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On September 29, 2020, Democratic Governor Gavin Newsom vetoed S.B. 972, the controversial taxpayer disclosure bill that would have required the California Franchise Tax Board (FTB) to provide the Legislature annually with the names, tax liabilities, and tax credits claimed by corporate taxpayers that meet a $5 billion gross receipts threshold.
S.B. 972 proposed a new provision of the California Revenue and Taxation Code requiring the FTB to annually compile a list with specific corporate taxpayer information and provide the list to the Assembly Committee on Revenue and Taxation and the Senate Committee on Governance and Finance (collectively, “Committees”) by May 1st of each year.
The list would have included information on all corporate taxpayers, including combined groups, subject to California’s Corporation Tax Law with $5 billion or more in gross receipts (less returns and allowances) reported on a return for the previous calendar year. For each of these corporate taxpayers, the FTB would have been required to provide the following information to the Committees:
Notably, the Senate significantly amended how the required corporate taxpayer information would have been disclosed under S.B. 972. The bill initially required the FTB to post the taxpayer information on its website. However, the Senate later amended the bill to remove website publication, and to instead require the FTB to provide this information annually to the Committees.
Echoing the sentiment of the Council On State Taxation, CalTax, and others opposing the bill, Governor Newsom noted in his veto message that the bill is “unnecessary, as current law already authorizes the FTB, upon request, to disclose taxpayer data to legislative committees.” He further stated that he was “not persuaded that enactment of the bill would provide additional value to future policy deliberations.”
Please see our previous post on S.B. 972 for additional information.
While the Legislature has the ability to override Governor Newsom’s veto of S.B. 972, this seems very unlikely. The California Constitution, Article IV, Section 10(a) permits the Legislature to override the Governor’s veto by a two-thirds majority vote in both the Senate and the Assembly. However, the California Legislature has only rarely used its veto override power. We anticipate it is unlikely the Legislature will use its veto override power here based on its historic reluctance to do so.