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AB-1196 Income taxes: rates: credit: earned income.(2011-2012)

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Amended  IN  Assembly  May 10, 2011
Amended  IN  Assembly  March 31, 2011

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 1196


Introduced  by  Assembly Member Allen

February 18, 2011


An act to add Section Sections 17044.2 and 17052.1 to the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1196, as amended, Allen. Income taxes: rates: credit: earned income.
(1) The Personal Income Tax Law, which is administered by the Franchise Tax Board, imposes taxes upon the taxable income of individual taxpayers, at specified rates, based on the amount of the taxpayer’s taxable income.
This bill, for taxable years beginning on or after January 1, 2012, would impose an additional tax at the rate of 0.7% on the taxpayer’s taxable income that exceeds $1,000,000. This bill would require all revenues received by the Franchise Tax Board from those taxes be deposited in the Earned Income Tax Credit Fund, a continuously appropriated fund established by this bill, for the purposes of providing taxpayer refunds for the earned income tax credit, as provided.

The

(2) The Personal Income Tax Law authorizes various credits against the taxes imposed by that law, including certain credits that are allowed in modified conformity to credits allowed by federal income tax laws.
This bill would, for taxable years beginning on or after January 1, 2012, allow a credit computed by multiplying the federal credit amount, as defined, by 15% and subtracting therefrom the alternative minimum tax, as specified. This bill would provide that the credit would be refundable and would make an appropriation therefor.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17044.2 is added to the Revenue and Taxation Code, to read:

17044.2.
 (a) For each taxable year beginning on or after January 1, 2012, in addition to any other taxes imposed by this part, an additional tax at the rate of 0.7 percent shall be imposed on the portion of a taxpayer’s taxable income that exceeds one million dollars ($1,000,000).
(b) For purposes of applying Part 10.2 (commencing with Section 18401) of Division 2, the tax imposed under this section shall be treated as if imposed under Section 17041.
(c) The following shall not apply to the tax imposed by this section:
(1) The provisions of Section 17039, relating to the allowance of credits.
(2) The provisions of Section 17041, relating to filing status and recomputation of the income tax brackets.
(3) The provisions of Section 17045, relating to joint returns.
(d) Notwithstanding any other provision of this part, all revenues, less refunds, derived from the tax imposed pursuant to this section shall be deposited in the Earned Income Tax Credit Fund, hereby established in the State Treasury. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are hereby continuously appropriated, without regard to fiscal year, to the Franchise Tax Board for making refunds pursuant to subdivision (e) of Section 17052.1.

SECTION 1.SEC. 2.

 Section 17052.1 is added to the Revenue and Taxation Code, to read:

17052.1.
 (a) For each taxable year beginning on or after January 1, 2012, 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 the alternative minimum tax, if any, for the same taxable year.
(c) For purposes of this section, “federal credit amount” means the amount determined under Section 32 of the Internal Revenue Code as in effect on January 1, 2011.
(d) A credit shall not be allowed under this section to any of the following:
(1) Any person who is treated as a nonresident for any portion of the taxable year.
(2) Any person who is married, within the meaning of Section 17021.5, and files a separate return for the taxable year.
(e) (1) 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, shall be refunded to the taxpayer. Notwithstanding Section 13340 of the Government Code, and without regard to fiscal year, there is hereby continuously appropriated from the General Fund those amounts necessary to make the refunds pursuant to this subdivisions.
(2) If the amounts refunded to taxpayers pursuant to this section exceed the amount available in the Earned Income Tax Credit Fund, the Franchise Tax Board shall establish a wait list for refunds, with an order of priority based on the date the taxpayer’s return was received by the Franchise Tax Board. The Franchise Tax Board shall notify a taxpayer if he or she has been placed on the wait list.
(f) Notwithstanding any other state law, and to the extent permitted by federal law, amounts refunded pursuant to subdivision (e) shall be treated the same as the federal credit defined in subdivision (c) for the purpose of determining eligibility to receive benefits under Division 9 (commencing with Section 10000) of the Welfare and Institutions Code or amounts of those benefits.