Tax News

CCH (cch.taxgroup.com) reports:

  As part of his latest budget compromise proposal, California Governor Arnold Schwarzenegger is proposing a three-year temporary one cent sales and use tax rate increase (excluding diesel, gasoline and jet fuel); a two-year suspension of the corporation franchise and income tax net operating loss (NOL) deduction, which would be followed by a phased-in conformity to the federal NOL carryback and carryover periods; and enactment of a modified tax amnesty, a runaway Hollywood production tax credit, and provisions that better align accrual of revenues and accrual of spending.

  If enacted as proposed, the one cent sales tax rate increase would be followed by a permanent 11/4 -cent reduction beginning in the fourth year. Conformity to the federal NOL deduction would be phased-in over three years starting in 2010 and would allow taxpayers to claim a two-year NOL carryback and a 20-year NOL carryover. Currently, California does not allow NOL carrybacks and limits the carryover period to 10 years. The Governor's press release does not provide any further details regarding his tax amnesty proposal, the alignment of revenue and expense accruals, or the runaway Hollywood production tax credit.

  A fact sheet outlining the Governor's proposed budget compromise is available on the Governor's Web site at:
http://gov.ca.gov/index.php?/fact-sheet/10443/.

Fact Sheet , Governor Schwarzenegger's Office, August 20, 2008.