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AB-1542 Income taxes: Worker Training Program Tax Credit.(2019-2020)

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Date Published: 05/07/2019 09:00 PM
AB1542:v96#DOCUMENT

Amended  IN  Assembly  May 07, 2019
Amended  IN  Assembly  April 30, 2019
Amended  IN  Assembly  March 28, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1542


Introduced by Assembly Member Blanca Rubio

February 22, 2019


An act to add and repeal Sections 17053.80 and 23680 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1542, as amended, Blanca Rubio. Income taxes: Worker Training Program Tax Credit.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2020, and before January 1, 2025, to a qualified employer in an amount equal to 50% 30% of the expenditures paid or direct costs incurred for the implementation of an eligible worker training program, as defined, by the qualified employer during the taxable year, not to exceed a specified amount. The bill would also require the Franchise Tax Board to provide a report to the Legislature regarding the credits, as provided.
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.

 In seeking to address the growing gap between the needs of California’s industries and the skills of California’s workforce, it is the intent of the Legislature to reduce barriers to establishing employer-training programs and thereby encourage California’s employers to invest in upskilling their workforce, preserve employment, increase the productivity of each employee, and prepare the state for the 21st century economy.

SEC. 2.

 Section 17053.80 is added to the Revenue and Taxation Code, to read:

17053.80.
 (a) (1) For each taxable year beginning on or after January 1, 2020, and before January 1, 2025, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, to a qualified employer an amount equal to 50 30 percent of all expenditures paid or direct costs incurred for the implementation of an eligible worker training program by the qualified employer during the taxable year, subject to paragraph (2).
(2) The amount of credit allowed to a qualified employer per taxable year shall not exceed five thousand dollars ($5,000) per qualified full-time employee completing an eligible worker training program established by the qualified employer.
(b) For purposes of this section:
(1) (A) “Eligible worker training program” means a training program that upgrades, retrains, or enhances the qualified employee’s job-related skills in a manner that is necessary to adapt to new demands in the workplace due to the adoption of new technology, equipment, or innovation.
(B) An eligible worker training program shall not include a training program that is required by a federal or state entity or that is operated and administered by a federal or state entity.
(2) “Qualified employer” means an entity whose primary business is in an industry that satisfies all of the following criteria:
(A) Is an industry experiencing a shortage of workers due to a lack of technical skills in the workforce.
(B) Is an industry experiencing technological disruption requiring significant capital investment for existing businesses to remain competitive.
(C) Is an industry providing middle-skill occupation, as identified by the Employment Development Department.
(3) “Qualified full-time employee” means an individual who meets all of the following requirements:
(A) Performs at least 50 percent of their services for the qualified employer during the taxable year.
(B) Performs at least 50 percent of their services for the qualified employer in California.
(C) Has been employed by a qualified employer for at least six months and intends to remain employed by the qualified employer for 18 months after the completion of an eligible worker training program.
(D) Is paid no more than one hundred twenty thousand dollars ($120,000) per year.
(E) Satisfies either of the following conditions:
(i) Is paid wages by the qualified employer for services not less than an average of 35 hours per week.
(ii) Is 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.
(c) This credit shall be in lieu of any other credit or deduction that the taxpayer may otherwise claim pursuant to this part with respect to the same item of expense.

(c)

(d) (1) The Franchise Tax Board may adopt regulations as necessary or appropriate to implement the purposes of this section, including guidelines establishing procedures for claiming the credit allowed pursuant to this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

(d)

(e) This section shall remain in effect only until December 1, 2025, and as of that date is repealed.

SEC. 3.

 Section 23680 is added to the Revenue and Taxation Code, to read:

23680.
 (a) (1) For each taxable year beginning on or after January 1, 2020, and before January 1, 2025, there shall be allowed as a credit against the “tax,” as defined in Section 23036, to a qualified employer an amount equal to 50 30 percent of all expenditures paid or direct costs incurred for the implementation of an eligible worker training program by the qualified employer during the taxable year, subject to paragraph (2).
(2) The amount of credit allowed to a qualified employer per taxable year shall not exceed five thousand dollars ($5,000) per qualified full-time employee completing an eligible worker training program established by the qualified employer.
(b) For purposes of this section:
(1) (A) “Eligible worker training program” means a training program that upgrades, retrains, or enhances the qualified employee’s job-related skills in a manner that is necessary to adapt to new demands in the workplace due to the adoption of new technology, equipment, or innovation.
(B) An eligible worker training program shall not include a training program that is required by a federal or state entity or that is operated and administered by a federal or state entity.
(2) “Qualified employer” means an entity whose primary business is in an industry that satisfies all of the following criteria:
(A) Is an industry experiencing a shortage of workers due to a lack of technical skills in the workforce.
(B) Is an industry experiencing technological disruption requiring significant capital investment for existing businesses to remain competitive.
(C) Is an industry providing middle-skill occupation, as identified by the Employment Development Department.
(3) “Qualified full-time employee” means an individual who meets all of the following requirements:
(A) Performs at least 50 percent of their services for the qualified employer during the taxable year.
(B) Performs at least 50 percent of their services for the qualified employer in California.
(C) Has been employed by a qualified employer for at least six months and intends to remain employed by the qualified employer for 18 months after the completion of an eligible worker training program.
(D) Is paid no more than one hundred twenty thousand dollars ($120,000) per year.
(E) Satisfies either of the following conditions:
(i) Is paid wages by the qualified employer for services not less than an average of 35 hours per week.
(ii) Is 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.
(c) This credit shall be in lieu of any other credit or deduction that the taxpayer may otherwise claim pursuant to this part with respect to the same item of expense.

(c)

(d) (1) The Franchise Tax Board may adopt regulations as necessary or appropriate to implement the purposes of this section, including guidelines establishing procedures for claiming the credit allowed pursuant to this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

(d)

(e) This section shall remain in effect only until December 1, 2025, and as of that date is repealed.

SEC. 4.

 (a) The Franchise Tax Board shall submit a report to the Legislature commencing October 1, 2022, and each October 1 thereafter until Sections 17053.80 and 23680 of the Revenue and Taxation Code are repealed, assessing whether the credits were effective in increasing employer investment in their California-based workforce, that includes, but is not limited to:
(1) The number of tax returns claiming a credit allowed pursuant to Sections 17053.80 and 23680 of the Revenue and Taxation Code.
(2) The number of employees represented on tax returns claiming a credit pursuant to Sections 17053.80 and 23680 of the Revenue and Taxation Code.
(3) The average credit amount allowed for taxpayers claiming a credit pursuant to Sections 17053.80 and 23680 of the Revenue and Taxation Code.
(4) The average credit amount allowed per employee of taxpayers claiming a credit pursuant to Sections 17053.80 and 23680 of the Revenue and Taxation Code.
(5) The industry sectors claiming a credit pursuant to Sections 17053.80 and 23680 of the Revenue and Taxation Code.
(b) The report shall be submitted pursuant to Section 9795 of the Government Code.

SEC. 5.

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