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AB-151 Personal income taxes: exclusion: uniformed services: retirement pay.(2019-2020)

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Date Published: 01/06/2020 02:00 PM
AB151:v98#DOCUMENT

Amended  IN  Assembly  January 06, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 151


Introduced by Assembly Member Voepel

January 07, 2019


An act to amend Section 69436 of the Education Code, relating to student financial aid. An act to add and repeal Section 17132.9 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 151, as amended, Voepel. Student financial aid: Cal Grant Program: California Community College Transfer Entitlement Program. Personal income taxes: exclusion: uniformed services: retirement pay.
The Personal Income Tax Law imposes a tax on individual taxpayers measured by the taxpayer’s taxable income for the taxable year, but excludes certain items of income from the computation of tax, including an exclusion for combat-related special compensation. Existing law limits the collection and use of taxpayer information and provides that any unauthorized use of this information is punishable as a misdemeanor.
This bill, for taxable years beginning on or after January 1, 2020, and before January 1, 2030, would exclude from gross income specified amounts of retirement pay received by a taxpayer from the federal government for service performed in the uniformed services, as defined, during the taxable year.
This bill would require the Legislative Analyst, in collaboration with the Department of Veterans Affairs, to write and submit a report to the Legislature on or before December 1, 2029, on the effectiveness of the tax exclusion described above. The bill would require the Franchise Tax Board and the Department of Veterans Affairs to provide any data requested by the Legislative Analyst to write the report, and would make taxpayer information received by the Legislative Analyst subject to limitation on the collection and use of that information. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.

Under existing law, the Student Aid Commission administers the Cal Grant Program, among other duties. The Cal Grant Program comprises the Cal Grant A and B Entitlement awards, the California Community College Transfer Entitlement awards, the Competitive Cal Grant A and B awards, the Cal Grant C awards, and the Cal Grant T awards. Existing law establishes eligibility requirements for awards under these programs for participating students attending qualifying institutions, as defined. Under existing law, to be eligible for an award under the California Community College Transfer Entitlement Program, an applicant may not be 28 years of age or older by December 31 of the award year, among other requirements.

This bill would raise that limit to 30 years of age or older.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

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


SECTION 1.

 Section 17132.9 is added to the Revenue and Taxation Code, to read:

17132.9.
 (a) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, gross income shall not include retirement pay received by a taxpayer from the federal government for service in the uniformed services during the taxable year in an amount equal to the following:
(1) For the first taxable year in which the exclusion provided by this section is allowed to the taxpayer, 50 percent of the amount of retirement pay received by a taxpayer from the federal government for service in the uniformed services during the taxable year.
(2) For the first taxable year following the taxable year in which the exclusion provided by this section is first allowed to the taxpayer, 50 percent of the amount of retirement pay received by a taxpayer from the federal government for service in the uniformed services during the taxable year.
(3) For the second taxable year following the taxable year in which the exclusion provided by this section is first allowed to the taxpayer, 75 percent of the amount of retirement pay received by a taxpayer from the federal government for service in the uniformed services during the taxable year.
(4) For the third taxable year following the taxable year in which the exclusion provided by this section is first allowed to the taxpayer, 75 percent of the amount of retirement pay received by a taxpayer from the federal government for service in the uniformed services during the taxable year.
(5) For the fourth taxable year following the taxable year in which the exclusion provided by this section is first allowed to the taxpayer, and every taxable year thereafter, 100 percent of the amount of retirement pay received by a taxpayer from the federal government for service in the uniformed services during the taxable year.
(b) For purposes of this section:
(1) “Armed Forces of the United States” has the same meaning as that term is defined in Section 17022.
(2) “Uniformed services” means Armed Forces of the United States, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, and the commissioned corps of the United States Public Health Service.
(c) This section shall remain in effect only until December 1, 2030, and as of that date is repealed.

SEC. 2.

 It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act. With respect to Section 17132.9 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares the following:
(a) The specific goals, purposes, and objectives of the tax exclusion allowed by Section 17132.9 of the Revenue and Taxation Code, as added by this act, are as follows:
(1) Honor the service of California veterans and provide fiscal relief so they will remain or retire in California.
(2) Increase the number of highly skilled retired veterans in California’s workforce.
(b) Detailed performance indicators for the Legislature to use in determining whether the tax exclusion allowed by Section 17132.9 of the Revenue and Taxation Code, as added by this act, meets the goals, purposes, and objectives described in subdivision (a) are as follows:
(1) The number of veterans taking advantage of the tax exclusion.
(2) The economic security of veterans in California.
(3) The number of retired veterans leaving California.
(c) The data collection requirements for the tax exclusion allowed by Section 17132.9 of the Revenue and Taxation Code, as added by this act, are as follows:
(1) On or before December 1, 2029, the Legislative Analyst, in collaboration with the Department of Veterans Affairs, shall write and submit a report to the Legislature on the effectiveness of the tax exclusion allowed by Section 17132.9 of the Revenue and Taxation Code, as added by this act. The report shall include, but not be limited to, an analysis of the number of veterans taking advantage of the exclusion and the impact of the tax exclusion on the economic security of veterans in California and the number of retired veterans leaving California. The information in the report shall be compiled in an aggregate manner to preserve taxpayer confidentiality. The report shall be submitted in compliance with Section 9795 of the Government Code.
(2) To write the report required by this subdivision, the Legislative Analyst may request information from the Franchise Tax Board and the Department of Veterans Affairs.
(3) Notwithstanding Section 19542 of the Revenue and Taxation Code, the Franchise Tax Board and the Department of Veterans Affairs shall provide any data requested by the Legislative Analyst pursuant to this subdivision. Taxpayer information received pursuant to this section by the Legislative Analyst is subject to Section 19542 of the Revenue and Taxation Code.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 4.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SECTION 1.Section 69436 of the Education Code is amended to read:
69436.

(a)A student who was not awarded a Cal Grant A or B award pursuant to Article 2 (commencing with Section 69434) or Article 3 (commencing with Section 69435) at the time of his or her high school graduation but, at the time of transfer from a California community college to a qualifying baccalaureate program or upon matriculation into the upper division coursework of a community college baccalaureate program, described in Article 3 (commencing with Section 78040) of Chapter 1 of Part 48 of Division 7, meets all of the criteria set forth in subdivision (b), shall be entitled to a Cal Grant A or B award.

(b)Any California resident transferring from a California community college to a qualifying institution that offers a baccalaureate degree or who matriculates into the upper division coursework of a community college baccalaureate program, described in Article 3 (commencing with Section 78040) of Chapter 1 of Part 48 of Division 7, is entitled to receive, and the commission, or a qualifying institution pursuant to Article 8 (commencing with Section 69450), shall award, a Cal Grant A or B award depending on the eligibility determined pursuant to subdivision (c), if all of the following criteria are met:

(1)A complete official financial aid application has been submitted or postmarked pursuant to Section 69432.9, no later than the March 2 of the year immediately preceding the award year.

(2)The student demonstrates financial need pursuant to Section 69433.

(3)The student has earned a community college grade point average of at least 2.4 on a 4.0 scale and is eligible to transfer to a qualifying institution that offers a baccalaureate degree.

(4)The student’s household has an income and asset level not exceeding the limits set forth in Section 69432.7.

(5)The student is pursuing a baccalaureate degree that is offered by a qualifying institution.

(6)The student is enrolled at least part time.

(7)The student meets the general Cal Grant eligibility requirements set forth in Article 1 (commencing with Section 69430).

(8)The student will not be 30 years of age or older by December 31 of the award year.

(9)The student graduated from a California high school or its equivalent during or after the 2000–01 academic year.

(10)(A)Except as provided for in subparagraph (B), the student attended a California community college in the academic year immediately preceding the academic year for which the award will be used.

(B)A student otherwise eligible to receive an award pursuant to this section, who attended a California community college in the 2011–12 academic year, may use the award for the 2012–13 and 2013–14 academic years.

(c)The amount and type of the award pursuant to this article shall be determined as follows:

(1)For applicants with income and assets at or under the Cal Grant A limits, the award amount shall be the amount established pursuant to Article 2 (commencing with Section 69434).

(2)For applicants with income and assets at or under the Cal Grant B limits, the award amount shall be the amount established pursuant to Article 3 (commencing with Section 69435).

(d)(1)A student meeting the requirements of paragraph (9) of subdivision (b) by means of high school graduation, rather than its equivalent, shall be required to have graduated from a California high school, unless that California resident graduated from a high school outside of California due solely to orders received from a branch of the United States Armed Forces by that student or by that student’s parent or guardian that required that student to be outside of California at the time of high school graduation.

(2)For the purposes of this article, all of the following are exempt from the requirements of subdivision (e) of Section 69433.9 and paragraph (9) of subdivision (b) of this section:

(A)A student for whom a claim under this article was paid prior to December 1, 2005.

(B)A student for whom a claim under this article for the 2004–05 award year or the 2005–06 award year was or is paid on or after December 1, 2005, but no later than October 15, 2006.

(C)Commencing with the 2017–18 academic year, a student who did not graduate from high school or its equivalent and was a California resident, as determined pursuant to Article 5 (commencing with Section 68060) of Chapter 1 of Part 41, on his or her 18th birthday.

(3)(A)The commission, or a qualifying institution pursuant to Article 8 (commencing with Section 69450), shall make preliminary awards to all applicants currently eligible for an award under this article. At the time an applicant receives a preliminary award, the commission, or a qualifying institution pursuant to Article 8 (commencing with Section 69450), shall require that applicant to affirm, in writing, under penalty of perjury, that he or she meets the requirements set forth in subdivision (e) of Section 69433.9, paragraph (9) of subdivision (b) of this section, and paragraph (1) of this subdivision. The commission, or a qualifying institution pursuant to Article 8 (commencing with Section 69450), shall notify each person who receives a preliminary award under this paragraph that his or her award is subject to an audit pursuant to subparagraph (B).

(B)The commission shall select, at random, a minimum of 10 percent of the new and renewal awards made under subparagraph (A), and shall require, prior to the disbursement of Cal Grant funds to the affected postsecondary institution, that the institution verify that the recipient meets the requirements of subdivision (e) of Section 69433.9, paragraph (9) of subdivision (b) of this section, and paragraph (1) of this subdivision. An award that is audited under this paragraph and found to be valid shall not be subject to a subsequent audit.

(C)Pursuant to Section 69517.5, the commission shall seek repayment of any and all funds found to be improperly disbursed under this article.

(D)On or before November 1 of each year, the commission shall submit a report to the Legislature and the Governor including, but not necessarily limited to, both of the following:

(i)The number of awards made under this article in the preceding 12 months.

(ii)The number of new and renewal awards selected, in the preceding 12 months, for verification under subparagraph (B), and the results of that verification with respect to students at the University of California, at the California State University, at independent nonprofit institutions, and at independent for-profit institutions.