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SB-444 Personal income tax: exclusions: educational awards.(2021-2022)

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Date Published: 06/21/2022 09:00 PM
SB444:v95#DOCUMENT

Amended  IN  Assembly  June 21, 2022
Amended  IN  Assembly  May 31, 2022
Amended  IN  Senate  May 20, 2021
Amended  IN  Senate  March 03, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 444

Introduced by Senator Hertzberg
(Coauthors: Assembly Members Gray, Grayson, Nguyen, Petrie-Norris, Quirk, and Seyarto)

February 16, 2021

An act to add Sections 17131.13 and 17131.14 to Section 17131.14 to, and to add and repeal Section 17131.13 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 444, as amended, Hertzberg. Personal income tax: exclusions: educational awards.
The Personal Income Tax Law, in modified conformity with federal law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income for purposes of computing tax liability.
Existing federal law, known as the National and Community Service State Grant Program, gives educational awards to individuals based on the individual’s participation in an approved national service position. That law also provides grants to states, subdivisions of states, and other public and private organizations to carry out national service programs, as defined, including grants to the CaliforniaVolunteers program administered by the office of the Governor. CaliforniaVolunteers, through the California For All Education Award program, offers educational awards using funds granted pursuant to the National and Community Service State Grant Program.
This bill would exclude from gross income certain educational awards received by a taxpayer pursuant to the federal National and Community Service State Grant Program. These provisions would become operative upon passage of federal legislation that would exclude these educational awards from gross income for federal income tax purposes, and would remain operative for 5 years.
This bill, for taxable years beginning on or after January 1, 2022, and before January 1, 2027, would exclude from gross income those educational awards received by a taxpayer based on the taxpayer’s participation in the California For All Education Award program. any amount received as a California For All Education Award, as defined.
Existing law requires any bill authorizing a new tax expenditure, defined to include an exclusion from income, to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
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.

 The Legislature finds and declares all of the following:
(a) AmeriCorps is a volunteer federal program established under the National Community Service Trust Act of 1993 and is funded primarily through the federal government, foundations, and other donors.
(b) AmeriCorps recruits volunteers to help meet critical needs in communities through volunteering in education, public safety, health care, environmental protection, and more.
(c) Volunteers in AmeriCorps are of all ages and backgrounds but share one common aspiration: a desire to dedicate their time and talent to serve communities through collaboration with nonprofits, schools, public agencies, and other organizations.
(d) AmeriCorps engages approximately 75,000 volunteers in more than 21,000 locations across the country.
(e) Serving with an AmeriCorps State and National program puts members in an environment that propels their personal development, opens diverse career paths, and promotes lifelong civic engagement.
(f) AmeriCorps members who complete a minimum of 1,700 service hours in the program are eligible for a federal Segal AmeriCorps Education Award to help with higher education expenses, training programs, or paying off student debt.
(g) In 2020, AmeriCorps programs provided access to nearly $26,800,000 in educational awards for 7,146 individuals who completed their service in California, many of whom are from and reflect the ethnic, linguistic, and cultural diversity of the communities they serve.
(h) In 2021, Governor Gavin Newsom established the Californians for All College Service Program to create service opportunities and jobs for individuals through the provision of additional educational award funding to help pay for college for students who complete a term of service under the AmeriCorps program for a combined total amount of over $10,000 in educational awards and support.
(i) The Californians for All College Service Program leverages the unique opportunity to engage individuals to tackle critical issues in California, including tutoring and mentorship, climate action, child abuse and neglect prevention, and other critical needs in communities, including those related to COVID-19 response during the pandemic.
(j) Minnesota, Iowa, and Nebraska are among the states who have exempted the Segal AmeriCorps Education Award from their state income tax.
(k) Senators Michael Bennet (D-CO) and Bill Cassidy (R-LA), along with Representatives John Larson (D-CT) and Don Bacon (R-NE), have introduced the Segal AmeriCorps Education Award Tax Relief Act of 2021 (H.R. 3941 and S. 2075), that seeks to exclude the Segal AmeriCorps Education Award from federal income tax.

SEC. 2.

 Section 17131.13 is added to the Revenue and Taxation Code, to read:

17131.13.
 (a) For taxable years beginning on or after January 1, 2022, and before January 1, 2027, gross income does not include any educational award received by a taxpayer based on the taxpayer’s participation in the California For All Education Award program. amount received as a California For All Education Award.
(b) For purposes of this section, “California For All Education Award” means any educational award funded by this state issued to an AmeriCorps member for completion of the minimum required service hours for the term of service in which they were enrolled.
(c) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 3.

 Section 17131.14 is added to the Revenue and Taxation Code, to read:

17131.14.
 (a) Gross income does not include any educational award received by a taxpayer pursuant to Section 12604 of Title 42 of the United States Code. amount received as a Segal AmeriCorps Education Award if the award is received for completing a term of service with AmeriCorps in this state.
(b) For purposes of this section, the following definitions apply:
(1) “Segal AmeriCorps Education Award” means an educational award received by a taxpayer pursuant to Section 12604 of Title 42 of the United States Code.
(2) “In this state” means within the exterior limits of the State of California and includes all territory within these limits owned by or ceded to the United States of America.

(b)

(c) This section shall become operative for taxable years that include the date on which the federal government enacts legislation that would exempt from income, for federal income tax purposes, educational awards received by a taxpayer pursuant to Section 12604 of Title 42 of the United States Code, and shall remain operative only for that taxable year and the succeeding four taxable years.

SEC. 4.

 (a) For purposes of Section 41 of the Revenue and Taxation Code, with respect to the exclusions from gross income allowed by Sections 17131.13 and 17131.14 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares the following:
(1) The specific goal, purpose, and objective of the exclusions is to provide financial relief to volunteers in California, and to further incentivize civic engagement.
(2) The performance indicators used to determine if the exclusions are achieving the stated goal, purpose, and objective shall be the number of taxpayers receiving exempt educational awards and the average amount of the awards received by taxpayers.
(b) On or before June 1, 2023, 2024, and annually thereafter, CaliforniaVolunteers shall prepare a written report for the Legislature, in compliance with Section 9795 of the Government Code, containing the number of California residents receiving educational awards under the California For All Education Award program and pursuant to Section 12604 of Title 42 of the United States Code for the prior year, and the average amount of those educational awards.

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.