Tax increases on the horizon?

Part of the Democratic budget tax package is included in ABX8 8 (Evans), which has passed the full Senate and is awaiting action by the Assembly. ABX8 8 would:

• Suspend the professional licenses of taxpayers who are delinquent in paying taxes;
• Require financial institutions to match their account holders against the FTB’s collections accounts;
• Expand the definition of “abusive tax avoidance transactions,” increase penalties on amended returns, and prevent judicial review; and
• Expand sales tax nexus to out-of-state retailers (like Amazon) entering into agreements with anyone in California who refers potential customers by a web link or otherwise.

Provisions from the remainder of the Democratic budget tax package, which were not yet in a bill at press time, would:

• Repeal the tax credit sharing statute for 2010;
• Only allow 68% of NOLs to be used for 2010;
• Impose a 4.8% tax on fire insurance payments; and
• Repeal sales tax on gasoline and impose an excise tax instead.

Discussions of independent contractor withholding continue, but it looks like the heavy work on this proposal will take place this summer.

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