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AB-1942 California Earned Income Tax Credit: Earned Income Tax Credit Information Act.(2017-2018)

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Date Published: 04/11/2018 09:00 PM
AB1942:v98#DOCUMENT

Amended  IN  Assembly  April 11, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1942


Introduced by Assembly Member Santiago

January 29, 2018


An act to amend Section 19852 Sections 19852 and 19853 of, and to add Section 18573 to, the Revenue and Taxation Code, relating to tax administration.


LEGISLATIVE COUNSEL'S DIGEST


AB 1942, as amended, Santiago. California Earned Income Tax Credit: Earned Income Tax Credit Information Act.
The Personal Income Tax Law allows various credits against the taxes imposed by that law, including certain credits that are allowed in modified conformity to credits allowed by federal income tax laws. Federal income tax laws allow a refundable earned income tax credit (EITC) for certain low-income individuals who have earned income, as specified and who meet certain other requirements.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows an earned income credit against personal income tax, and a payment in excess of that credit amount, to an eligible individual that is equal to that portion of the EITC allowed by federal law as determined by the EITC adjustment factor as set forth in the annual Budget Act which, unless otherwise specified in that act, is 0%.
This bill would require the Franchise Tax Board to revise the Form 540 to include all of the information necessary for a taxpayer to claim the California EITC. specified language relating to claiming the California EITC on the Form 3514 and to revise the Form 540 2EZ to attach the Form 3514.
Existing law, the Earned Income Tax Credit Information Act, requires state departments and agencies that serve those who may qualify for the federal EITC and the California EITC to notify their program recipients that they may be eligible for the federal EITC and the California EITC, as provided. Existing law defines “state departments and agencies that serve those who may qualify for the federal EITC and the California EITC” to mean certain programs in the State Department of Education, the Employment Development Department, and the State Department of Health Care Services.
This bill would expand the definition of “state departments and agencies that serve those who may qualify for the federal EITC and the California EITC” to include the California Work Opportunity and Responsibility to Kids (CalWORKs) program in the State Department of Social Services. Services and would require those state departments and agencies that serve those who may qualify for the federal EITC and the California EITC to additionally provide the Internet Web site address of the Form 540 2EZ and a physical paper copy of the Form 540 2EZ to those program recipients who may be eligible for the federal EITC and the California EITC.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 18573 is added to the Revenue and Taxation Code, to read:

18573.
 (a) The Franchise Tax Board shall revise line 75 of the Form 540 to include all of the information necessary for a taxpayer to claim the California Earned Income Tax Credit. the following language: “Must complete Franchise Tax Board Form 3514. See Instructions.”
(b) The Franchise Tax Board shall revise the Form 540 2EZ to attach the Form 3514 to the end of the Form 540 2EZ.

SEC. 2.

 Section 19852 of the Revenue and Taxation Code is amended to read:

19852.
 For purposes of this part, the following terms have the following meanings:
(a) “Employer” means any California employer who is subject to, and is required to provide, unemployment insurance to his or her employees, under the Unemployment Insurance Code.
(b) “Employee” means any person who is covered by unemployment insurance by his or her employer, pursuant to the Unemployment Insurance Code.
(c) “Federal EITC” means the federal earned income tax credit, as defined in Section 32 of the Internal Revenue Code.
(d) “California EITC” means the California earned income tax credit, as defined in Section 17052 of the Revenue and Taxation Code.
(e) “State departments and agencies that serve those who may qualify for the federal EITC and the California EITC” means the following programs in the specified departments and agencies:
(1) The State Department of Education: free or reduced-price meal program and National School Lunch Program.
(2) Employment Development Department: California Unemployment Insurance.
(3) State Department of Health Care Services: the Medi-Cal program.
(4) State Department of Social Services: California Work Opportunity and Responsibility to Kids (CalWORKs) program.
(f) The amendments made to this section by Chapter 294 of the Statutes of 2016 shall apply to notices required pursuant to Section 19853 furnished on or after January 1, 2017.
(g) The amendments made to this section by the act adding this subdivision shall apply to notices required pursuant to Section 19853 furnished on or after the effective date of that act.

SEC. 3.

 Section 19853 of the Revenue and Taxation Code is amended to read:

19853.
 (a) An employer shall notify all employees that they may be eligible for the federal and the California EITC within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee.
(b) (1) The state departments and agencies that serve those who may qualify for the federal and the California EITC, as defined in subdivision (e) of Section 19852, shall notify their program recipients that they may be eligible for the federal and the California EITC, at least once a year during the months of January through April, or alternatively, shall provide this annual notification during a regularly scheduled contact with a recipient by telephone, mail, or electronic communication, or by an in-person communication. State departments or agencies that do not directly communicate with persons or households with persons who may qualify for the federal and the California EITC may communicate indirectly through agencies, districts, or regulated entities that serve eligible persons or households with eligible persons. Departments, agencies, and programs are encouraged to develop the most effective method to provide notice to recipients of federal and California EITC eligibility, as long as the notice contains substantially the same language as the notice described in Section 19854.
(2) In addition to paragraph (1), state departments and agencies that serve those who may qualify for the federal EITC and the California EITC shall provide their program recipients who may be eligible for the federal and the California EITC with both of the following:
(A) The Internet Web site address to the Form 540 2EZ.
(B) A physical paper copy of the Form 540 2EZ.
(c) The employer shall provide the notification required by subdivision (a) by handing directly to the employee or mailing to the employee’s last known address either of the following:
(1) Instructions on how to obtain any notices available from the Internal Revenue Service and the Franchise Tax Board for this purpose, including, but not limited to, the IRS Notice 797 and information on the California EITC at the Web site www.ftb.ca.gov.
(2) Any notice created by the employer, as long as it contains substantially the same language as the notice described in paragraph (1) or in Section 19854.
(d) The employer shall not satisfy the notification required by subdivision (a) by posting a notice on an employee bulletin board or sending it through office mail. However, these methods of notification are encouraged to help inform all employees of the federal and the California EITC.
(e) The amendments made to this section by the act adding this subdivision Chapter 294 of the Statutes of 2016 shall apply to notices furnished on or after the effective date of that act. January 1, 2017.
(f) The amendments made to this section by the act adding this subdivision shall apply to notices furnished on or after the effective date of that act.