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AB-2496 Income taxes: credits: cleaning and sanitizing supplies: COVID-19.(2019-2020)

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Date Published: 05/01/2020 09:00 PM
AB2496:v98#DOCUMENT

Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2496


Introduced by Assembly Member Choi

February 19, 2020


An act to add Sections 17053.4 and 23606 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. An act to add and repeal Sections 17053.2 and 23664 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2496, as amended, Choi. Income taxes: credits: employer-provided child care credit. Income taxes: credits: cleaning and sanitizing supplies: COVID-19.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2020, and before January 1, 2021, to a taxpayer that is a business with a physical location in the state in an amount equal to the costs paid or incurred by the qualified taxpayer during the taxable year for the purchase of cleaning and sanitizing supplies used at business locations in the state to prevent the transmission of the novel coronavirus (COVID-19). The bill would also include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing federal income tax law allows a credit against federal income taxes in an amount equal to the sum of 25% of the qualified child care expenditures, as defined, and 10% of the qualified child care resource and referral expenditures of the taxpayer for the taxable year.

This bill would, in modified conformity with that federal income tax credit provision, allow a credit against those taxes for each taxable year beginning on or after January 1, 2020, and before January 1, 2025, in an amount equal to the sum of 25% of the qualified child care expenditures and 10% of the qualified child care resource and referral expenditures of the taxpayer for the taxable year. The bill would modify the definition of qualified child care expenditures to include any amount paid or incurred for any of the following: (1) to acquire, construct, rehabilitate, or expand property which is to be used as part of a qualified child care facility located in this state of the taxpayer, (2) operating costs of a qualified child care facility located in this state of the taxpayer, and (3) under a contract with a qualified child care facility in this state to provide child care services to employees of the taxpayer who are paid less than $36,000 in gross wages by the taxpayer in the taxable year. The bill would, in modified conformity with the federal income tax credit provision, provide for recapture of any acquisition and construction credit if there is a recapture event, as defined, with respect to any qualified child care facility of the taxpayer.

This bill would make specified findings detailing the goals, purposes, and objectives of the above-described tax credits and would require the Franchise Tax Board to make annual written reports that include specified data to the Legislature for measuring whether the credits meet those goals, purposes, and objectives.

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 17053.2 is added to the Revenue and Taxation Code, to read:

17053.2.
 (a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2021, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer in an amount equal to the costs paid or incurred by the qualified taxpayer during the taxable year for the purchase of cleaning and sanitizing supplies used at business locations in the state to prevent the transmission of the novel coronavirus (COVID-19).
(b) For purposes of this section, “qualified taxpayer” means a taxpayer that is a business with a physical location in the state.
(c) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.
(d) 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 succeeding seven years as necessary, until the credit is exhausted.
(e) For purposes of complying with Section 41, the Legislature finds as follows:
(1) The purpose of the tax expenditures allowed by this section and Section 23664 is to help reimburse those businesses that incurred extra costs to protect their employees and the public and prevent the transmission of the novel coronavirus (COVID-19).
(2) Notwithstanding Section 19542, in order to provide information on the use of these tax expenditures, the Franchise Tax Board shall produce a report for the Legislature in compliance with Section 9795 of the Government Code.
(f) This section shall remain in effect only until December 1, 2021, and as of that date is repealed. However, any unused credit may continue to be carried forward, as provided in subdivision (d), until the credit is exhausted.

SEC. 2.

 Section 23664 is added to the Revenue and Taxation Code, to read:

23664.
 (a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2021, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer in an amount equal to the costs paid or incurred by the qualified taxpayer during the taxable year for the purchase of cleaning and sanitizing supplies used at business locations in the state to prevent the transmission of the novel coronavirus (COVID-19).
(b) For purposes of this section, “qualified taxpayer” means a taxpayer that is a business with a physical location in the state.
(c) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.
(d) 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 taxable year, and succeeding seven years as necessary, until the credit is exhausted.
(e) This section shall remain in effect only until December 1, 2021, and as of that date is repealed. However, any unused credit may continue to be carried forward, as provided in subdivision (d), until the credit is exhausted.

SEC. 3.

 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 17053.4 is added to the Revenue and Taxation Code, to read:
17053.4.

(a)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 by Section 17039) an amount determined in accordance with subsections (a), (b), and (c) of Section 45F of the Internal Revenue Code, relating to employer-provided child care credit, as amended by Public Law 107-147, except as follows:

(1)Section 45F(c)(1)(A)(iii) is modified by deleting “employees of the taxpayer” and inserting in lieu thereof the following: “employees of the taxpayer who are paid less than thirty-six thousand dollars ($36,000) in gross wages by the taxpayer in the taxable year.”

(2)Any reference to “qualified child care facility” shall only mean a qualified childcare facility located in California.

(3)Any reference to “child care resource and referral services” shall only mean services provided in California.

(b)Section 45F(d), relating to recapture of acquisition and construction credit, shall apply for purposes of a credit allowed by this section, except as follows:

(1)Section 45F(d)(1) is modified by deleting “under this chapter” and inserting in lieu thereof “this part.”

(2)Section 45F(d)(1)(B) is modified by deleting “Section 38” and inserting in lieu thereof “subdivision (a).”

(3)The reference to “this section” in Section 45F(d)(4)(A) shall mean this section of the Revenue and Taxation Code.

(4)Section 45F(d)(4)(A) is modified to delete “carryforwards and carrybacks under Section 39” and inserting in lieu thereof “the carryover amount allowed in subdivision (e).”

(5)Section 45F(d)(4)(B) shall not apply and instead the following shall apply: “Any increase in tax due to the application of Section 45F(d)(1) by this subdivision shall not be treated as a tax imposed by this part for purposes of determining the amount of any credit allowed under this part or for purposes of Chapter 2.1 (commencing with Section 17062).”

(6)Section 45F(d)(4)(C) is modified by deleting “under this subsection” and inserting in lieu thereof “due to the application of Section 45F(d)(1) by this subdivision.”

(c)Section 45F(e), relating to special rules, shall apply for purposes of a credit allowed by this section.

(d)Section 45F(f), relating to no double benefit, shall apply for purposes of this part with respect to a credit allowed by this section, except as follows:

(1)Section 45F(f)(1)(B), relating to certain dispositions, shall not apply and instead the following shall apply:

(A)If, during any taxable year, there is a recapture amount determined with respect to any property the basis of which was reduced due to the application of Section 45F(f) by this subdivision, the basis of the property (immediately before the event resulting in the recapture) shall be increased by an amount equal to the recapture amount.

(B)For purposes of this section, “recapture amount” means any increase in tax determined by application of Section 45F(d) by subdivision (b) or adjustment in the carryover amount allowed by subdivision (e).

(2)The reference to “this section” in Section 45F(f)(1)(A) shall mean this section of the Revenue and Taxation Code.

(3)Section 45F(f)(2) is modified by deleting “this chapter with respect to the amount of the credit determined under this section” and inserting in lieu thereof “this part with respect to the amount of the credit determined under this section.”

(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 year, and one succeeding year after that if necessary, until the credit has been exhausted.

SEC. 2.Section 23606 is added to the Revenue and Taxation Code, to read:
23606.

(a)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 by Section 23036) an amount determined in accordance with subsections (a), (b), and (c) Section 45F of the Internal Revenue Code, relating to employer-provided child care credit, as amended by Public Law 107-147, except as follows:

(1)Section 45F(c)(1)(A)(iii) is modified by deleting “employees of the taxpayer” and inserting in lieu thereof the following: “employees of the taxpayer who are paid less than thirty-six thousand dollars ($36,000) in gross wages by the taxpayer in the taxable year.”

(2)Any reference to “qualified child care facility” shall only mean a qualified childcare facility located in California.

(3)Any reference to “child care resource and referral services” shall only mean services provided in California.

(b)Section 45F(d), relating to recapture of acquisition and construction credit, shall apply for purposes of a credit allowed by this section, except as follows:

(1)Section 45F(d)(1) is modified by deleting “under this chapter” and inserting in lieu thereof “this part.”

(2)Section 45F(d)(1)(B) is modified by deleting “Section 38” and inserting in lieu thereof “subdivision (a).”

(3)The reference to “this section” in Section 45F(d)(4)(A) shall mean this section of the Revenue and Taxation Code.

(4)Section 45F(d)(4)(A) is modified to delete “carryforwards and carrybacks under Section 39” and inserting in lieu thereof “the carryover amount allowed in subdivision (e).”

(5)Section 45F(d)(4)(B) shall not apply and instead the following shall apply: “Any increase in tax due to the application of Section 45F(d)(1) by this subdivision shall not be treated as a tax imposed by this part for purposes of determining the amount of any credit allowed under this part or for purposes of Chapter 2.5 (commencing with Section 23400).”

(6)Section 45F(d)(4)(C) is modified by deleting “under this subsection” and inserting in lieu thereof “due to the application of Section 45F(d)(1) by this subdivision.”

(c)Section 45F(e), relating to special rules, shall apply for purposes of a credit allowed by this section.

(d)Section 45F(f), relating to no double benefit, shall apply for purposes of this part with respect to a credit allowed by this section, except as follows:

(1)Section 45F(f)(1)(B), relating to certain dispositions, shall not apply and instead the following shall apply:

(A)If, during any taxable year, there is a recapture amount determined with respect to any property the basis of which was reduced due to the application of Section 45F(f) by this subdivision, the basis of the property (immediately before the event resulting in the recapture) shall be increased by an amount equal to the recapture amount.

(B)For purposes of this section, “recapture amount” means any increase in tax determined by application of Section 45F(d) by subdivision (b) or adjustment in the carryover amount allowed by subdivision (e).

(2)The reference to “this section” in Section 45F(f)(1)(A) shall mean this section of the Revenue and Taxation Code.

(3)Section 45F(f)(2) is modified by deleting “this chapter with respect to the amount of the credit determined under this section” and inserting in lieu thereof “this part with respect to the amount of the credit determined under this section.”

(e)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 one succeeding year after that if necessary, until the credit has been exhausted.

SEC. 3.

For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to employer-provided child care income tax credit allowed by Sections 17053.4 and 23606 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares as follows:

(a)The specific goals, purposes, and objectives of the credits are as follows:

(1)To incentive companies and employers to provide onsite or cheaper contracted childcare for their employee in order to help working families continue to work and not exit the workforce in the situation of a newborn.

(2)To test whether through incentives, companies can lessen the burden on working families needing childcare and thus save the state money in its childcare crisis and keep workforce levels and income stable.

(b)To measure whether the employer-provided child care income tax credit allowed by Sections 17053.4 and 23606 of the Revenue and Taxation Code, as added by this act, meet these goals, purposes, and objectives, the Franchise Tax Board shall prepare a written report on the use of the tax credit within California for each fiscal year in which the credit allowed is taken on a tax return, and to identify any increases or decreases in credit amounts allowed from year to year or lack of use. The report shall include the following data: number of taxpayers allowed the credit, total amount of tax credits allowed that is taken on a tax return during the fiscal year, and a breakdown on whether the credit taken was for qualified child care expenditures for acquiring, constructing, rehabilitating or expanding property to be used as part of a qualified child care facility of the taxpayer, for operating costs of a qualified child care facility of the taxpayer, or for a contract with a qualified child care facility to provide child care services.

(c)The Franchise Tax Board shall provide the written report required by subdivision (b) to the Legislature annually commencing with the 2020–21 fiscal year until the 2025–26 fiscal year. A report submitted pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code.

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.