California Governor Announces plans to veto short sale debt forgiveness tax relief bill

Governor Arnold Schwarzenegger announced Monday that he would not sign a bill ( SBX8 32 )passed by lawmakers that would have provided relief from debt fogiveness income recognition through a short sale due to the inclusion of another provision in the legislation totally unrelated to this issue. California is the only state that has not passed legislation conforming state tax laws to Federal Legislation providing relief from inclusion of debt forgiveness “phantom income” in taxable income past the previous expiration date of such legislation in California of 12/31/2008..

Administration officials urged lawmakers to immediately craft and pass a new proposal in time for filing 2009 tax returns, but Democrats said it was unlikely that a new bill would get the required two-thirds vote of the Legislature to pass as an urgent measure.

You should immediately send an email to the Governors office demanding that he sign this legislation. and also send an email to your State Assemblyman or State Senator demanding emergency legislation to pass this tax relief.

For more about debt fogiveness and California taxes, see my web blog entry at Debt Forgiveness and California Taxes as well as Income Tax Issues or Foreclosures & Short Sales on my website.