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AB-927 Income taxes: credits: hiring.(2013-2014)

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AB927:v96#DOCUMENT

Amended  IN  Assembly  April 29, 2013
Amended  IN  Assembly  April 08, 2013
Amended  IN  Assembly  April 01, 2013

CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION

Assembly Bill
No. 927


Introduced by Assembly Member Muratsuchi

February 22, 2013


An act to add Sections 17053.81 and23623.1 and 23623.1 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 927, as amended, Muratsuchi. Income taxes: credits: hiring.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill would, under both laws, for taxable years beginning on or after January 1, 2014, allow a credit to a qualified employer, as defined, in an amount equal to $3,000 for each net increase in qualified full-time employee hired during the taxable year by a qualified employer, and an additional $1,000 per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a veteran or an additional $2,000 per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a service-connected disabled veteran, as provided. This bill would limit the total amount of credit allowed to a qualified employer to an amount not to exceed $5,000,000 for all taxable years. This bill would cap the total amount of credit which may be allowed under those provisions for any calendar year to $35,000,000.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 It is the intent of the Legislature to create a competitive tax policy for businesses involved with research, development, and manufacturing.

SEC. 2.

 Section 17053.81 is added to the Revenue and Taxation Code, to read:

17053.81.
 (a) (1) For each taxable year beginning on or after January 1, 2014, there shall be allowed to a qualified employer a credit against the “net tax,” as defined in Section 17039, in an amount described in paragraph (2).
(2) The amount of credit allowed under this section is as follows:
(A) (i) Three thousand dollars ($3,000) for each net increase in qualified full-time employee hired during the taxable year by a qualified employer.
(ii) An additional one thousand dollars ($1,000) per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a veteran or an additional two thousand dollars ($2,000) per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a service-connected disabled veteran, as measured by the percentage of increase in an annual full-time equivalent that the veteran or service-connected disabled veteran represents.
(B) The total amount of credits allowed under this section to a qualified employer shall not exceed five million dollars ($5,000,000) for all taxable years.
(b) For purposes of this section:
(1) “Annual full-time equivalent” means either of the following:
(A) In the case of a full-time employee paid hourly qualified wages, “annual full-time equivalent” means the total number of hours worked for the taxpayer by the employee (not to exceed 2,000 hours per employee) divided by 2,000.
(B) In the case of a salaried full-time employee, “annual full-time equivalent” means the total number of weeks worked for the taxpayer by the employee divided by 52.

(2)“Qualified full-time employee” means either of the following:

(A)An employee who was paid wages subject to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code by the qualified employer for services of not less than an average of 35 hours per week.

(B)An employee who was a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified employer.

(3)

(2) “Qualified employer” means a taxpayer who employed qualified full-time employees who are located in this state and meets any of the following:
(A) The taxpayer manufactures, assembles, tests, renovates, or converts aircraft and spacecraft.
(B) The taxpayer manufactures or designs aircraft or spacecraft engines and engine parts.
(C) The taxpayer manufactures or designs aircraft and spacecraft auxiliary components, including detection equipment, navigation, and guidance systems.
(D) The taxpayer provides aircraft and spacecraft support services, including launching, operating, and retrieving air and space vehicles.
(E) The taxpayer is a military contractor that is involved with aerospace defense has contracted with the United States military or federal government for the purpose of national defense related to aerospace, including the manufacturing of missiles and military airplanes.
(3) “Qualified full-time employee” means either of the following:
(A) An employee who was paid wages subject to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code by the qualified employer for services of not less than an average of 35 hours per week.
(B) An employee who was a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified employer.
(4) “Service-connected disabled veteran” means a veteran who is disabled by an injury or illness that was incurred or aggravated during active military service.
(5) “Veteran” means a person honorably discharged from the Armed Forces of the United States.
(c) The net increase in qualified full-time employees of a qualified employer shall be determined as provided by this subdivision:
(1) (A) The net increase in qualified full-time employees shall be determined on an annual full-time equivalent basis by subtracting from the amount determined in subparagraph (C) the amount determined in subparagraph (B).
(B) The total number of qualified full-time employees employed in the preceding taxable year by the taxpayer and by any trade or business acquired by the taxpayer during the preceding current taxable year.
(C) The total number of full-time employees employed in the current taxable year by the taxpayer and by any trade or business acquired during the current taxable year.
(2) For taxpayers who first commence doing business in this state during the taxable year, the number of full-time employees for the immediately preceding prior taxable year shall be zero.
(d) For purposes of this section:
(1) All employees of the trades or businesses that are treated as related under either Section 267, 318, or 707 of the Internal Revenue Code shall be treated as employed by a single taxpayer.
(2) In determining whether the taxpayer has first commenced doing business in this state during the taxable year, the provisions of subdivision (f) of Section 17276 17276.20, without application of paragraph (7) of that subdivision, shall apply.
(e) (1) The aggregate amount of credits that may be allowed for any calendar taxable year under this section and Section 23623.1 shall not exceed an amount equal to thirty-five million dollars ($35,000,000).
(2) The credits allowed under this section and Section 23623.1 shall be allowed to a taxpayer on a first-come-first-served basis.
(3) The taxpayer shall claim the credit on a timely filed original return.
(4) The date a return is received shall be determined by the Franchise Tax Board.
(5) (A) The determinations of the Franchise Tax Board with respect to the date a return is received and whether a return has been timely filed for purposes of this subdivision may not be reviewed in any administrative or judicial proceeding.
(B) Any disallowance of a credit claimed due to a determination under this subdivision, including the application of the limitation specified in paragraph (1), shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from such disallowance may be assessed by the Franchise Tax Board in the same manner as provided by Section 19051.
(6) The Franchise Tax Board shall periodically provide notice on its Internet Web site with respect to the amount of credit under this section and Section 23623.1 claimed on timely filed original returns received by the Franchise Tax Board.

(f)In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and succeeding years if necessary, until the credit is exhausted.

(g)

(f) (1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines necessary to avoid the application of subparagraph (B) of paragraph (2) of subdivision (a) through split-ups, shell corporations, partnerships, tiered ownership structures, or otherwise.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

SEC. 3.

 Section 23623.1 is added to the Revenue and Taxation Code, to read:

23623.1.
 (a) (1) For each taxable year beginning on or after January 1, 2014, there shall be allowed to a qualified employer a credit against the “tax,” as defined in Section 23036, in an amount described in paragraph (2).
(2) The amount of credit allowed under this section is as follows:
(A) (i) Three thousand dollars ($3,000) for each net increase in qualified full-time employee hired during the taxable year by a qualified employer.
(ii) An additional one thousand dollars ($1,000) per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a veteran or an additional two thousand dollars ($2,000) per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a service-connected disabled veteran, as measured by the percentage of increase in an annual full-time equivalent that the veteran or service-connected disabled veteran represents.
(B) The total amount of credits allowed under this section to a qualified employer shall not exceed five million dollars ($5,000,000) for all taxable years.
(b) For purposes of this section:
(1) “Annual full-time equivalent” means either of the following:
(A) In the case of a full-time employee paid hourly qualified wages, “annual full-time equivalent” means the total number of hours worked for the taxpayer by the employee (not to exceed 2,000 hours per employee) divided by 2,000.
(B) In the case of a salaried full-time employee, “annual full-time equivalent” means the total number of weeks worked for the taxpayer by the employee divided by 52.

(2)“Qualified full-time employee” means either of the following:

(A)An employee who was paid wages subject to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code by the qualified employer for services of not less than an average of 35 hours per week.

(B)An employee who was a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified employer.

(3)

(2) “Qualified employer” means a taxpayer who employed qualified full-time employees who are located in this state and meets any of the following:
(A) The taxpayer manufactures, assembles, tests, renovates, or converts aircraft and spacecraft.
(B) The taxpayer manufactures or designs aircraft or spacecraft engines and engine parts.
(C) The taxpayer manufactures or designs aircraft and spacecraft auxiliary components, including detection equipment, navigation, and guidance systems.
(D) The taxpayer provides aircraft and spacecraft support services, including launching, operating, and retrieving air and space vehicles.
(E) The taxpayer is a military contractor that is involved with aerospace defense has contracted with the United States military or federal government for the purpose of national defense related to aerospace, including the manufacturing of missiles and military airplanes.
(3) “Qualified full-time employee” means either of the following:
(A) An employee who was paid wages subject to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code by the qualified employer for services of not less than an average of 35 hours per week.
(B) An employee who was a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified employer.
(4) “Service-connected disabled veteran” means a veteran who is disabled by an injury or illness that was incurred or aggravated during active military service.
(5) “Veteran” means a person honorably discharged from the Armed Forces of the United States.
(c) The net increase in qualified full-time employees of a qualified employer shall be determined as provided by this subdivision:
(1) (A) The net increase in qualified full-time employees shall be determined on an annual full-time equivalent basis by subtracting from the amount determined in subparagraph (C) the amount determined in subparagraph (B).
(B) The total number of qualified full-time employees employed in the preceding taxable year by the taxpayer and by any trade or business acquired by the taxpayer during the preceding current taxable year.
(C) The total number of full-time employees employed in the current taxable year by the taxpayer and by any trade or business acquired during the current taxable year.
(2) For taxpayers who first commence doing business in this state during the taxable year, the number of full-time employees for the immediately preceding prior taxable year shall be zero.
(d) For purposes of this section:
(1) All employees of the trades or businesses that are treated as related under either Section 267, 318, or 707 of the Internal Revenue Code shall be treated as employed by a single taxpayer.
(2) In determining whether the taxpayer has first commenced doing business in this state during the taxable year, the provisions of subdivision (f) (g) of Section 17276 24416.20, without application of paragraph (7) of that subdivision, shall apply.
(e) (1) The aggregate amount of credits that may be allowed for any calendar taxable year under this section and Section 17053.81 shall not exceed an amount equal to thirty-five million dollars ($35,000,000).
(2) The credits allowed under this section and Section 17053.81 shall be allowed to a taxpayer on a first-come-first-served basis.
(3) The taxpayer shall claim the credit on a timely filed original return.
(4) The date a return is received shall be determined by the Franchise Tax Board.
(5) (A) The determinations of the Franchise Tax Board with respect to the date a return is received and whether a return has been timely filed for purposes of this subdivision may not be reviewed in any administrative or judicial proceeding.
(B) Any disallowance of a credit claimed due to a determination under this subdivision, including the application of the limitation specified in paragraph (1), shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from such disallowance may be assessed by the Franchise Tax Board in the same manner as provided by Section 19051.
(6) The Franchise Tax Board shall periodically provide notice on its Web site with respect to the amount of credit under this section and Section 17053.81 claimed on timely filed original returns received by the Franchise Tax Board.

(f)In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding years if necessary, until the credit is exhausted.

(g)

(f) (1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines necessary to avoid the application of subparagraph (B) of paragraph (2) of subdivision (a) through split-ups, shell corporations, partnerships, tiered ownership structures, or otherwise.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

SEC. 4.

  This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.