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SB-49 Income taxes: credits: California Fair Fees Tax Credit.(2021-2022)

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Date Published: 04/06/2021 09:00 PM
SB49:v96#DOCUMENT

Amended  IN  Senate  April 06, 2021
Amended  IN  Senate  March 08, 2021
Amended  IN  Senate  February 01, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 49

Introduced by Senator Umberg
(Coauthors: Senators Min, Newman, and Ochoa Bogh)
(Coauthor: Assembly Member Daly)

December 07, 2020

An act to add and repeal Sections 17053.70 and 23670 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 49, as amended, Umberg. Income taxes: credits: California Fair Fees Tax Credit.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
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, for eligible costs paid or incurred by in an unspecified amount to a taxpayer that meets certain criteria, including that the taxpayer temporarily ceased business operations for an unspecified minimum number of consecutive days during the taxable year in response to an emergency order, as defined, including certain costs paid or incurred before January 1, 2022. defined. The bill would designate the credit allowed under its provisions as the California Fair Fees Tax Credit. The bill would define “eligible costs” for these purposes as any amount of fees, as defined, paid to a state agency or a local government in connection with a permit, license, or other mandatory operating cost imposed by the state or a local government during the time in which the qualified taxpayer was required to cease business operations in response to an emergency order. The bill would require a taxpayer claiming this credit to declare, under penalty of perjury, that it has complied with all applicable emergency orders.
Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.
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.

 Section 17053.70 is added to the Revenue and Taxation Code, to read:

17053.70.
 (a) 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 paid or incurred in eligible costs by___ dollars ($____) to a qualified taxpayer.
(b) For purposes of this section:

(1)(A)“Eligible costs” means any amount of fees paid to a state agency or a local government in connection with a permit, license, or other mandatory operating cost imposed by the state or a local government during the time in which the qualified taxpayer was required to cease business operations in response to an emergency order.

(B)“Eligible costs” includes any amounts described in subparagraph (A) that were paid or incurred on or before January 1, 2022, in response to the COVID-19 state of emergency. For purposes of this subparagraph, “COVID-19 state of emergency” means the state of emergency proclaimed by the Governor on March 4, 2020.

(2)

(1) “Emergency order” means any order issued by the Governor pursuant to the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code), any state agency, or any local government that requires the closure of businesses in response to a state of emergency.

(3)(A)“Fees” mean a charge imposed for the reasonable regulatory costs to the state or a local government incident to issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.

(B) “Fees” does not include any charge imposed for purposes of protecting the health and safety of the residents of this state.

(4)“Local government” means a city, whether general law or chartered, county, or any officer of a city or county.

(5)

(2) “Qualified taxpayer” means a taxpayer for which both all of the following apply:
(A) The taxpayer is a business that requires substantial in-person contact to conduct its business operations.
(B) The taxpayer temporarily ceased business operations for at least ___days___ consecutive days during the taxable year in response to an emergency order.
(C) The taxpayer had gross receipts of___ dollars ($____) or less during the taxable year.

(6)

(3) “State of emergency” means a state of emergency proclaimed by the Governor pursuant to Article 13 (commencing with Section 8625) of Chapter 7 of Division 1 of Title 2 of the Government Code.
(c) A qualified taxpayer claiming a credit allowed by this section shall declare, under penalty of perjury, that the qualified taxpayer has complied with all applicable emergency orders, in the form and manner prescribed by the Franchise Tax Board.
(d) In the case where 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 the succeeding six years if necessary, until the credit is exhausted.
(e) The credit allowed by this section and Section 23670 shall be known, and may be cited, as the California Fair Fees Tax Credit.
(f) This section shall remain in effect only until December 1, 2027, and as of that date is repealed. However, any unused credit may continue to be carried forward, as provided in subdivision (d), until the credit is exhausted.

SEC. 2.

 Section 23670 is added to the Revenue and Taxation Code, to read:

23670.
 (a) 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 “tax,” as defined in Section 23036, an amount equal to the amount paid or incurred in eligible costs by___ dollars ($____) to a qualified taxpayer.
(b) For purposes of this section:

(1)(A)“Eligible costs” means any amount of fees paid to a state agency or a local government in connection with a permit, license, or other mandatory operating cost imposed by the state or a local government during the time in which the qualified taxpayer was required to cease business operations in response to an emergency order.

(B)“Eligible costs” includes any amounts described in subparagraph (A) that were paid or incurred on or before January 1, 2022, in response to the COVID-19 state of emergency. For purposes of this subparagraph, “COVID-19 state of emergency” means the state of emergency proclaimed by the Governor on March 4, 2020.

(2)

(1) “Emergency order” means any order issued by the Governor pursuant to the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code), any state agency, or any local government that requires the closure of businesses in response to a state of emergency.

(3)(A)“Fees” mean a charge imposed for the reasonable regulatory costs to the state or a local government incident to issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.

(B)“Fees” does not include any charge imposed for purposes of protecting the health and safety of the residents of this state.

(4)“Local government” means a city, whether general law or chartered, county, or any officer of a city or county.

(5)

(2) “Qualified taxpayer” means a taxpayer for which both all of the following apply:
(A) The taxpayer is a business that requires substantial in-person contact to conduct its business operations.
(B) The taxpayer temporarily ceased business operations for at least ___days___ consecutive days during the taxable year in response to an emergency order.
(C) The taxpayer had gross receipts of___ dollars ($____) or less during the taxable year.

(6)

(3) “State of emergency” means a state of emergency proclaimed by the Governor pursuant to Article 13 (commencing with Section 8625) of Chapter 7 of Division 1 of Title 2 of the Government Code.
(c) A qualified taxpayer claiming a credit allowed by this section shall declare, under penalty of perjury, that the qualified taxpayer has complied with all applicable emergency orders, in the form and manner prescribed by the Franchise Tax Board.
(d) In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and the succeeding six years if necessary, until the credit is exhausted.
(e) The credit allowed by this section and Section 17053.70 shall be known, and may be cited, as the California Fair Fees Tax Credit.
(f) This section shall remain in effect only until December 1, 2027, and as of that date is repealed. However, any unused credit may continue to be carried forward, as provided in subdivision (d), until the credit is exhausted.

SEC. 3.

 For purposes of complying with Section 41 of the Revenue and Taxation Code, the Legislature finds and declares the following with respect to Sections 17053.70 and 23670 of the Revenue and Taxation Code, as added by this act, hereafter referred to as “the tax credit:”
(a) The specific goals, purposes, and objectives that the tax credit will achieve are as follows:
(1) Ensuring that businesses are compensated for fees paid to local and state government when those local and state governments disallowed their operations due to a proclaimed state of emergency, including, but not limited to, a pandemic, fire, flood, or earthquake.
(2) To the extent possible, providing equity for businesses during a state of emergency.
(3) To the extent possible, curbing the closure of small businesses and the laying off of employees during a state of emergency.
(b) Detailed performance indicators for the Legislature to use in determining whether the tax credit allowed by this act meet those goals, purposes, and objectives are as follows:
(1) The number of tax credits claimed by businesses, which is evidence of businesses being charged by governmental entities when governments are also disallowing them to open.
(2) To the extent feasible, the number of small business prevented from closing or laying off employees as a result of the tax credit.
(c) The Legislative Analyst’s Office shall, on an annual basis beginning January 1, 2023, and each January 1 thereafter until January 1, 2028, collaborate with the Franchise Tax Board to review the effectiveness of the tax credit. The review shall include, but not be limited to, the metrics described above.
(d) The data collection requirements for determining whether the tax credit are meeting, failing to meet, or exceeding those specific goals, purposes, and objectives are as follows:
(1) To assist the Legislature in determining whether the tax credit allowed by this act meet the goals, purposes, and objectives specified in subdivision (a), and in carrying out their duties under subdivision (c), the Legislative Analyst’s Office may request information from the Franchise Tax Board.
(2) (A) The Franchise Tax Board shall provide any data requested by the Legislative Analyst’s Office pursuant to this subdivision.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542 of the Revenue and Taxation Code under Article 2 (commencing with 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code.

SEC. 4.

 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. 5.

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