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AB-2136 Personal income taxes: credit: family caregiver.(2019-2020)

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Date Published: 02/10/2020 09:00 PM
AB2136:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2136

Introduced by Assembly Members Petrie-Norris and Patterson

February 10, 2020

An act to add and repeal Section 17056.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2136, as introduced, Petrie-Norris. Personal income taxes: credit: family caregiver.
The Personal Income Tax Law allows various credits against the taxes imposed by that law.
This bill, for each taxable year beginning on or after January 1, 2021, and before January 1, 2026, would allow a credit against those taxes in an amount equal to 50% of the amount paid or incurred by a family caregiver during the taxable year for eligible expenses related to the care of an eligible family member, not to exceed $5,000. The bill would limit the aggregate amount of these credits to be allocated in each calendar year to $150,000,000 as well as any unused credit amount, if any, allocated in the preceding calendar year. The bill would require the Franchise Tax Board to allocate and certify these credits to taxpayers on a first-come-first-served basis. The bill would make these provisions operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer these provisions.
The bill would require an eligible family member to be certified by a physician, registered nurse, advanced practice registered nurse, or physician assistant, under penalty of perjury, as being an individual with long-term care needs and would require the family caregiver to retain, and make available to the Franchise Tax Board upon request, that certification. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.
The bill would make specified findings detailing the goals, purposes, and objectives of the above-described credit, performance indicators for determining whether the credit meets those goals, purposes, and objectives, and data collection requirements.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) At any given time, an estimated 4.4 million Californians provide varying degrees of unreimbursed care to adults with limitations in daily activities. The total value of the unpaid care provided to individuals in need of long-term services and support amounts to an estimated $57 billion every year, based on 2013 data. While most caregivers are asked to assist an individual with basic activities of daily living, including mobility, eating, and dressing, many are expected to perform complex tasks on a daily basis, including administering multiple medications, providing wound care, and operating medical equipment.
(b) Caregivers are increasingly contributing more time, more energy, and more money to support their loved ones. The rising costs of health care, the limitations to Medicare and other insurance coverage, the increased number of years that caregivers are providing care, and improved longevity have all put pressure on caregivers to dip into their own finances to help pay for various elements of care.
(c) For many caregivers, these out-of-pocket expenses can add up. A recent AARP study, “Family Caregiving and Out-of-Pocket Costs: 2016 Report,” showed that caregivers, on average, contribute $6,954 to their loved one’s care. For caregivers earning at or below the average median income level, those contributions have a significant impact.
(d) Numerous studies have found that caregivers feel stressed by the financial burden of caregiving. Two in five caregivers have noted that this stress is moderate to high. Furthermore, this strain is exacerbated the longer that someone provides care, the more intense the care burden, whether the care recipient has a mental health condition, and whether other help is involved.
(e) In order to successfully address the challenges of a surging population of older adults and others living with chronic conditions, who have significant needs for long-term services and support, the state must develop methods to enable caregivers to continue to support their loved ones at home and in the community, and avoid unnecessary costs to the state’s health care system.

SEC. 2.

 It is the intent of the Legislature to create a tax credit for certain expenses incurred by a family caregiver for the care and support of an eligible family member.

SEC. 3.

 Section 17056.1 is added to the Revenue and Taxation Code, to read:

17056.1.
 (a) For each taxable year beginning on or after January 1, 2021, and before January 1, 2026, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, an amount equal to 50 percent of the amount paid or incurred by a family caregiver during the taxable year for eligible expenses. The credit allowed by this section shall not exceed five thousand dollars ($5,000), regardless of the type of return filed.
(b) For the purposes of this section:
(1) (A) “Eligible family member” means, with respect to any taxable year, an individual who is the spouse of the family caregiver or who bears a relationship, as defined in Section 152(d)(2) of the Internal Revenue Code, relating to relationship, with the family caregiver, and who has been certified, under penalty of perjury, before the due date for filing the return of tax for the taxable year, not subject to extensions, by a physician, as defined in Section 1861(r) of the Social Security Act, a registered nurse licensed pursuant to Chapter 6 (commencing with Section 2700) of Division 2 of the Business and Professions Code, an advanced practice registered nurse, as defined in Section 2725.5 of the Business and Professions Code, or a physician assistant, as defined in Section 3501 of the Business and Professions Code, as being an individual with long-term care needs described in subparagraph (C) for a period that meets both of the following requirements:
(i) Is at least 180 consecutive days.
(ii) A portion of that period occurs within the taxable year.
(B) “Eligible family member” shall not include an individual otherwise meeting the requirements of subparagraph (A) unless, within the 391/2-month period ending on that due date for the filing of the return of tax, or another period that the Franchise Tax Board prescribes, a physician, registered nurse, advanced practice registered nurse, or physician assistant, as those terms are defined in subparagraph (A), has certified, under penalty of perjury, that the individual meets those requirements.
(C) An individual is described in this paragraph to have long-term care needs if that individual meets any of the following requirements:
(i) The individual is at least six years of age and meets either of the following requirements:
(I) The individual is unable to perform, without substantial assistance from another individual, at least two activities of daily living, as defined in Section 7702B(c)(2)(B) of the Internal Revenue Code, relating to activities of daily living, due to a loss of functional capacity.
(II) The individual requires substantial supervision to protect that individual from threats to health and safety due to severe cognitive impairment and meets either of the following additional requirements:
(ia) Is unable to perform at least one activity of daily living, as defined in Section 7702B(c)(2)(B) of the Internal Revenue Code, relating to activities of daily living.
(ib) To the extent provided by the Franchise Tax Board, in consultation with the Secretary of California Health and Human Services, is unable to engage in age-appropriate activities.
(ii) The individual is at least two years of age but less than six years of age and is unable, due to a loss of functional capacity, to perform, without substantial assistance from another individual, at least two of the following activities: eating, transferring, or mobility.
(iii) The individual is under two years of age and requires specific durable medical equipment by reason of a severe health condition or requires a skilled practitioner trained to address the individual’s condition to be available if the individual’s parents or guardians are absent.
(2) (A) “Family caregiver” means an individual who meets all of the following requirements:
(i) Incurs uncompensated expenses directly related to the care of an eligible family member.
(ii) Provides care to one or more eligible family members during the taxable year.
(iii) Has an annual federal adjusted gross income of one hundred seventy thousand dollars ($170,000) or less for an individual or two hundred fifty thousand dollars ($250,000) or less for a joint return for the taxable year in which the credit is claimed.
(B) In the case of a joint return, “family caregiver” includes the individual and the individual’s spouse.
(3) “Eligible expenses” includes all of the following that are directly related to assisting a family caregiver in providing care for an eligible family member in the state:
(A) The total amount expended by the family caregiver to retrofit an existing residence, provided that the retrofitting of the existing residence is designed to improve accessibility, or to provide universal visitability.
(B) Purchases or leases of equipment that is necessary to assist an eligible family member in carrying out one or more activities of daily living.
(C) Goods, services, or support that assists the family caregiver in providing care to an eligible family member, including, but not limited to, expenditures related to hiring a home care aide or personal care attendant, respite care, adult day care, transportation, legal and financial services, and for assistive technology to care for the eligible family member.
(c) Only one family caregiver may be allowed the credit provided by this section in a taxable year with respect to any one eligible family member.
(d) If 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 two years if necessary, until the credit is exhausted.
(e) (1) No credit shall be allowed under this section to a family caregiver with respect to any eligible family member unless the family caregiver includes the name and taxpayer identification number of the eligible family member, and the identification number of the physician, registered nurse, advanced practice registered nurse, or physician assistant certifying that eligible family member, on the return of tax for the taxable year.
(2) The denial of any credit under paragraph (1) may be made pursuant to Section 19051.
(f) The family caregiver shall retain the certification required by paragraph (1) of subdivision (b) and shall make that certification available to the Franchise Tax Board upon request.
(g) (1) The Franchise Tax Board may adopt regulations necessary or appropriate to carry out the purposes of this section.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board.
(h) 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.
(i) The aggregate amount of credits that may be allocated pursuant to this section shall be an amount equal to the sum of the following:
(1) One hundred fifty million dollars ($150,000,000) in credits for each calendar year.
(2) The unused credit amount, if any, allocated in the preceding calendar year.
(j) For the purposes of this section, the Franchise Tax Board shall do both of the following:
(1) On or after January 1, 2021, and before January 1, 2026, allocate and certify tax credits to taxpayers on a first-come-first-served basis by determining and designating applicants who meet the requirements of this section.
(2) Once the credits allocated exceed the limit established in subdivision (i), the Franchise Tax Board shall cease to allocate and certify tax credits to taxpayers.
(k) This section shall become operative on the effective date of any budget measure specifically appropriating funds to the Franchise Tax Board for its costs to administer this section.
(l) This section is repealed on December 1, 2026.

SEC. 4.

 For purposes of complying with Section 41 of the Revenue and Taxation Code, the Legislature finds and declares the following with respect to the credit allowed by Section 17056.1 of the Revenue and Taxation Code, as added by this act (hereafter “credit”):
(a) The specific goals, purposes, and objectives that the credit will achieve are as follows:
(1) Relieving part of the significant financial burden that family caregivers face for out-of-pocket expenses they often cannot afford.
(2) Reducing the number of family caregivers who require loans to cover the costs of caring for an eligible family member.
(3) Providing flexibility for family caregivers to care for loved ones themselves.
(b) Detailed performance indicators for the Legislature to use in determining whether the credit meets those goals, purposes, and objectives are as follows:
(1) The number of people receiving the credit.
(2) The number of family caregivers who are able to financially manage taking care of their loved one full time as a result of receiving the credit.
(c) The Legislative Analyst shall, on an annual basis beginning January 1, 2022, collaborate with the Franchise Tax Board to review the effectiveness of the credit. The review shall include, but not be limited to, an analysis of the demand for the credit and the economic impact of the credit.
(d) The data collection requirements for determining whether the credit is meeting, failing to meet, or exceeding those specific goals, purposes, and objectives are as follows:
(1) To assist the Legislature in determining whether the credit meets the goals, purposes, and objectives specified in subdivision (a), and in carrying out their duties under subdivision (c), the Legislative Analyst may request information from the Franchise Tax Board.
(2) The Franchise Tax Board shall provide any data requested by the Legislative Analyst pursuant to this subdivision.

SEC. 5.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 6.

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