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AB-2493 Income tax credits: Homelessness Prevention Pilot Act of 2021.(2019-2020)

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Date Published: 02/19/2020 09:00 PM
AB2493:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2493


Introduced by Assembly Member Choi

February 19, 2020


An act to add and repeal Sections 17053.81 and 23681 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2493, as introduced, Choi. Income tax credits: Homelessness Prevention Pilot Act of 2021.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill, under both laws, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, would allow a credit against those taxes in an amount equal to $500 for each qualified property owned by the taxpayer, not to exceed $2,000 per taxable year.
The bill would define a qualified property to mean a unit located in this state that is rented to, or leased by, qualified persons at an amount that is below market rates for the entire taxable year and a nonprofit organization subsidizes the rent or lease of the unit in whole or in part pursuant to an agreement with the taxpayer.
Existing law requires a bill that would authorize certain tax expenditures, including a new credit against the tax imposed by the Personal Income Tax Law or the Corporation Tax Law, to contain specific goals, purposes, and objectives that the new tax expenditure will achieve, and detailed performance indicators and data collection requirements for determining whether the new tax expenditure achieves these goals, purposes, and objectives.
This bill would make findings specifying the goals, purposes, and objectives of the above-described tax credits and would require the Franchise Tax Board to provide a report regarding the credit.
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.

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

17053.81.
 (a) For each taxable year beginning on or after January 1, 2021, and before January 1, 2026, there shall be allowed a credit against the “net tax,” as defined in Section 17039, in an amount equal to five hundred dollars ($500) for each qualified property owned by the taxpayer, not to exceed two thousand dollars ($2,000) per taxable year.
(b) For purposes of this section, both of the following shall apply:
(1) “Below market rate” means at a rate that equal to or less than 75 percent of the measured market rate in the area where the qualified property is located for a unit that is of a similarly-sized square footage space and similar property description to that qualified property.
(2) “Nonprofit organization” means an organization that is exempt from federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code that provides housing assistance in the form of subsidies.
(3) “Qualified person” means an individual or family receiving housing assistance from a nonprofit organization in the form of full or partial rental in order to rent housing.
(4) “Qualified property” means a unit located in this state that meets both of the following criteria:
(A) Is rented to, or leased by, qualified persons at an amount that is below market rates for the entire taxable year.
(B) A nonprofit organization subsidizes the rent or lease of the unit in whole or in part pursuant to an agreement with the taxpayer.
(c) A taxpayer that owns a proportional share of the qualified property may claim the credit allowed by this section based upon the taxpayer’s ownership share of the property.
(d) The taxpayer shall maintain a record of any agreement between the taxpayer and the nonprofit organization that indicates the rental or lease of qualified property was below market rate and was subsidized in whole or in part by the nonprofit organization. The taxpayer shall provide that record to the Franchise Tax Board upon request.
(e) 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 taxable year, and one succeeding year if necessary, until the credit is exhausted.
(f) This section and Section 23681 may be known and cited as the Homelessness Prevention Pilot Act of 2021.
(g) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

SEC. 2.

 Section 23681 is added to the Revenue and Taxation Code, to read:

23681.
 (a) For each taxable year beginning on or after January 1, 2021, and before January 1, 2026, there shall be allowed a credit against the “tax,” as defined in Section 23036, in an amount equal to five hundred dollars ($500) for each qualified property owned by the taxpayer, not to exceed two thousand dollars ($2,000) per taxable year.
(b) For purposes of this section, both of the following shall apply:
(1) “Below market rate” means at a rate that equal to or less than 75 percent of the measured market rate in the area where the qualified property is located for a unit that is of a similarly-sized square footage space and similar property description to that qualified property.
(2) “Nonprofit organization” means an organization that is exempt from federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code that provides housing assistance in the form of subsidies.
(3) “Qualified person” means an individual or family receiving housing assistance from a nonprofit organization in the form of full or partial subsidies in order to rent housing.
(4) “Qualified property” means a unit located in this state that meets both of the following criteria:
(A) Is rented to, or leased by, qualified persons at an amount that is below market rates for the entire taxable year.
(B) A nonprofit organization subsidizes the rent or lease of the unit in whole or in part pursuant to an agreement with the taxpayer.
(c) A taxpayer that owns a proportional share of the qualified property may claim the credit allowed by this section based upon the taxpayer’s ownership share of the property.
(d) The taxpayer shall maintain a record of any agreement between the taxpayer and the nonprofit organization that indicates the rental or lease of qualified property was below market rate and was subsidized in whole or in part by the nonprofit organization. The taxpayer shall provide that record to the Franchise Tax Board upon request.
(e) In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and one succeeding year if necessary, until the credit is exhausted.
(f) This section and Section 17053.81 may be known and cited as the Homelessness Prevention Pilot Act of 2021.
(g) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

SEC. 3.

 (a) For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Sections 17053.81 and 23681 of the Revenue and Taxation Code as added by this act, hereafter “the credits,” the Legislature finds and declares as follows:
(1) The specific goal, purpose, and objective of the credits is to incentivize small unit owners to agree to lower rental rates in connection with an organization described in Section 501(c)(3) of the Internal Revenue Code to preempt the situation of an individual or families becoming homeless.
(2) The performance indicators for the Legislature to use when measuring whether the credits meets the goal, purpose, and objective stated in paragraph (1) would be measured by the allowance of the credits by taxpayers in the private sector.
(b) Notwithstanding Section 19542 of the Revenue and Taxation Code, the Franchise Tax Board shall prepare a report, in compliance with Section 9795 of the Government Code, on the allowance of the credits under Sections 17053.81 and 23681 of the Revenue and Taxation Code, as added by this act, to the Legislature during the odd-numbered calendar years through 2027.

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.