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SB-248 Taxation: renters’ credit.(2019-2020)

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Date Published: 06/27/2019 09:00 PM
SB248:v95#DOCUMENT

Amended  IN  Assembly  June 27, 2019
Amended  IN  Senate  May 21, 2019
Amended  IN  Senate  April 24, 2019
Amended  IN  Senate  March 18, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 248


Introduced by Senator Glazer
(Principal coauthors: Assembly Members Gonzalez and Quirk-Silva)
(Coauthors: Senators Allen, Archuleta, Bates, Beall, Bradford, Caballero, Chang, Dodd, Galgiani, Hertzberg, Hill, Hueso, Jones, McGuire, Nielsen, Pan, Portantino, Roth, Skinner, Wieckowski, Wiener, and Wilk)
(Coauthors: Assembly Members Brough, Carrillo, Choi, Daly, Diep, Grayson, McCarty, Melendez, Mullin, Robert Rivas, Blanca Rubio, Santiago, and Voepel)

February 11, 2019


An act to amend Section 17053.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 248, as amended, Glazer. Taxation: renters’ credit.
The Personal Income Tax Law authorizes various credits against the taxes imposed by that law, including a credit for qualified renters in the amount of $120 for spouses filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000, as adjusted, or less, and in the amount of $60 for other individuals if adjusted gross income is $25,000, as adjusted, or less. Existing law requires the Franchise Tax Board to annually adjust for inflation these adjusted gross income amounts. For 2018, the adjusted gross income limit is $83,282 and $41,641, respectively. Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
Existing law establishes the continuously appropriated Tax Relief and Refund Account in the General Fund and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account, including any amount allowable as an earned income tax credit in excess of any tax liabilities.
This bill, for taxable years beginning on or after January 1, 2019, 2020, and before January 1, 2025, and only when specified in a bill relating to the Budget Act, would increase the credit amount for a qualified renter to $220 and $434, as provided. In the event the increased credit amount is not specified in a bill relating to the Budget Act, the existing credit amounts of $120 and $60, as described above, respectively, would be the credit amounts for that taxable year. The bill would require the Franchise Tax Board to annually recompute for inflation the credit amount for taxable years on or after January 1, 2020, 2021, and before January 1, 2025, unless otherwise provided. The bill would provide findings and declarations relating to the goals, purposes, and objectives of this credit.
The bill, for credits allowable for taxable years beginning on or after January 1, 2019, 2020, and before January 1, 2025, would provide that the credit amount in excess of the qualified renter’s liability would be refundable and paid from the Tax Relief and Refund Account to the qualified renter upon appropriation by the Legislature.
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 17053.5 of the Revenue and Taxation Code is amended to read:

17053.5.
 (a) (1) For a qualified renter, there shall be allowed a credit against the “net tax,” as defined in Section 17039. The amount of the credit shall be as follows:
(A) For spouses filing joint returns, heads of household, and surviving spouses, as defined in Section 17046, if adjusted gross income is fifty thousand dollars ($50,000) or less, the credit shall be equal to:
(i) For taxable years beginning before January 1, 2019, 2020, and on and after January 1, 2025, one hundred twenty dollars ($120).
(ii) Except as otherwise provided in subdivision (l), for taxable years beginning on or after January 1, 2019: 2020, and before January 1, 2025:
(I) Two hundred twenty dollars ($220) if the qualified renter has no dependents as defined in Section 17056.
(II) Four hundred thirty-four dollars ($434) if the qualified renter has one or more dependents as defined in Section 17056.
(iii) For taxable years beginning on or after January 1, 2020, 2021, and before January 1, 2025, the credit amounts in clause (ii) shall be the amount recomputed pursuant to subdivision (k), except as otherwise provided in subdivision (l).
(B) For other individuals, if adjusted gross income is twenty-five thousand dollars ($25,000) or less, the credit shall be equal to:
(i) For taxable years beginning before January 1, 2019, 2020, and on and after January 1, 2025, sixty dollars ($60).
(ii) Except as otherwise provided in subdivision (l), for taxable years beginning on or after January 1, 2019: 2020, and before January 1, 2025:
(I) Two hundred twenty dollars ($220) if the qualified renter has no dependents as defined in Section 17056.
(II) Four hundred thirty-four dollars ($434) if the qualified renter has one or more dependents as defined in Section 17056.
(iii) For taxable years beginning on or after January 1, 2020, 2021, and before January 1, 2025, the credit amounts in clause (ii) shall be the amount recomputed pursuant to subdivision (k), except as otherwise provided in subdivision (l).
(2) Except as provided in subdivision (b), spouses shall receive only one credit under this section. If the spouses file separate returns, the credit may be taken by either or equally divided between them, except as follows:
(A) If one spouse was a resident for the entire taxable year and the other spouse was a nonresident for part or all of the taxable year, the resident spouse shall be allowed one-half the credit allowed to married persons and the nonresident spouse shall be permitted one-half the credit allowed to married persons, prorated as provided in subdivision (e).
(B) If both spouses were nonresidents for part of the taxable year, the credit allowed to married persons shall be divided equally between them subject to the proration provided in subdivision (e).
(b) For spouses, if each spouse maintained a separate place of residence and resided in this state during the entire taxable year, each spouse will be allowed one-half the full credit allowed to married persons provided in subdivision (a).
(c) For purposes of this section, a “qualified renter” means an individual who satisfies both of the following:
(1) Was a resident of this state, as defined in Section 17014.
(2) Rented and occupied premises in this state that constituted the individual’s principal place of residence during at least 50 percent of the taxable year.
(d) “Qualified renter” does not include any of the following:
(1) An individual who for more than 50 percent of the taxable year rented and occupied premises that were exempt from property taxes, except that an individual, otherwise qualified, is deemed a qualified renter if they or their landlord pays possessory interest taxes, or the owner of those premises makes payments in lieu of property taxes that are substantially equivalent to property taxes paid on properties of comparable market value.
(2) An individual whose principal place of residence for more than 50 percent of the taxable year is with any other person who claimed that individual as a dependent for income tax purposes.
(3) An individual who has been granted or whose spouse has been granted the homeowners’ property tax exemption during the taxable year. This paragrargin:0 0 1em 0;">(i) This section shall become operative on January 1, 1998, and applies to any taxable year beginning on or after January 1, 1998.
(j) For each taxable year beginning on or after January 1, 1999, the Franchise Tax Board shall recompute the adjusted gross income amounts set forth in subdivision (a). The computation shall be made as follows:
(1) The Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current year, no later than August 1 of the current calendar year.
(2) The Franchise Tax Board shall compute an inflation adjustment factor by adding 100 percent to the portion of the percentage change figure that is furnished pursuant to paragraph (1) and dividing the result by 100.
(3) The Franchise Tax Board shall multiply the adjusted gross income amount in subparagraph (B) of paragraph (1) of subdivision (a) for the preceding taxable year by the inflation adjustment factor determined in paragraph (2), and round off the resulting products to the nearest one dollar ($1).
(4) In computing the adjusted gross income amounts pursuant to this subdivision, the adjusted gross income amounts provided in subparagraph (A) of paragraph (1) of subdivision (a) shall be twice the amount provided in subparagraph (B) of paragraph (1) of subdivision (a).
(k) (1) For each taxable year beginning on or after January 1, 2020, 2021, and before January 1, 2025, the Franchise Tax Board shall recompute the credit amount for the immediately preceding taxable year under clause (ii) of subparagraphs (A) and (B) of paragraph (1) of subdivision (a). The computation shall be made as follows:
(A) The Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current year, no later than August 1 of the current calendar year.
(B) The Franchise Tax Board shall compute an inflation adjustment factor by adding 100 percent to the portion of the percentage change figure that is furnished pursuant to subparagraph (A) and dividing the result by 100.
(C) The Franchise Tax Board shall multiply the credit amount for the immediately preceding taxable year under clause (ii) of subparagraphs (A) and (B) of paragraph (1) of subdivision (a) by the inflation adjustment factor determined in subparagraph (B) and round off the resulting products to the nearest one dollar ($1).
(2) This subdivision shall not apply during a taxable year in which the credit amount is zero dollars ($0) pursuant to paragraph (1) of subdivision (l).
(l) (1) Unless otherwise specified in any bill providing for appropriations related to the Budget Act, for taxable years beginning on or after January 1, 2019, 2020, and before January 1, 2025, the amount of credit under clause (ii) of subparagraphs (A) and (B) of paragraph (1) of subdivision (a) shall be zero dollars ($0).
(2) For any taxable year for which the amount of the credit under clause (ii) of subparagraphs (A) and (B) of paragraph (1) of subdivision (a) is zero dollars ($0) pursuant to paragraph (1), the credit amounts set forth in clause (i) of subparagraphs (A) and (B) of paragraph (1) of subdivision (a) for taxable years beginning before January 1, 2019, 2020, and on and after January 1, 2025, shall be the credit amounts for a qualified renter for the taxable year.
(m) For taxable years beginning on or after January 1, 2019, 2020, and before January 1, 2025, notwithstanding Section 19611, if the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the qualified renter upon appropriation by the Legislature.
(n) For the purposes of complying with Section 41, the Legislature finds and declares as follows:
(1) The specific goals, purposes, and objectives of this bill are as follows:
(A) To compensate low- and middle-income renters for the increasing rates of rent throughout the State of California.
(B) To restructure the credit to reflect the disproportionate burden of high rents on single-parent families.
(C) To stimulate consumer spending and economic growth by providing more disposable income to reinvest in the economy.
(2) To measure whether the credit achieves its intended purpose, for those taxable years for which the amount of credit under clause (ii) of subparagraphs (A) and (B) of paragraph (1) of subdivision (a) is not zero dollars ($0), the Franchise Tax Board shall prepare a written report on the following:
(A) The number of taxpayers claiming the credit.
(B) The average credit amount on tax returns claiming the credit.
(3) The Franchise Tax Board shall provide the written report prepared pursuant to paragraph (2) to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, and the Assembly Committee on Revenue and Taxation. The report shall be submitted in compliance with Section 9795 of the Government Code.

SEC. 2.

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