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AB-219 Personal income tax: credit: back-to-school items.(2021-2022)

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Date Published: 02/23/2021 09:00 PM
AB219:v98#DOCUMENT

Amended  IN  Assembly  February 23, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 219


Introduced by Assembly Members Villapudua and Mathis
(Coauthors: Assembly Members Choi and Gipson Choi, Gipson, Nguyen, Blanca Rubio, and Salas)

January 11, 2021


An act to add and repeal Section 6370.3 to 17055.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 219, as amended, Villapudua. Sales and use taxes: exemption: tax holiday: Personal income tax: credit: back-to-school items.

Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, and provides various exemptions from the taxes imposed by those laws.

This bill, on and after January 1, 2022, would exempt from those taxes the gross receipts from the sale of, and the storage, use, or other consumption of, back-to-school items that are purchased during the ____ weekend in ____, beginning at 12:01 a.m. on Saturday and ending at 11:59 p.m. on Sunday, by parents with schoolchildren, students attending a postsecondary institution, or educators.

Existing law requires a bill that would authorize a new tax exemption under the Sales and Use Tax Law to identify specific goals, purposes, and objectives that the tax expemption will achieve, and detailed performance indicators and data collection requirements for determining whether the tax expenditure achieves these goals, purposes, and objectives.

This bill would state the intent of the Legislature to enact legislation to comply with those tax exemption requirements.

The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws.

Existing law requires the state to reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.

This bill would provide that, notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill.

This bill would take effect immediately as a tax levy.

The Personal Income Tax Law allows various credits against the taxes imposed by that law. 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.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2022, and before January 1, 2027, in an amount equal to the amount of sales tax collected from a qualified taxpayer during the first week of August of the taxable year for purchases of back-to-school items, as defined, not to exceed $2,500 per taxable year per household. The bill would define qualified taxpayer as a parent with a schoolchild, a student attending a postsecondary institution, or an educator. The bill would require a qualified taxpayer to have a household income at the time of filing that is at or below the federal poverty threshold, except as otherwise specified. The bill would require the Franchise Tax Board to submit a report by January 1, 2026, to the Legislature on the amount of credits used by qualified taxpayers, and would provide findings and declarations relating to the goals of this credit.
Existing law establishes the continuously appropriated Tax Relief and Refund Account 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 to be paid as an earned income tax credit in excess of any tax liabilities.
This bill would require the amount of the credit exceeding the taxpayer’s liability to be credited against other amounts due, if any, and would require the balance to be paid from the Tax Relief and Refund Account and refunded to the taxpayer.
By authorizing new payments from that account for additional amounts in excess of personal income tax liabilities, this bill would make an appropriation.
Vote: MAJORITY2/3   Appropriation: NOYES   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 This act shall be known, and may be cited, as the “Back-to-School State Sales and Use Tax Holiday.” Holiday Week Tax Credit.”
SEC. 2.Section 6370.3 is added to the Revenue and Taxation Code, to read:
6370.3.

On and after January 1, 2022, there are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, back to school items that are purchased during the ____ weekend in ____, beginning at 12:01 a.m. on Saturday and ending at 11:59 p.m. on Sunday, by parents with schoolchildren, students attending a postsecondary institution, or educators.

SEC. 3.

It is the intent of the Legislature to enact legislation to comply with the requirements of Section 41 of the Revenue and Taxation Code.

SEC. 4.

Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it under this act.

SEC. 2.

 Section 17055.5 is added to the Revenue and Taxation Code, to read:

17055.5.
 (a) (1) For each taxable year beginning on or after January 1, 2022, and before January 1, 2027, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, an amount equal to the amount of sales tax collected from a qualified taxpayer during the first week of August of the taxable year for purchases of back-to-school items, not to exceed two thousand five hundred dollars ($2500) per taxable year per household.
(2) To be eligible to receive the tax credit, the qualified taxpayer’s household income at the time of filing shall be at or below the federal poverty threshold. This paragraph shall not apply to a public school educator who purchases back-to-school items for teaching purposes during the first week of August.
(b) For purposes of this section, all of the following definitions shall apply:
(1) “Back-to-school items” means all of the following:
(A) Articles of clothing with a sales price of one hundred dollars ($100), or less, per article of clothing.
(B) (i) A single purchase, with a sales price of one thousand dollars ($1,000), or less, of computers, computer software, and school computer supplies.
(ii) Computer, computer software, and school computer supplies do not include furniture and any systems, devices, software, or peripherals designed or intended primarily for recreational use, or video games of a noneducational nature.
(C) Noncommercial purchases of school supplies, school art supplies, and school instructional material, with a sales price of one hundred dollars ($100), or less, per item.
(D) Noncommercial purchases of books with a sales price of not more than one hundred fifty ($150) per book.
(2) “Book” means a set of printed sheets bound together and published in a volume with an ISBN number, but does not include magazines, newspapers, periodicals, or any other document printed or offered for sale in a nonbound form.
(3) “Clothing” means all human wearing apparel suitable for general use, including sandals, shoes, and sneakers. Clothing does not include any of the following:
(A) Belt buckles sold separately.
(B) Costume masks sold separately.
(C) Patches and emblems sold separately.
(D) Protective equipment. Protective equipment means items for human wear and designed as protection of the wearer against injury or disease or as protection against damage or injury of other persons or property, but not suitable for general use. Protective equipment includes, but is not limited to, all of the following:
(i) Breathing masks.
(ii) Clean room apparel and equipment.
(iii) Ear and hearing protectors.
(iv) Face shields.
(v) Hard hats.
(vi) Helmets.
(vii) Paint or dust respirators.
(viii) Protective gloves.
(ix) Safety glasses and goggles.
(x) Safety belts.
(xi) Tool belts.
(xii) Welding gloves and masks.
(E) Sport or recreational equipment. Sport or recreational equipment means items designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use. Sport or recreational equipment includes, but is not limited to, all of the following:
(i) Ballet and tap shoes.
(ii) Cleated or spiked athletic shoes.
(iii) Gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf.
(iv) Goggles.
(v) Hand and elbow guards.
(vi) Life preservers and vests.
(vii) Mouth guards.
(viii) Roller and ice skates.
(ix) Shin guards.
(x) Shoulder pads.
(xi) Ski boots.
(xii) Waders.
(xiii) Wetsuits and fins.
(4) “Computer” means an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions.
(5) “Computer software” means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.
(6) “First week of August” means the week beginning at 12:01 a.m. on the first day of August and ending at 11:59 p.m. on the seventh day of August.
(7) “Qualified taxpayer” means a parent with a schoolchild, a student attending a postsecondary institution, or an educator.
(8) “School computer supply” means an item commonly used by a student in a course of study in which a computer is used and includes only the following:
(A) Computer storage media, including diskettes and compact disks.
(B) Handheld electronic schedulers, except devices that are cellular phones.
(C) Personal digital assistants, except devices that are cellular phones.
(D) Computer printers.
(E) Printer supplies for computers, including printer paper and printer ink.
(9) “School art supply” means an item commonly used by a student in a course of study for artwork and includes only the following:
(A) Clay and glazes.
(B) Acrylic paint, tempera paint, and oil paint.
(C) Paintbrushes for artwork.
(D) Sketch and drawing pads.
(E) Watercolors.
(10) “School instructional material” means written material commonly used by a student in a course of study as a reference and to learn the subject being taught and includes only the following:
(A) Reference maps and globes.
(B) Required textbooks on an official school book list with a sales price of more than one hundred fifty dollars ($150).
(11) “School supply” means an item commonly used by a student in a course of study and includes only the following:
(A) Binders.
(B) Book bags.
(C) Calculators.
(D) Cellophane tape.
(E) Blackboard chalk.
(F) Compasses.
(G) Composition books.
(H) Crayons.
(I) Erasers.
(J) Expandable, pocket, plastic, and manila folders.
(K) Glue, paste, and paste sticks.
(L) Highlighters.
(M) Index cards.
(N) Index card boxes.
(O) Legal pads.
(P) Lunch boxes.
(Q) Markers.
(R) Notebooks.
(S) Loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper.
(T) Pencil boxes and other school supply boxes.
(U) Pencil sharpeners.
(V) Pencils.
(W) Pens.
(X) Protractors.
(Y) Rulers.
(Z) Scissors.
(AA) Writing tablets.
(c) The qualified taxpayer shall save their receipts from purchases of back-to-school items made during the first week of August, itemize the taxes collected from the taxpayer on the items, and submit the amount when filing their personal income tax return.
(d) 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 taxpayer.
(e) (1) Notwithstanding Section 19542, the Franchise Tax Board shall submit to the Legislature a report by January 1, 2026, on the amount of credits used by qualified taxpayers. Any individually identifiable information collected pursuant to this subdivision that is used in the report shall be compiled in an aggregate or anonymized manner to preserve confidentiality.
(2) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
(f) For the purpose of complying with Section 41, the Legislature finds and declares that the goal of this credit is to relieve the financial burden for families and educators buying school supplies.
(g) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

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.