Part 32Individual Shared Responsibility Penalty

Section § 61000

Explanation

This section provides definitions for key terms related to health coverage in California. It defines "applicable entity" as those who offer or manage health insurance plans, including employers, state programs, and the California Health Benefit Exchange. "Applicable dependent" and "applicable individual" refer to terms defined elsewhere, while "applicable household income" is the combined income of those who must file a tax return. "Exchange" means Covered California. "Modified adjusted gross income" includes certain non-taxable interests and foreign income. "Premium assistance" covers tax credits and subsidies for health insurance. "Qualified health plan" follows federal guidelines under the Affordable Care Act. The "responsible individual" is defined as someone who must file a tax return and ensure health coverage for themselves or dependents. The definition affects penalties related to non-compliance with health coverage requirements.

For the purposes of this part, the following definitions shall apply:
(a)CA Revenue and Taxation Code § 61000(a) “Applicable entity” means the following:
(1)CA Revenue and Taxation Code § 61000(a)(1) A carrier licensed or otherwise authorized to offer health coverage with respect to minimum essential coverage, including coverage in a catastrophic plan, that is not described in paragraph (3) or (4).
(2)CA Revenue and Taxation Code § 61000(a)(2) An employer or other sponsor of an employment-based health plan with respect to employment-based minimum essential coverage
(3)CA Revenue and Taxation Code § 61000(a)(3) The State Department of Health Care Services and county welfare departments with respect to coverage under a state program.
(4)CA Revenue and Taxation Code § 61000(a)(4) The Exchange with respect to individual health plans, except catastrophic plans, on the Exchange.
(5)CA Revenue and Taxation Code § 61000(a)(5) Any other provider of minimum essential coverage, including the University of California with respect to coverage under a student health insurance program.
(b)CA Revenue and Taxation Code § 61000(b) “Applicable dependent” has the same meaning as defined in Section 100710 of the Government Code.
(c)CA Revenue and Taxation Code § 61000(c) “Applicable household income” means, with respect to a responsible individual for a taxable year, an amount equal to the sum of the modified adjusted gross income of all applicable household members who were required to file a tax return under Chapter 2 (commencing with Section 18501) of Part 10.2 for the taxable year.
(d)CA Revenue and Taxation Code § 61000(d) “Applicable household members” means, with respect to a responsible individual, all of the following persons:
(1)CA Revenue and Taxation Code § 61000(d)(1) The responsible individual.
(2)CA Revenue and Taxation Code § 61000(d)(2) The responsible individual’s applicable spouse.
(3)CA Revenue and Taxation Code § 61000(d)(3) The responsible individual’s applicable dependents.
(e)CA Revenue and Taxation Code § 61000(e) “Applicable individual” has the same meaning as defined in Section 100710 of the Government Code.
(f)CA Revenue and Taxation Code § 61000(f) “Applicable spouse” has the same meaning as defined in Section 100710 of the Government Code.
(g)CA Revenue and Taxation Code § 61000(g) “Dependent” has the same meaning as defined in Section 17056 of the Revenue and Taxation Code.
(h)CA Revenue and Taxation Code § 61000(h) “Exchange” means the California Health Benefit Exchange, also known as Covered California, established pursuant to Title 22 (commencing with Section 100500).
(i)CA Revenue and Taxation Code § 61000(i) “Household size” means, with respect to a responsible individual, the number of applicable household members.
(j)CA Revenue and Taxation Code § 61000(j) “Modified adjusted gross income” means adjusted gross income, as defined in Section 17072, increased by both of the following:
(1)CA Revenue and Taxation Code § 61000(j)(1) The amount of interest received or accrued by the individual during the taxable year that is exempt from tax, unless the interest is exempt from tax under the United States Constitution or the California Constitution.
(2)CA Revenue and Taxation Code § 61000(j)(2) Foreign-earned income, foreign housing exclusion, or foreign housing deduction under Section 911 of the Internal Revenue Code.
(k)CA Revenue and Taxation Code § 61000(k) “Premium assistance” means the amount of credit allowable under Section 36B of the Internal Revenue Code of 1986 and any premium assistance subsidies administered pursuant to Title 25 (commencing with Section 100800) of the Government Code.
(l)CA Revenue and Taxation Code § 61000(l) “Qualified health plan” has the same meaning as defined in Section 1301 of the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152).
(m)Copy CA Revenue and Taxation Code § 61000(m)
(1)Copy CA Revenue and Taxation Code § 61000(m)(1) Except as provided in paragraphs (2) and (3), “responsible individual” means an applicable individual who is required to file a return under Chapter 2 (commencing with Section 18501) of Part 10.2 and who is either of the following:
(A)CA Revenue and Taxation Code § 61000(m)(1)(A) An applicable individual required to be enrolled in and maintain minimum essential coverage, pursuant to subdivision (a) of Section 100705 of the Government Code.
(B)CA Revenue and Taxation Code § 61000(m)(1)(B) An applicable individual required to ensure that a person who qualifies as the applicable individual’s applicable spouse or applicable dependent is enrolled in and maintains minimum essential coverage for that month, pursuant to subdivision (b) of Section 100705 of the Government Code.
(2)CA Revenue and Taxation Code § 61000(m)(2) If two applicable individuals file a joint return, only one shall be considered the responsible individual for purposes of calculating the penalty as determined by the Franchise Tax Board.
(3)CA Revenue and Taxation Code § 61000(m)(3) If a dependent files a return, only the dependent or the individual claiming the dependent, but not both, shall be considered the responsible individual for purposes of calculating the penalty as determined by the Franchise Tax Board.
health coverage applicable entity applicable dependent applicable household income Covered California modified adjusted gross income premium assistance qualified health plan responsible individual health benefit exchange minimum essential coverage health insurance penalties taxable year family health coverage Franchise Tax Board
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61001

Explanation

This section specifies that to decide if someone is an employee, you should follow the guidelines in another part of the law, specifically starting at Section 2775 of the Labor Code. This means the rules for determining employee status are not detailed here, but elsewhere.

For the purposes of this part, except as otherwise provided, the determination of whether an individual is an employee shall be governed by Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.
employee determination Section 2775 Labor Code employment guidelines worker classification Labor Code Chapter 2 Division 3 employment status employee vs contractor employment regulations California Labor Code worker status Article 1.5 employment rules classification guidelines
(Added by Stats. 2020, Ch. 38, Sec. 7. (AB 2257) Effective September 4, 2020.)

Section § 61005

Explanation

This section of the law requires certain entities that provide health coverage to report specific information to the Franchise Tax Board (FTB). The aim is to ensure people comply with penalties for not having minimum health insurance coverage as required. Reporting entities need to submit details like names, addresses, and insurance coverage dates of individuals covered under their policies.

They must also send a written statement to primary insurance holders, including their contact info and covered individuals' details. If an entity fails to report, a $50 penalty per individual may apply. The required reports and statements align with federal requirements, ensuring consistency and minimization of extra effort for reporting entities.

(a)CA Revenue and Taxation Code § 61005(a) The Legislature finds and declares both of the following:
(1)CA Revenue and Taxation Code § 61005(a)(1) The reporting requirement provided for in this section is necessary for the successful implementation of the penalty imposed by Section 61010. In particular, this requirement provides the only widespread source of third-party reporting to help applicable individuals and the Franchise Tax Board verify whether an applicable individual maintains minimum essential coverage. There is compelling evidence that third-party reporting is crucial for ensuring compliance with those tax provisions.
(2)CA Revenue and Taxation Code § 61005(a)(2) The reporting requirement in this section has been narrowly tailored to support compliance with the penalty imposed by Section 61010, while imposing only an incidental burden on reporting entities. In particular, the information required to be reported under this section is limited to the information already required to be reported under a similar federal reporting requirement under Section 6055 of the Internal Revenue Code of 1986. In addition, this section provides that its reporting requirement may be satisfied by providing the same information that is currently reported under that federal requirement.
(b)CA Revenue and Taxation Code § 61005(b) For purposes of administering the penalty imposed by this part on applicable individuals who fail to maintain minimum essential coverage as required by Title 24 of the Government Code:
(1)CA Revenue and Taxation Code § 61005(b)(1) An applicable entity that provides minimum essential coverage to an individual during a calendar year shall, at the time the Franchise Tax Board prescribes, make a return to the Franchise Tax Board in the form and manner described in subdivision (c) or (d) on or before March 31 of the year following the calendar year for which the return is required.
(2)CA Revenue and Taxation Code § 61005(b)(2) An applicable entity described in paragraph (2) of subdivision (a) of Section 61000 shall not be required to make the return specified in paragraph (1) if the applicable entity that is described in paragraph (1) of subdivision (a) of Section 61000 makes that return.
(c)CA Revenue and Taxation Code § 61005(c) Except as provided in subdivision (d), an applicable entity shall make a return that complies with all of the following:
(1)CA Revenue and Taxation Code § 61005(c)(1) Is in the form as the Franchise Tax Board prescribes.
(2)CA Revenue and Taxation Code § 61005(c)(2) Contains the name, address, and taxpayer identification number of the applicable individual and the name and taxpayer identification number of each other individual who receives coverage under the policy.
(3)CA Revenue and Taxation Code § 61005(c)(3) Contains the dates during which the individuals specified in paragraph (2) were covered under minimum essential coverage during the calendar year.
(4)CA Revenue and Taxation Code § 61005(c)(4) Contains any other information as the Franchise Tax Board may require.
(d)CA Revenue and Taxation Code § 61005(d) Notwithstanding the requirements of subdivision (c), a return complies with the requirements of this section if it is in the form of, and includes the information contained in, a return described in Section 6055 of the Internal Revenue Code of 1986, as that section is in effect on December 15, 2017.
(e)CA Revenue and Taxation Code § 61005(e) Except as provided in subdivision (g), an applicable entity required to make a return under subdivision (b) shall provide to each primary subscriber, primary policyholder, primary insured, employee, former employee, uniformed services sponsor, parent, or other related person named on an application who enrolls one or more individuals, including themselves, in minimum essential coverage a written statement in the form and manner described in subdivision (f) on or before January 31 of the year following the calendar year for which the return is required under subdivision (b).
(f)CA Revenue and Taxation Code § 61005(f) The written statement required by subdivision (e) shall include both of the following:
(1)CA Revenue and Taxation Code § 61005(f)(1) The name and address of the person required to make the return and the telephone number of the contact information for that person.
(2)CA Revenue and Taxation Code § 61005(f)(2) The information required to be shown on the return, as specified in subdivision (c).
(g)CA Revenue and Taxation Code § 61005(g) Notwithstanding subdivisions (e) and (f), the requirements of this section may be satisfied by a written statement provided to an individual under Section 6055 of the Internal Revenue Code of 1986, as that section is in effect and interpreted on December 15, 2017.
(h)CA Revenue and Taxation Code § 61005(h) In the case of coverage provided by an applicable entity that is a governmental unit or an agency or instrumentality of that unit, the officer or employee who enters into the agreement to provide the coverage, or the person appropriately designated for purposes of this section, shall be responsible for the returns and statements required by this section.
(i)CA Revenue and Taxation Code § 61005(i) An applicable entity may contract with third-party service providers, including insurance carriers, to provide the returns and statements required by this section.
(j)CA Revenue and Taxation Code § 61005(j) Except for the applicable entities described in paragraphs (3) and (4) of subdivision (a) of Section 61000, a penalty shall be imposed on an applicable entity that fails to make a return as required by subdivision (b) in an amount of fifty dollars ($50) per applicable individual covered by the applicable entity for a taxable year in which the failure occurs.
health coverage reporting Franchise Tax Board minimum essential coverage penalty for non-compliance third-party reporting insurance coverage dates written statement requirement governmental coverage entities third-party service providers insurance carriers taxpayer identification individual health coverage reporting deadline federal reporting requirement alignment penalty per individual
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61010

Explanation

This law imposes a penalty on individuals who do not enroll in and maintain minimum essential health coverage, except in specified cases under Sections 61020 and 61023. This penalty is known as the Individual Shared Responsibility Penalty.

The penalty must be included in the responsible individual's tax return for the year when the penalty applies. If a dependent fails to have coverage, the person who claims them as a dependent on their tax return is responsible for paying the penalty. Additionally, if a couple files a joint tax return, both individuals are liable for the penalty if it applies to one of them.

(a)CA Revenue and Taxation Code § 61010(a) A penalty in the amount determined under Section 61015 shall be imposed on a responsible individual for a failure by the responsible individual, the applicable spouse, or an applicable dependent to enroll in and maintain minimum essential coverage pursuant to Section 100705 of the Government Code for one or more months, except as provided in Section 61020 and 61023. This penalty shall be referred to as the Individual Shared Responsibility Penalty.
(b)CA Revenue and Taxation Code § 61010(b) A penalty imposed by this section with respect to any month shall be included with a responsible individual’s return under Chapter 2 (commencing with Section 18501) of Part 10.2 for the taxable year that includes that month.
(c)CA Revenue and Taxation Code § 61010(c) If an individual with respect to whom a penalty is imposed by this section for any month is a dependent of another individual for the other individual’s taxable year, including that month, the other individual shall be solely liable for that penalty.
(d)CA Revenue and Taxation Code § 61010(d) If a responsible individual with respect to whom a penalty is imposed pursuant to this section for any month files a joint return for the taxable year, including that month, that responsible individual and the spouse or domestic partner of the individual shall be jointly and severally liable for the penalty imposed.
Individual Shared Responsibility Penalty failure to enroll in coverage minimum essential coverage tax penalty for no health insurance joint and several liability dependent coverage responsibility health coverage requirement tax return penalty responsible individual joint return penalty for uninsured dependents Section 61015 Section 100705 government code health insurance mandate applicable spouse health coverage
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61015

Explanation

This law details how the Individual Shared Responsibility Penalty is calculated for those who don't meet health insurance requirements. It's the lesser of two amounts: the sum of monthly penalties or one-twelfth of the state average bronze health plan premium, times the number of uninsured months.

The monthly penalty is based on the greater of either a set dollar amount per person or 2.5% of their income over the tax filing threshold. Special rules apply to minors and large households. The base penalty amount of $695 can adjust annually with inflation. If a federal penalty also applies, the state penalty is reduced by that amount, but not below zero.

(a)CA Revenue and Taxation Code § 61015(a) The amount of the Individual Shared Responsibility Penalty imposed on a responsible individual for a taxable year with respect to the failures described in Section 61010 shall be equal to the lesser of either of the following amounts:
(1)CA Revenue and Taxation Code § 61015(a)(1) The sum of the monthly penalty amounts determined under subdivision (b) for months in the taxable year during which one or more of the failures described in Section 61010 occurred.
(2)CA Revenue and Taxation Code § 61015(a)(2) An amount equal to one-twelfth of the state average premium for qualified health plans that have a bronze level of coverage for the applicable household size involved, and are offered through the Exchange for plan years beginning in the calendar year with or within which the taxable year ends, multiplied by the number of months in which a failure described in Section 61010 occurred.
(b)CA Revenue and Taxation Code § 61015(b) For purposes of subdivision (a), the monthly penalty amount with respect to a responsible individual for any month during which a failure described in Section 61010 occurred is an amount equal to one-twelfth of the greater of either of the following amounts:
(1)CA Revenue and Taxation Code § 61015(b)(1) An amount equal to the lesser of either of the following:
(A)CA Revenue and Taxation Code § 61015(b)(1)(A) The sum of the applicable dollar amounts for all applicable household members who failed to enroll in and maintain minimum essential coverage pursuant to Section 100705 of the Government Code during the month, except as provided by Section 61023.
(B)CA Revenue and Taxation Code § 61015(b)(1)(B) Three hundred percent of the applicable dollar amount determined for the calendar year during which the taxable year ends.
(2)CA Revenue and Taxation Code § 61015(b)(2) An amount equal to 2.5 percent of the excess of the responsible individual’s applicable household income for the taxable year over the amount of gross income that would trigger the responsible individual’s requirement to file a state income tax return under Section 18501, also referred to as the applicable filing threshold, for the taxable year.
(c)CA Revenue and Taxation Code § 61015(c) For purposes of subdivisions (a) and (b):
(1)CA Revenue and Taxation Code § 61015(c)(1) Except as provided in paragraph (2) and subdivision (d), the applicable dollar amount is six hundred ninety-five dollars ($695).
(2)CA Revenue and Taxation Code § 61015(c)(2) If an applicable individual has not attained 18 years of age as of the beginning of a month, the applicable dollar amount with respect to that individual for that month shall be equal to one-half of the applicable dollar amount as provided in paragraph (1) or subdivision (d).
(3)CA Revenue and Taxation Code § 61015(c)(3) The maximum monthly penalty, under paragraph (1) or (2) of subdivision (a), for a responsible individual with an applicable household size of five or more individuals equals the maximum monthly penalty for a responsible individual with an applicable household size of five individuals.
(d)CA Revenue and Taxation Code § 61015(d) In the case of a calendar year beginning after 2019, the applicable dollar amount shall be equal to six hundred ninety-five dollars ($695) and increased as follows:
(1)CA Revenue and Taxation Code § 61015(d)(1) An amount equal to six hundred ninety-five dollars ($695) multiplied by the cost-of-living adjustment determined pursuant to paragraph (2).
(2)CA Revenue and Taxation Code § 61015(d)(2) A cost-of-living adjustment for a calendar year is an amount equal to the percentage by which the California Consumer Price Index for all items in the preceding calendar year exceeds the California Consumer Price Index for all items for the 2016 calendar year.
(3)CA Revenue and Taxation Code § 61015(d)(3) If the amount of an increase under paragraph (1) is not a multiple of fifty dollars ($50), that increase shall be rounded down to the next multiple of fifty dollars ($50).
(4)CA Revenue and Taxation Code § 61015(d)(4) No later than August 1 of each year, the Department of Industrial Relations shall annually transmit to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current calendar year, inclusive.
(e)CA Revenue and Taxation Code § 61015(e) For taxable years during which the Franchise Tax Board determines that a federal shared responsibility penalty applies, the Individual Shared Responsibility Penalty shall be reduced, but not below zero, by the amount of the federal penalty imposed on the responsible individual for each month of the taxable year during which the Individual Shared Responsibility Penalty is imposed.
Individual Shared Responsibility Penalty health insurance requirements penalty calculation monthly penalty amount state average premium bronze level coverage applicable household income filing threshold applicable dollar amount children under 18 large household penalty cost-of-living adjustment California Consumer Price Index Franchise Tax Board federal penalty reduction
(Amended by Stats. 2020, Ch. 8, Sec. 17. (AB 85) Effective June 29, 2020.)

Section § 61020

Explanation

This law says that a penalty for not having health insurance won't apply if certain conditions are met. You won't face a penalty if the monthly cost of health insurance is more than 8.3% of your household income, or if you earn too little to be required to file a tax return. The law explains how to calculate these costs and percentages, including adjustments based on salary reductions and available health plans.

Also, it considers cases where coverage is through an employer or on the individual market and details how different incomes affect whether you need to pay the penalty.

An Individual Shared Responsibility Penalty shall not be imposed on a responsible individual for a month in which any of the following circumstances apply:
(a)CA Revenue and Taxation Code § 61020(a) If the responsible individual’s required contribution, determined on an annual basis, for coverage for the month exceeds 8.3 percent of that responsible individual’s applicable household income for the taxable year.
(1)CA Revenue and Taxation Code § 61020(a)(1) For purposes of applying this subdivision, a responsible individual’s applicable household income shall be increased by any exclusion from gross income for any portion of the required contribution made through a salary reduction arrangement for any applicable household member.
(2)CA Revenue and Taxation Code § 61020(a)(2) For purposes of this subdivision, the term “required contribution” means either of the following:
(A)CA Revenue and Taxation Code § 61020(a)(2)(A) In the case of a responsible individual eligible to purchase minimum essential coverage consisting of coverage through an eligible employer-sponsored plan, the portion of the annual premium that would be paid by the responsible individual, without regard to whether paid through salary reduction or otherwise, for self-only coverage.
(B)CA Revenue and Taxation Code § 61020(a)(2)(B) In the case of a responsible individual eligible only to purchase minimum essential coverage in the individual market, the annual premium for the lowest cost bronze plan available in the individual market through the Exchange in the rating area in which the individual resides, reduced by any premium assistance for the taxable year determined as if the responsible individual was covered by a qualified health plan offered through the Exchange for the entire taxable year.
(3)CA Revenue and Taxation Code § 61020(a)(3) For purposes of subparagraph (A) of paragraph (2), if a responsible individual is eligible for minimum essential coverage through an employer by reason of a relationship to an applicable household member, the determination under this subdivision shall be made by reference to the portion of the premium required to be paid by the applicable household member for family coverage.
(4)CA Revenue and Taxation Code § 61020(a)(4) In the case of plan years beginning in any calendar year after 2019, this subdivision shall be applied by substituting for “8.3 percent” an amount equal to 8 percent increased by the amount the United States Secretary of Health and Human Services determines reflects the excess of the rate of premium growth between the preceding calendar year and 2013 over the rate of income growth for that period. If the United States Secretary of Health and Human Services fails to determine this percentage for a calendar year, the Exchange shall determine the percentage.
(b)CA Revenue and Taxation Code § 61020(b) If the responsible individual’s applicable household income for the taxable year containing the month is less than the amount of adjusted gross income specified in paragraph (1) or (2) of subdivision (a) of Section 18501 for that taxable year.
(c)CA Revenue and Taxation Code § 61020(c) If the responsible individual’s gross income for the taxable year containing the month is less than the amount specified in paragraph (3) of subdivision (a) of Section 18501.
individual shared responsibility penalty required contribution household income salary reduction arrangement minimum essential coverage eligible employer-sponsored plan self-only coverage lowest cost bronze plan premium assistance family coverage rate of premium growth income growth Exchange determination adjusted gross income taxable year requirements
(Amended by Stats. 2020, Ch. 8, Sec. 18. (AB 85) Effective June 29, 2020.)

Section § 61023

Explanation

This law explains when you won't have to pay a penalty for not having health insurance in California. If someone in your household goes without health insurance for three months or less, you won't face a penalty for that time. It doesn't matter if those months happen over two different calendar years.

If a gap without insurance is longer than three months, then this exemption won't apply. If you have multiple short gaps in one year, only the first gap qualifies for this exception. The Franchise Tax Board can set rules for how these penalties are collected, especially when gaps stretch over more than one tax year.

An Individual Shared Responsibility Penalty shall not be imposed with respect to an applicable household member for a month if the last day of the month occurred during a period in which the applicable household member did not maintain minimum essential coverage for a continuous period of three months or less.
(a)CA Revenue and Taxation Code § 61023(a) The length of a continuous period shall be determined without regard to the calendar years in which months in that period occur.
(b)CA Revenue and Taxation Code § 61023(b) If a continuous period is greater than the period allowed under this subdivision, an exception shall not be provided under this subdivision for any month in the period.
(c)CA Revenue and Taxation Code § 61023(c) If there is more than one continuous period described in this subdivision covering months in a calendar year, the exception provided by this subdivision shall only apply to months in the first of those periods.
(d)CA Revenue and Taxation Code § 61023(d) The Franchise Tax Board may prescribe rules for the collection of the penalty imposed by this section in cases where continuous periods include months in more than one taxable year.
Individual Shared Responsibility Penalty minimum essential coverage three-month exception continuous period without insurance health insurance gap penalty exemption Franchise Tax Board rules multiple calendar years penalty collection insurance coverage gap household member coverage first gap exception taxable year insurance compliance health insurance penalty
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61025

Explanation

This law explains how the Franchise Tax Board (FTB) in California handles the collection of the Individual Shared Responsibility Penalty, which is related to not having health insurance. The FTB uses the same procedures it uses for income tax collection, but with some differences. If you don't pay this penalty on time, you won't face criminal charges or extra penalties for it. The FTB also can't put a lien on your property or take your property just because you didn't pay. Additionally, certain collection rules usually applied for taxes don't apply here. The FTB will incorporate the penalty enforcement into its usual activities like audits and taxpayer education.

(a)CA Revenue and Taxation Code § 61025(a) The Franchise Tax Board’s civil authority and procedures for purposes of compliance with notice and other due process requirements imposed by law to collect income taxes shall be applicable to the collection of the Individual Shared Responsibility Penalty.
(b)CA Revenue and Taxation Code § 61025(b) The Individual Shared Responsibility Penalty shall be paid upon notice and demand by the Franchise Tax Board, and shall be assessed and collected pursuant to Part 10.2 (commencing with Section 18401), except as follows:
(1)CA Revenue and Taxation Code § 61025(b)(1) If an applicable individual fails to timely pay the Individual Shared Responsibility Penalty, the applicable individual shall not be subject to a criminal prosecution or penalty with respect to that failure.
(2)CA Revenue and Taxation Code § 61025(b)(2) The Franchise Tax Board shall not file a notice of lien with respect to any real property of an applicable individual by reason of any failure to pay the Individual Shared Responsibility Penalty, or levy any real property with respect to that failure.
(3)CA Revenue and Taxation Code § 61025(b)(3) For the purpose of collecting the Individual Shared Responsibility Penalty, Article 1 (commencing with Section 19201) of Chapter 5 of Part 10.2 shall not apply.
(c)CA Revenue and Taxation Code § 61025(c) The Franchise Tax Board shall integrate enforcement of the Individual Shared Responsibility Penalty into existing activities, protocols, and procedures, including audits, enforcement actions, and taxpayer education efforts.
Franchise Tax Board Individual Shared Responsibility Penalty income tax collection due process requirements penalty enforcement taxpayer education property lien restrictions levy restrictions health insurance penalty compliance procedures audit procedures notice and demand civil authority taxpayer compliance no criminal prosecution
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61030

Explanation

This law gives the Franchise Tax Board the power to create rules to implement certain tax provisions, after discussing them with the Exchange. These rules are meant to align with federal tax regulations from December 2017, as long as they don't conflict with state rules. Until January 1, 2022, the usual process for making regulations doesn't apply, which means the Board can issue rules more quickly and without going through the usual extensive review process.

(a)CA Revenue and Taxation Code § 61030(a) The Franchise Tax Board may, in consultation with the Exchange, adopt regulations that are necessary and appropriate to implement this part.
(b)CA Revenue and Taxation Code § 61030(b) It is the intent of the Legislature that, in construing this part, the regulations promulgated by under Section 5000A of the Internal Revenue Code as of December 15, 2017, notwithstanding the specified date in paragraph (1) of subdivision (a) of Section 17024.5, shall apply to the extent that those regulations do not conflict with this part or regulations promulgated by the Franchise Tax Board pursuant to subdivision (a) in consultation with the Exchange.
(c)CA Revenue and Taxation Code § 61030(c) Until January 1, 2022, the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any regulation, standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this part.
Franchise Tax Board consultation with Exchange tax regulation implementation Internal Revenue Code Section 5000A federal tax regulations conflict with state regulations Administrative Procedure Act exemption fast-track rule issuance guidance by Franchise Tax Board tax provisions implementation
(Amended by Stats. 2020, Ch. 8, Sec. 19. (AB 85) Effective June 29, 2020.)

Section § 61035

Explanation

Starting July 1, 2023, and every July 1 after that, the money collected from the Individual Shared Responsibility Penalty is to be put into the Health Care Affordability Reserve Fund.

Beginning July 1, 2023, and on July 1 annually thereafter, moneys collected from the Individual Shared Responsibility Penalty shall be deposited into the Health Care Affordability Reserve Fund.
Individual Shared Responsibility Penalty Health Care Affordability Reserve Fund annual deposit July 1 deadline collected moneys health care funding California penalties affordability reserve penalty proceeds health care finance state fund allocation annual collection deposit funding allocation penalty collection reserve fund management
(Repealed and added by Stats. 2023, Ch. 42, Sec. 61. (AB 118) Effective July 10, 2023.)

Section § 61040

Explanation

This law means that if any part of the rules in this section is found to be invalid or doesn't work, the rest of the rules will still remain in effect. The invalid part won't affect the remaining parts that can still be applied.

The provisions of this part are severable. If any provision of this part or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
severability invalid provision legal severability application of provisions invalidity separation of provisions rule independence continuation of rules partial invalidity legislative intent enforceable provisions legal effect validity of law preserving law parts continued application
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61045

Explanation

The Franchise Tax Board is required to yearly share certain tax-related details on its website. This information includes how many households are paying penalties, with an average penalty calculated by income levels, across the state and within each county. They also need to disclose the total penalty collected, the most common exemptions claimed, and specific penalty data from another section of the tax code.

The Franchise Tax Board shall annually publish on its internet website all of the following information:
(a)CA Revenue and Taxation Code § 61045(a) The number of applicable households paying the penalty and the average penalty amount by applicable household income level.
(b)CA Revenue and Taxation Code § 61045(b) The number of applicable households paying the penalty in each county and statewide.
(c)CA Revenue and Taxation Code § 61045(c) The total penalty amount collected.
(d)CA Revenue and Taxation Code § 61045(d) The number and type of most commonly claimed exemptions.
(e)CA Revenue and Taxation Code § 61045(e) The number and total penalty amounts collected under subdivision (j) of Section 61005.
Franchise Tax Board penalty payments household income levels county penalties statewide penalties total penalty amount claimed exemptions Section 61005 penalties annual publication tax-related information
(Added by Stats. 2019, Ch. 38, Sec. 42. (SB 78) Effective June 27, 2019.)

Section § 61050

Explanation

The Franchise Tax Board must report to the Legislature each year by March 1st about key details related to penalties and exemptions under certain parts of the Government Code. This includes details like how many households and dependents are paying penalties, the penalty amounts by county and income class, and statewide totals.

The report also covers the number of exemptions given, the most common reasons for those exemptions, and details about the penalties and subsidies in relation to different federal poverty level categories.

Finally, the report must compare the numbers and amounts of state financial subsidies, with adjustments, by county and poverty level. The report is submitted according to specific rules in the Government Code.

(a)CA Revenue and Taxation Code § 61050(a) On or before March 1, 2022, and annually on or before March 1 thereafter, the Franchise Tax Board shall report to the Legislature on information regarding this part and Title 24 (commencing with Section 100700) and Title 25 (commencing with Section 100800) of the Government Code, including all of the following:
(1)CA Revenue and Taxation Code § 61050(a)(1) The total number of applicable households paying the penalty and the total number of dependents for whom applicable households pay the penalty, by county and by adjusted gross income class.
(2)CA Revenue and Taxation Code § 61050(a)(2) The total penalty amounts imposed, by county and by adjusted gross income class.
(3)CA Revenue and Taxation Code § 61050(a)(3) The total statewide penalty amount imposed.
(4)CA Revenue and Taxation Code § 61050(a)(4) The total number of exemptions applied, and the most common qualifications for exemptions applied.
(5)CA Revenue and Taxation Code § 61050(a)(5) The number of applicable households who pay the penalty and the number of dependents claimed by applicable households who pay the penalty, by federal poverty level category. The federal poverty level shall be estimated using adjusted gross income and number of individuals in the tax household, using the following categories:
(A)CA Revenue and Taxation Code § 61050(a)(5)(A) At or between 0 percent and 138 percent of the federal poverty level.
(B)CA Revenue and Taxation Code § 61050(a)(5)(B) At or between 139 percent and 266 percent of the federal poverty level.
(C)CA Revenue and Taxation Code § 61050(a)(5)(C) At or between 267 percent and 400 percent of the federal poverty level.
(D)CA Revenue and Taxation Code § 61050(a)(5)(D) At or above 401 percent of the federal poverty level.
(6)CA Revenue and Taxation Code § 61050(a)(6) The number and amount of state financial subsidies paid and adjustments made through reconciliation, by county and by federal poverty level category as described in paragraph (5).
(b)CA Revenue and Taxation Code § 61050(b) The report shall be submitted pursuant to Section 9795 of the Government Code.
Franchise Tax Board report penalties exemptions adjusted gross income county penalty amounts statewide penalty total federal poverty level income categories state financial subsidies reconciliation household penalties dependents penalties poverty level categories income class Legislature reporting requirements
(Added by Stats. 2019, Ch. 801, Sec. 1. (AB 414) Effective January 1, 2020.)