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<ns0:Id>20250SB__034797AMD</ns0:Id>
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<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2025-02-12</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
<ns0:ActionDate>2025-03-26</ns0:ActionDate>
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<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
<ns0:ActionDate>2025-05-07</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>SB</ns0:MeasureType>
<ns0:MeasureNum>347</ns0:MeasureNum>
<ns0:MeasureState>AMD</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Choi</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Choi</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title>An act to amend Sections 17935, 17941, and 17948 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.</ns0:Title>
<ns0:RelatingClause>taxation, to take effect immediately, tax levy</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Annual tax: partnerships and LLCs.</ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law imposes an annual minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or doing business in this state, and an annual tax in an amount equal to the minimum franchise tax on every limited partnership, limited liability partnership, and limited liability company doing business in this state, as specified.</html:p>
<html:p>This bill, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, would reduce the annual tax on every limited partnership, limited liability partnership, and limited liability company to $80.</html:p>
<html:p>Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. </html:p>
<html:p>This bill also would include additional information required for any bill authorizing
a new tax expenditure. </html:p>
<html:p>This bill would take effect immediately as a tax levy.</html:p>
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<ns0:DigestKey>
<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
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<ns0:MeasureIndicators>
<ns0:ImmediateEffect>YES</ns0:ImmediateEffect>
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<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>YES</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
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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 17935 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:Num>17935.</ns0:Num>
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<html:p>
(a)
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Except as provided in subdivision (f), for each taxable year beginning on or after January 1, 1997, every limited partnership doing business in this state (as defined by Section 23101) and required to file a return under Section 18633 shall pay annually to this state a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified in subdivision (d) of Section 23153.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
In addition to any limited partnership that is doing business in this state and therefore is subject to the tax imposed by subdivision (a), for each taxable year beginning on or after January 1, 1997, every limited partnership that has executed, acknowledged, and filed a certificate of limited partnership with the Secretary of State pursuant to Section 15621 or 15902.01 of the Corporations Code, and every foreign limited partnership that has registered with the Secretary of State pursuant to Section 15692 or 15909.01 of the Corporations Code, shall pay annually the tax prescribed in subdivision (a). The tax shall be paid for each taxable year, or part thereof, until a certificate of cancellation is filed on behalf of the limited partnership with the office of the Secretary of State pursuant to Section 15623, 15696, 15902.03, or 15909.07 of the Corporations
Code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If a taxpayer files a return with the Franchise Tax Board that is designated its final return, that board shall notify the taxpayer that the tax imposed by this chapter is due annually until a certificate of cancellation is filed with the Secretary of State pursuant to Section 15623, 15696, 15902.03, or 15909.07 of the Corporations Code.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The tax imposed by this chapter shall be due and payable on the date the return is required to be filed under former Section 18432 or 18633.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
For purposes of this section, “limited partnership” means any partnership formed by two or more persons under the laws of this state or any other jurisdiction and having one or more general partners and one or more limited
partners.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Notwithstanding subdivision (b), any limited partnership that ceased doing business prior to January 1, 1997, filed a final return with the Franchise Tax Board for a taxable year ending before January 1, 1997, and filed a certificate of dissolution with the Secretary of State pursuant to Section 15623 of the Corporations Code prior to January 1, 1997, shall not be subject to the tax imposed by this chapter for any period following the date the certificate of dissolution was filed with the Secretary of State, but only if the limited partnership files a certificate of cancellation with the Secretary of State pursuant to Section 15623 of the Corporations Code. In the case where a notice of proposed deficiency assessment of tax or a notice of tax due (whichever is applicable) is mailed after January 1, 2001, the first sentence of this
subdivision shall not apply unless the certificate of cancellation is filed with the Secretary of State not later than 60 days after the date of the mailing of the notice.
</html:p>
<html:p>
(f)
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For each taxable year beginning on or after January 1, 2025, and before January 1, 2030, every limited partnership doing business in this state and required to file a return under Section 18633 shall, instead of the amount specified in subdivision (a), pay an annual tax to this state in the amount of $80.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 17941 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_8E5D2024-1DEC-4170-A00F-78EC4B5C8306">
<ns0:Num>17941.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
Except as provided in subdivision (g), for each taxable year beginning on or after January 1, 1997, a limited liability company doing business in this state (as defined in Section 23101) shall pay annually to this state a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified in subdivision (d) of Section
23153.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
In addition to any limited liability company that is doing business in this state and is therefore subject to the tax imposed by subdivision (a), for each taxable year beginning on or after January 1, 1997, a limited liability company shall pay annually the tax prescribed in subdivision (a) if articles of organization have been accepted, or a certificate of registration has been issued, by the office of the Secretary of State. The tax shall be paid for each taxable year, or part thereof, until a certificate of cancellation of registration or of articles of organization is filed on behalf of the limited liability company with the office of the Secretary of State.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If a taxpayer files a return with the Franchise Tax Board that is designated as its final
return, the Franchise Tax Board shall notify the taxpayer that the annual tax shall continue to be due annually until a certificate of dissolution is filed with the Secretary of State pursuant to Section 17707.08 of the Corporations Code or a certificate of cancellation is filed with the Secretary of State pursuant to Section 17708.06 of the Corporations Code.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The tax assessed under this section shall be due and payable on or before the 15th day of the fourth month of the taxable year.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
For purposes of this section, “limited liability company” means an organization, other than a limited liability company that is exempt from the tax and fees imposed under this chapter pursuant to Section 23701h or Section 23701x, that is formed by one or more persons under the law of this state,
any other country, or any other state, as a “limited liability company” and that is not taxable as a corporation for California tax purposes.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Notwithstanding anything in this section to the contrary, if the office of the Secretary of State files a certificate of cancellation pursuant to Section 17707.02 of the Corporations Code for any limited liability company, then paragraph (1) of subdivision (f) of Section 23153 shall apply to that limited liability company as if the limited liability company were properly treated as a corporation for that limited purpose only, and paragraph (2) of subdivision (f) of Section 23153 shall not apply. Nothing in this subdivision entitles a limited liability company to receive a reimbursement for any annual taxes or fees already paid.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding any provision of this section to the contrary, a limited liability company that is a small business solely owned by a deployed member of the United States Armed Forces shall not be subject to the tax imposed under this section for any taxable year the owner is deployed and the limited liability company operates at a loss or ceases operation.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Franchise Tax Board may promulgate regulations as necessary or appropriate to carry out the purposes of this subdivision, including a definition for “ceases operation.”
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
For the purposes of this subdivision, all of the following definitions apply:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
“Deployed” means being called to active duty or active service
during a period when a Presidential Executive order specifies that the United States is engaged in combat or homeland defense. “Deployed” does not include either of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Temporary duty for the sole purpose of training or processing.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A permanent change of station.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Operates at a loss” means a limited liability company’s expenses exceed its receipts.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
“Small business” means a limited liability company with total income from all sources derived from, or attributable to, the state of two hundred fifty thousand dollars ($250,000) or less.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
This subdivision shall become inoperative for
taxable years beginning on or after January 1, 2025.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
For each taxable year beginning on or after January 1, 2025, and before January 1, 2030, every limited liability company doing business in this state shall, instead of the amount specified in subdivision (a), pay an annual tax to this state in the amount of eighty dollars ($80).
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 17948 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:Num>17948.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Except as provided in subdivision (e), for each taxable year beginning on or after January 1, 1997, every limited liability partnership doing business in this state (as defined in Section 23101) and required to file a return under Section 18633 shall pay annually to the Franchise Tax Board a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified in
subdivision (d) of Section 23153.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
In addition to any limited liability partnership that is doing business in this state and therefore is subject to the tax imposed by subdivision (a), for each taxable year beginning on or after January 1, 1997, every registered limited liability partnership that has registered with the Secretary of State pursuant to Section 16953 of the Corporations Code and every foreign limited liability partnership that has registered with the Secretary of State pursuant to Section 16959 of the Corporations Code shall pay annually the tax prescribed in subdivision (a). The tax shall be paid for each taxable year, or part thereof, until any of the following occurs:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A notice of cessation is filed with the Secretary of State pursuant to subdivision
(b) of Section 16954 or 16960 of the Corporations Code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A foreign limited liability partnership withdraws its registration pursuant to subdivision (a) of Section 16960 of the Corporations Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The registered limited liability partnership or foreign limited liability partnership has been dissolved and finally wound up.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The tax assessed under this section shall be due and payable on the date the return is required to be filed under Section 18633.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
If a taxpayer files a return with the Franchise Tax Board that is designated as its final return, the Franchise Tax Board shall notify the taxpayer that the annual tax shall continue to be due annually
until a certificate of cancellation is filed with the Secretary of State pursuant to Section 16954 or 16960 of the Corporations Code.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For each taxable year beginning on or after January 1, 2025, and before January 1, 2030, every limited liability partnership doing business in this state and required to file a return under Section 18633 shall, instead of the amount specified in subdivision (a), pay an annual tax to this state in the amount of eighty dollars ($80).
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
With respect to Sections 17935, 17941, and 17948 of the Revenue and Taxation Code, as amended by this act, the
Legislature finds and declares as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The goal of this act is to reduce costs for California partnerships and limited liability companies.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The performance indicator for the Legislature to use in determining whether the act achieves its goal shall be the number of partnerships and limited liability companies that are affected by the act.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
On or before December 1, 2026, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with
Section 9795 of the Government Code, on the performance of partnerships and limited liability companies in the state using the data in paragraph (2).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The disclosure requirements of this subdivision shall be treated as an exception to Section 19542 of the Revenue and Taxation Code.
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<ns0:Num>SEC. 5.</ns0:Num>
<ns0:Content>
<html:p>This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.</html:p>
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