17039.

 (a) Notwithstanding any provision in this part to the contrary, for the purposes of computing tax credits, the term “net tax” means the tax imposed under either Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to lump-sum distributions) less the credits allowed by Section 17054 (relating to personal exemption credits) and any amount imposed under paragraph (1) of subdivision (d) and paragraph (1) of subdivision (e) of Section 17560. Notwithstanding the preceding sentence, the “net tax” shall not be less than the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions), if any. Credits shall be allowed against “net tax” in the following order:

(1) Credits that do not contain carryover or refundable provisions, except those described in paragraphs (4) and (5).

(2) Credits that contain carryover provisions but do not contain refundable provisions.

(3) Credits that contain both carryover and refundable provisions.

(4) The minimum tax credit allowed by Section 17063 (relating to the alternative minimum tax).

(5) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).

(6) Credits that contain refundable provisions but do not contain carryover provisions.

The order within each paragraph shall be determined by the Franchise Tax Board.

(b) Notwithstanding the provisions of Sections 17052 (relating to the earned income credit), 17061 (relating to refunds pursuant to the Unemployment Insurance Code), and 19002 (relating to tax withholding), the credits provided in those sections shall be allowed in the order provided in paragraph (6) of subdivision (a).

(c) (1) Notwithstanding any other provision of this part, no tax credit shall reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions) below the tentative minimum tax, as defined by Section 17062, except the following credits, but only after allowance of the credit allowed by Section 17063:

(A) The credit allowed by Section 17052 (relating to earned income credit).

(B) The credit allowed by former Section 17052.4 (relating to solar energy).

(C) The credit allowed by former Section 17052.5 (relating to solar energy).

(D) The credit allowed by Section 17052.5 (relating to solar energy).

(E) The credit allowed by Section 17052.12 (relating to research expenses).

(F) The credit allowed by former Section 17052.13 (relating to sales and use tax credit).

(G) The credit allowed by Section 17052.15 (relating to Los Angeles Revitalization Zone sales tax credit).

(H) The credit allowed by Section 17053.5 (relating to the renter’s credit).

(I) The credit allowed by former Section 17053.8 (relating to enterprise zone hiring credit).

(J) The credit allowed by Section 17053.10 (relating to Los Angeles Revitalization Zone hiring credit).

(K) The credit allowed by former Section 17053.11 (relating to program area hiring credit).

(L) For each taxable year beginning on or after January 1, 1994, the credit allowed by Section 17053.17 (relating to Los Angeles Revitalization Zone hiring credit).

(M)  The credit allowed by Section 17053.33 (relating to targeted tax area sales or use tax credit).

(N) The credit allowed by Section 17053.34 (relating to targeted tax area hiring credit).

(O) The credit allowed by Section 17053.49 (relating to qualified property).

(P) The credit allowed by Section 17053.70 (relating to enterprise zone sales or use tax credit).

(Q) The credit allowed by Section 17053.74 (relating to enterprise zone hiring credit).

(R) The credit allowed by Section 17054 (relating to credits for personal exemption).

(S) The credit allowed by Section 17057 (relating to clinical testing expenses).

(T) The credit allowed by Section 17058 (relating to low-income housing).

(U) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code).

(V) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).

(W) The credit allowed by Section 19002 (relating to tax withholding).

(2) Any credit that is partially or totally denied under paragraph (1) shall be allowed to be carried over and applied to the net tax in succeeding taxable years, if the provisions relating to that credit include a provision to allow a carryover when that credit exceeds the net tax.

(d) Unless otherwise provided, any remaining carryover of a credit allowed by a section that has been repealed or made inoperative shall continue to be allowed to be carried over under the provisions of that section as it read immediately prior to being repealed or becoming inoperative.

(e) (1) Unless otherwise provided, if two or more taxpayers (other than husband and wife) share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to his or her respective share of the costs paid or incurred.

(2) In the case of a partnership, the credit shall be allocated among the partners pursuant to a written partnership agreement in accordance with Section 704 of the Internal Revenue Code, relating to partner’s distributive share.

(3) In the case of a husband and wife who file separate returns, the credit may be taken by either or equally divided between them.

(f) Unless otherwise provided, in the case of a partnership, any credit allowed by this part shall be computed at the partnership level, and any limitation on the expenses qualifying for the credit or limitation upon the amount of the credit shall be applied to the partnership and to each partner.

(g) (1) With respect to any taxpayer that directly or indirectly owns an interest in a business entity that is disregarded for tax purposes pursuant to Section 23038 and any regulations thereunder, the amount of any credit or credit carryforward allowable for any taxable year attributable to the disregarded business entity shall be limited in accordance with paragraphs (2) and (3).

(2) The amount of any credit otherwise allowed under this part, including any credit carryover from prior years, that may be applied to reduce the taxpayer’s “net tax,” as defined in subdivision (a), for the taxable year shall be limited to an amount equal to the excess of the taxpayer’s regular tax (as defined in Section 17062), determined by including income attributable to the disregarded business entity that generated the credit or credit carryover, over the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to that disregarded business entity. No credit shall be allowed if the taxpayer’s regular tax (as defined in Section 17062), determined by including the income attributable to the disregarded business entity, is less than the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to the disregarded business entity.

(3) If the amount of a credit allowed pursuant to the section establishing the credit exceeds the amount allowable under this subdivision in any taxable year, the excess amount may be carried over to subsequent taxable years pursuant to subdivisions (c) and (d).

17052.

 (a) For each taxable year beginning on or after January 1, 2000, and before January 1, 2005, there shall be allowed as a credit against the “net tax” (as defined by Section 17039) an amount determined under subdivision (b).

(b) Except as otherwise provided in this section, the amount of the credit allowed under subdivision (a) shall be computed by multiplying the “federal credit amount” (as defined in subdivision (c)) by 15 percent and subtracting therefrom the amount of tax imposed by Section 17062 (relating to alternative minimum tax), if any, for the same taxable year.

(c) The term “federal credit amount” means the amount determined for purposes of federal income tax under Section 32 of the Internal Revenue Code prior to the application of Section 32(h), relating to reduction of credit to taxpayers subject to alternative minimum tax.

(d) No credit shall be allowed under this section to any of the following:

(1) Any person who is married (within the meaning of Section 17021.5) and files a separate return for the taxable year.

(2) Any person who does not have a “qualifying child” (as defined by Section 32(c)(3) of the Internal Revenue Code) for the taxable year.

(e) Section 32 (k) of the Internal Revenue Code, relating to restrictions on taxpayers who improperly claimed the credit allowed by Section 32 in a prior year, shall apply to taxpayers who improperly claimed the credit allowed by this section in a prior year.

(f)  Section 3507 of the Internal Revenue Code, relating to advance payment of earned income credit, shall not apply.

(g) For purposes of this section, any reference to Section 32 of the Internal Revenue Code means the Internal Revenue Code as amended by Public Law 105-206 106-107.

(h) If the amount allowable as a credit under this section exceeds the tax liability computed under this part, the excess shall be credited against other amounts due, if any, and the balance, if any, refunded to the taxpayer only if funds are appropriated for that purpose by the Legislature.

(j) The Franchise Tax Board shall provide training and information to employers in order that employees claiming the credit allowed by this section are allowed to adjust their withholding allowances to reflect the credit.

(k) This section shall remain in effect only until December 1, 2005, and as of that date, is repealed.

19340.

 Interest shall be allowed and paid on any overpayment in respect of any tax, at the adjusted annual rate established pursuant to Section 19521 as follows:

(a) In the case of a credit, from the date of the overpayment to the due date of the amount for which the credit is allowed. Any interest allowed on any credit shall first be credited on any amounts due from the taxpayer under Part 10 (commencing with Section 17001), this part, or Part 11 (commencing with Section 23001).

(b) In the case of a refund, including a refund in excess of tax liability as prescribed in subdivision (g) of Section 17052 or subdivision (j) of Section 17053.5, from the date of the overpayment to a date preceding the date of the refund warrant by not more than 30 days, the date to be determined by the Franchise Tax Board.

19341.

 (a) Except as provided in subdivisions (b), (c), and (d), if any overpayment of tax is refunded or credited within 90 days after the return is filed, or within 90 days after the last day prescribed for filing the return of tax (determined without regard to any extension of time for filing the return), whichever is later, no interest shall be allowed under Section 19340 on the overpayment.

For the purposes of this section, “overpayment of tax” includes a refund in excess of tax liability as prescribed in subdivision (g) of Section 17052 or subdivision (j) of Section 17053.5.

(b) In the case of returns which set forth no determination or amount of tax liability, or credits other than that allowed under Section 17053.5, and which are filed solely for the purpose of claiming the renter credit, no interest shall be allowed on refunds made within 90 days from the date on which the return is filed, or within 90 days after the last day prescribed for filing the return, whichever is later. This subdivision applies only when communication with the claimant or other verification is necessary to determine entitlement to the claimed credit.

(c) In the case of an individual or fiduciary taxable under Part 10 (commencing with Section 17001), for the 1982 taxable year and each taxable year thereafter, the 90-day time periods specified in subdivision (a) shall be 45 days.

(d) In the case of a return of tax which is filed after the last date prescribed for filing the return (determined with regard to extensions), no interest shall be allowed or paid for any day before the date on which the return is filed.