns0:Num>940.</ns0:Num>
<ns0:LawSectionVersion id="id_B4E9CFCF-4133-4216-B3EB-FD26AE1646DD">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For the purposes of this section, of Sections 977 and 977.5 to the extent specified by those sections, and of Sections 1026, 1088, 1280, 1281, 1282, 2652, 2654, 2655, and 2657, “wages” means taxable wages as well as wages that would be taxable except for the limitations on taxable wages provided under Sections 930 and 985.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
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</ns0:LawSectionVersion>
</ns0:LawSection>
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<ns0:BillSection id="id_4B6F71BD-0909-49C9-BBAB-7104AE6DD0B7">
<ns0:Num>SEC. 12.</ns0:Num>
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Section 987.7 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_28796D8F-7145-44ED-B96D-B988AF7F31AB">
<ns0:Num>SEC. 13.</ns0:Num>
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Section 987.7 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
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<ns0:Num>987.7.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
If the worker contributions required in any one month to be made because of the receipt of cash tips and cash gratuities exceed the wages of the worker under the control of the employer, the worker may furnish the employer, on or before the 10th day of the following month, or, if the amounts are estimated, on or before the last day of the month following the calendar quarter, an amount equal to the excess.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
If the worker contributions required by Section 984 with respect to cash tips and cash gratuities exceed the amount of worker contributions that can be collected by the employer from the wages of the worker, the excess shall be paid by the worker, except as provided by Section 1088.6. The worker shall pay the excess to the department
within 30 days from receipt of the written statement furnished by their employer pursuant to Section 1088.6. If the worker fails to pay the excess within the time required by this subdivision, the director may make an assessment for the excess and shall give the worker a written notice of the assessment. Article 8 (commencing with Section 1126) with respect to the assessment of contributions and Chapter 7 (commencing with Section 1701) with respect to the collection of contributions shall apply to the recovery of amounts under this subdivision.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The director may offset amounts assessed pursuant to subdivision (b) against any refund payable to the worker under Section 1176.5 or against any amount of disability benefits the worker may become entitled to under Part 2 (commencing with Section 2601) within any of the following periods:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The current disability benefit period.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
One year from the beginning date of any disability benefit period that begins during the three-year period next succeeding the service of notice of the assessment.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
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<ns0:Num>SEC. 14.</ns0:Num>
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Section 13009 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_D35BF49C-4165-4591-B139-14383BC44BA9">
<ns0:Num>13009.</ns0:Num>
<ns0:LawSectionVersion id="id_22626B1C-3522-435D-9815-9BB917852270">
<ns0:Content>
<html:p>“Wages” means all remuneration, other than fees paid to a public official, for services performed by an employee for their employer, including all remuneration paid to a nonresident employee for services performed in this state, and the cash value of all remuneration paid in any medium other than cash, except as provided by this section. “Wages” includes compensation
that is deductible under Section 162 of the Internal Revenue
Code paid to a member of a limited liability company filing a federal corporate income tax return.</html:p>
<html:p>“Wages” shall not include remuneration paid under any of the following conditions:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
For agricultural labor, as defined in subdivision (g) of Section 3121 of the Internal Revenue Code.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For domestic service in a private home, local college club, or local chapter of a college fraternity or sorority.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
For service not in the course of the employer’s trade or business performed in any calendar quarter by an employee, unless the cash remuneration paid for that service is fifty dollars ($50) or more and the service is performed by an individual who is regularly employed by the employer to perform the service. For purposes of this
subdivision, an individual shall be deemed to be regularly employed by an employer during a calendar quarter only if either of the following conditions is met:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
On each of some 24 days during the quarter, the individual performs for the employer for some portion of the day service not in the course of the employer’s trade or business.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The individual was regularly employed, as determined under paragraph (1), by the employer in the performance of the service during the preceding calendar quarter.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
For services by a citizen or resident of the United States for a foreign government or an international organization.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For services performed by a nonresident individual who is not a citizen or national of the United States as designated by
regulations prescribed by the department.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
For services performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of their ministry or by a member of a religious order in the exercise of duties required by the order.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For services performed by an individual under the age of 18 years in delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For services performed by an individual in, and at the time of, the sale of newspapers or magazines to ultimate consumers, under an arrangement under which the newspapers or magazines are to be sold by the individual at a fixed price, the individual’s compensation being based on the retention of the excess of the price
over the amount at which the newspapers or magazines are charged to the individual whether or not the individual is guaranteed a minimum amount of compensation for the services, or is entitled to be credited with the unsold newspapers or magazines turned back.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
For services not in the course of the employer’s trade or business, to the extent paid in any medium other than cash.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
To, or on behalf of, an employee or their beneficiary under any of the following situations:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
From or to a trust that is exempt from tax under Section 17631 of the Revenue and Taxation Code at the time of payment, unless the payment is made
to an employee of the trust as remuneration for services rendered as an employee and not as a beneficiary of the trust.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Under or to an annuity plan that, at the time of payment, is a plan qualified pursuant to Chapter 5 (commencing with Section 17501) of Part 10 of Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Under or to a bond purchase plan
that, at the time of payment, is a bond purchase plan qualified pursuant to Chapter 5 (commencing with Section 17501) of Part 10 of Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For a payment that qualifies for deduction by an employee pursuant to Section 219 of the Internal Revenue Code if, at the time of payment, it is reasonable to believe that the employee will be entitled to a deduction under that section for payment.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Under a cafeteria plan (within the meaning of Section 125 of the Internal Revenue Code).
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
To a master, officer, or any other seaman who is a member of a
crew on a vessel engaged in foreign, coastwise, intercoastal, interstate, or noncontiguous trade.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Pursuant to any provision of law other than Section 5(c) or 6(1) of the Peace Corps Act (Public Law 87-293), for service performed as a volunteer or volunteer leader within the meaning of that act.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
In the form of group-term life insurance on the life of an employee.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
To or on behalf of an employee, and to the extent that, at the time of the payment of
remuneration it is reasonable to believe that a corresponding deduction is allowable for moving expenses pursuant to Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 of Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
As tips in any medium, including any gratuity provided by a customer or client of the employer’s business.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
For service performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of the boat pursuant to which all of the following apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The individual does not receive any cash remuneration, other than as provided in paragraph (2).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The individual receives a share of the boat’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of the catch.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The amount of the individual’s share depends on the amount of the
boat’s or boats’, as applicable, catch of fish or other forms of aquatic animal life.
</html:p>
<html:p>This subdivision shall apply only where the operating crew of the boat, or each boat, as applicable, is normally made up of fewer than 10 individuals.</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
For any medical care reimbursement made to, or for the benefit of, an employee under a self-insured medical reimbursement plan pursuant to Section 105(h)(6) of the Internal Revenue Code.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
To, or on behalf of, an employee to the extent not includable in gross income pursuant to Section 13006.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
For services to which Section 633 applies.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
This section shall remain in effect only until January 1,
2031, and as of that date is repealed.
</html:p>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_E75A517C-ADB8-4BD0-AFB6-DD109E9DE57E">
<ns0:Num>SEC. 15.</ns0:Num>
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Section 13009 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_0353D6B9-B6BB-4C7E-A610-64568D77532F">
<ns0:Num>13009.</ns0:Num>
<ns0:LawSectionVersion id="id_93B531A4-42AE-456B-B752-ECE479882C1B">
<ns0:Content>
<html:p>“Wages” means all remuneration, other than fees paid to a public official, for services performed by an employee for their employer, including all remuneration paid to a nonresident employee for services performed in this state, and the cash value of all remuneration paid in any medium other than cash, except as provided by this section. “Wages” includes tips received by an employee in the course of employment. The wages shall be deemed to be paid at the time a written statement including tips is furnished to the employer pursuant to Section 13055 or, if no statement including those tips is so furnished, at the time received. “Wages” includes compensation that is deductible under Section 162 of the Internal Revenue Code, paid to a member of a limited liability company filing a federal corporate income tax return.</html:p>
<html:p>“Wages” shall not include remuneration paid under any of the following conditions:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
For agricultural labor, as defined in subdivision (g) of Section 3121 of the Internal Revenue Code.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For domestic service in a private home, local college club, or local chapter of a college fraternity or sorority.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
For service not in the course of the employer’s trade or business performed in any calendar quarter by an employee, unless the cash remuneration paid for that service is fifty dollars ($50) or more and the service is performed by an individual who is regularly employed by the employer to perform the service. For purposes of this subdivision, an individual shall be deemed to be regularly employed by an employer during a calendar quarter only if either of the following
conditions is met:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
On each of some 24 days during the quarter, the individual performs for the employer for some portion of the day service not in the course of the employer’s trade or business.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The individual was regularly employed, as determined under paragraph (1), by the employer in the performance of the service during the preceding calendar quarter.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
For services by a citizen or resident of the United States for a foreign government or an international organization.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For services performed by a nonresident individual who is not a citizen or national of the United States as designated by regulations prescribed by the department.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
For services performed by a duly
ordained, commissioned, or licensed minister of a church in the exercise of their ministry or by a member of a religious order in the exercise of duties required by the order.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For services performed by an individual under the age of 18 years in delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For services performed by an individual in, and at the time of, the sale of newspapers or magazines to ultimate consumers, under an arrangement under which the newspapers or magazines are to be sold by the individual at a fixed price, the individual’s compensation being based on the retention of the excess of the price over the amount at which the newspapers or magazines are charged to the individual whether or not the individual is guaranteed a minimum amount
of compensation for the services, or is entitled to be credited with the unsold newspapers or magazines turned back.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
For services not in the course of the employer’s trade or business, to the extent paid in any medium other than cash.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
To, or on behalf of, an employee or their beneficiary under any of the following situations:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
From or to a trust that is exempt from tax under Section 17631 of the Revenue and Taxation Code at the time of payment, unless the payment is made to an employee of the trust as remuneration for services rendered as an employee and not as a beneficiary of the trust.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Under or to an annuity plan that, at the time of payment, is a plan qualified pursuant to Chapter 5 (commencing with Section 17501) of Part 10 of
Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Under or to a bond purchase plan that, at the time of payment, is a bond purchase plan qualified pursuant to Chapter 5 (commencing with Section 17501) of Part 10 of Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For a payment that qualifies for deduction by an employee pursuant to Section 219 of the Internal Revenue Code if, at the time of payment, it is reasonable to believe that the employee will be entitled to a deduction under that section for payment.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Under a cafeteria plan (within the meaning of Section 125 of the Internal Revenue Code).
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
To a master, officer, or any other seaman who is a member of a crew on a vessel engaged in foreign, coastwise, intercoastal, interstate, or noncontiguous
trade.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Pursuant to any provision of law other than Section 5(c) or 6(1) of the Peace Corps Act (Public Law 87-293), for service performed as a volunteer or volunteer leader within the meaning of that act.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
In the form of group-term life insurance on the life of an employee.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
To or on behalf of an employee, and to the extent that, at the time of the payment of remuneration, it is reasonable to believe that a corresponding deduction is allowable for moving expenses pursuant to Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 of Division 2 of the Revenue and Taxation Code.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
As tips in any medium other than cash.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
As cash tips
to an employee in any calendar month in the course of employment by an employer, unless the amount of the cash tips is twenty dollars ($20) or more.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
For service performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of the boat pursuant to which all of the following apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The individual does not receive any cash remuneration, other than as provided in paragraph (2).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The individual receives a share of the boat’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of the catch.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The amount of the individual’s share depends on the
amount of the boat’s or boats’, as applicable, catch of fish or other forms of aquatic animal life.
</html:p>
<html:p>This subdivision shall apply only where the operating crew of the boat, or each boat, as applicable, is normally made up of fewer than 10 individuals.</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
For any medical care reimbursement made to, or for the benefit of, an employee under a self-insured medical reimbursement plan pursuant to Section 105(h)(6) of the Internal Revenue Code.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
To, or on behalf of, an employee to the extent not includable in gross income pursuant to Section 13006.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
For services to which Section 633 applies.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_8BC9D9E0-9014-44D7-BC3C-5D664ED9ED0B">
<ns0:Num>SEC. 16.</ns0:Num>
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Section 13009.5 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_C1F47BD9-06AB-4802-B2A0-628D2F7D60FB">
<ns0:Num>13009.5.</ns0:Num>
<ns0:LawSectionVersion id="id_A78BFF76-B359-4FC1-A6F2-F954CFFD6211">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For purposes of the report required by subdivision (a) of Section 1088 and the statement required by Section 13050, “wages subject to personal income tax” means all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Remuneration defined as wages by Section 13009.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Remuneration described in subdivisions (a), (b), (f), and (
<html:i>l</html:i>
) of Section 13009, to the extent included in gross income.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Payments made by a third party for sick pay as specified in Section 931.5.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Any employer who receives a report of wages from a third-party payer as provided for in subdivisions (a) and (b) of Section 931.5 shall report those wages to the department as required under paragraph (2) of subdivision
(a) of Section 1088.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Any third-party payer described in Section 931.5 who fails to report wages to an employer as provided for in that section shall report those wages to the department as required under paragraph (2) of subdivision (a) of Section 1088.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A person or entity shall not be required to register with the Employment Development Department solely for the purpose of reporting wages subject to personal income tax pursuant to Section 1088 unless that registration is otherwise required by this code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A person or entity shall not be required to withhold any tax under Section 13020 for wages, as defined by this section, unless that person or entity is required to withhold tax for those wages as defined by Section 13009.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This section shall remain in effect only until January 1, 2031, and as of that date is repealed.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_77EF75D0-BCDE-4AEA-8D3D-31FAEED1DC6F">
<ns0:Num>SEC. 17.</ns0:Num>
<ns0:ActionLine action="IS_ADDED" ns3:type="locator" ns3:href="urn:caml:codes:UIC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'13009.5.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 13009.5 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_7480FA33-A5D0-4B1E-8745-E0C37A08F0DD">
<ns0:Num>13009.5.</ns0:Num>
<ns0:LawSectionVersion id="id_B948D08D-B8F0-4526-935C-5BF84F0D2D91">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For purposes of the report required by subdivision (a) of Section 1088 and the statement required by Section 13050, “wages subject to personal income tax” means all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Remuneration defined as wages by Section 13009, except that in the case of tips received by an employee in the course employment, the amounts shall include only those tips included in statements furnished to the employer, pursuant to Section 13055.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Remuneration described in subdivisions (a), (b), (f), and (
<html:i>l</html:i>
) of Section 13009, to the extent included in gross income.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Payments made by a third party for sick pay as
specified in Section 931.5.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Any employer who receives a report of wages from a third-party payer as provided for in subdivisions (a) and (b) of Section 931.5 shall report those wages to the department as required under paragraph (2) of subdivision (a) of Section 1088.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Any third-party payer described in Section 931.5 who fails to report wages to an employer as provided for in that section shall report those wages to the department as required under paragraph (2) of subdivision (a) of Section 1088.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A person or entity shall not be required to register with the Employment Development Department solely for the purpose of reporting wages subject to personal income tax pursuant to Section 1088 unless that registration is otherwise required by this code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A person or entity shall not be required to withhold any tax under Section 13020 for wages, as defined by this section, unless that person or entity is required to withhold tax for those wages as defined by Section 13009.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_732F8216-C8BC-4ADB-8C64-37BA7D0BBFEF">
<ns0:Num>SEC. 18.</ns0:Num>
<ns0:ActionLine action="IS_REPEALED" ns3:type="locator" ns3:href="urn:caml:codes:UIC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'13027.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 13027 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is repealed.
</ns0:ActionLine>
<ns0:Fragment/>
</ns0:BillSection>
<ns0:BillSection id="id_A6DA78FF-BBCD-4E9D-BF2D-1F8C1A6DBCC5">
<ns0:Num>SEC. 19.</ns0:Num>
<ns0:ActionLine action="IS_ADDED" ns3:type="locator" ns3:href="urn:caml:codes:UIC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'13027.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 13027 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_F20D947E-590D-4A27-9913-9E242408B399">
<ns0:Num>13027.</ns0:Num>
<ns0:LawSectionVersion id="id_62199829-07E2-4001-99EE-1D050A2B50BA">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
In the case of tips that constitute wages, subdivision (a) of Section 13020 shall be applicable only to those tips included in a written statement furnished to the employer pursuant to Section 13055, and only to the extent that the tax can be deducted and withheld by the employer, at or after the time the statement is furnished and before the close of the calendar year in which the statement is furnished, from those wages of the employee, excluding tips, but including funds turned over by the employee to the employer for the purpose of deduction and withholding, that are under the control of the employer. An employer who is furnished by an employee a written statement of tips received in a calendar month pursuant to Section 13055 to which paragraph (2) of subdivision (n) of Section 13009 is applicable may
deduct and withhold the tax with respect to those tips from any wages of the employee, excluding tips, under the employer’s control, even though at the time the statement is furnished the total amount of the tips included in statements furnished to the employer as having been received by the employee in the calendar month in the course of employment by the employer is less than twenty dollars ($20). Such tax shall not at any time be deducted and withheld in any amount that exceeds the aggregate of those wages and funds.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_3D000001-06BC-4ED9-B2D6-96BC6C823483">
<ns0:Num>SEC. 20.</ns0:Num>
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Section 13055 of the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_59FFDF0C-BB8E-4500-9B95-2BF9C443AD4B">
<ns0:Num>SEC. 21.</ns0:Num>
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Section 13055 is added to the
<ns0:DocName>Unemployment Insurance Code</ns0:DocName>
, to read:
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<ns0:LawSection id="id_6AA853FF-7266-47F7-BA3F-036B8AD5B7B7">
<ns0:Num>13055.</ns0:Num>
<ns0:LawSectionVersion id="id_4B744CEA-6612-4BC2-A721-CD7BC75AF894">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Every employee who, in the course of employment by an employer, receives in any calendar month tips that are wages shall report all those tips in one or more written statements furnished to the employee’s employer on or before the 10th day following that month. The statements shall be furnished by the employee in accordance with applicable regulations, at such other times before such 10th day, and in the form and manner prescribed by the department.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
This section shall become operative on January 1, 2031.
</html:p>
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