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AB-2378 Income taxes: credit: employer: qualified wages.(2021-2022)

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Date Published: 04/28/2022 09:00 PM
AB2378:v98#DOCUMENT

Amended  IN  Assembly  April 28, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2378

Introduced by Assembly Member Irwin

February 17, 2022

An act to add and repeal Section Sections 17053.75 and 23632 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2378, as amended, Irwin. Personal income Income taxes: credit: employer: qualified wages.
The Personal Income Tax Law allows and Corporation Tax Law allow various credits against the taxes imposed by that law. those laws.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2028, in an amount amount, not to exceed $30,000 per qualified taxpayer per taxable year, equal to 40% of the amount paid or incurred by a qualified taxpayer during the taxable year for qualified wages of qualified employees, not to exceed $6,000 per qualified employee. The bill would define “qualified employee” to mean an employee who is hired on or after January 1, 2023, and who is a vocational rehabilitation referral, qualified SSI recipient, or qualified SSDI recipient. recipient, and who was not an employee of the qualified taxpayer in the previous 5 taxable years.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
The bill would also include additional information required for a 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.

 Section 17053.75 is added to the Revenue and Taxation Code, to read:

17053.75.
 (a) (1) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, in an amount equal to 40 percent of the amount paid or incurred by a qualified taxpayer during the taxable year for qualified wages of qualified employees, not to exceed six thousand dollars ($6,000) per qualified employee. as determined pursuant to paragraph (2), not to exceed thirty thousand dollars ($30,000) per qualified taxpayer per taxable year.
(2) A qualified taxpayer shall be allowed the credit pursuant to this section in an amount equal to 40 percent of the amount paid or incurred by a qualified taxpayer during the taxable year for qualified wages of qualified employees not to exceed six thousand dollars ($6,000) per qualified employee.
(b) For purposes of this section:
(1) “Qualified employee” means an employee that meets both all of the following criteria:
(A) Was hired on or after January 1, 2023.
(B) Is one of the following:
(i) A vocational rehabilitation referral.
(ii) A qualified SSI recipient.
(iii) A qualified SSDI recipient.
(C) Was not an employee of the qualified taxpayer in the previous five taxable years.
(2) “Qualified SSI recipient” means an individual who is receiving supplemental security income benefits under Title XVI of the Social Security Act, including supplemental security income benefits of the type described in Section 1616 of the Social Security Act (42 U.S.C. Sec. 1382e) or Section 212 of Public Law 93-66, for any month ending within 60 days of the date that the qualified taxpayer hired the qualified employee.
(3) “Qualified SSDI recipient” means an individual who is certified by a designated local agency as receiving disability insurance benefits under Section 223 of the Social Security Act (42 U.S.C. Sec. 423) for any month ending within 60 days of the date that the qualified taxpayer hired the qualified employee.
(4) “Qualified taxpayer” means a taxpayer that operates a business and does not hold a certificate pursuant to subsection (c) of Section 214 of Title 29 of the United States Code.
(5) “Qualified wages” means wages for work performed in California for the first 12 months that a qualified employee is employed by the qualified taxpayer.
(6) “Vocational rehabilitation referral” means an individual who is certified by the Department of Rehabilitation as having both of the following:
(A) A physical or mental disability that constitutes or results in a substantial handicap to employment.
(B) A referral to the employer upon completion of or while receiving rehabilitative services pursuant to any of the following:
(i) An individualized written plan for employment under California’s plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973 (19 U.S.C. Sec. 701). (29 U.S.C. Sec. 701).
(ii) A program of vocational rehabilitation carried out under Chapter 31 of Title 38 of the United States Code.
(iii) An individual work plan developed and implemented by an employment network pursuant to subsection (g) of Section 1148 of the Social Security Act (42 U.S.C. Sec. 1320b-19).
(c) 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.
(d) The Employment Development Department, the Department of Rehabilitation, the California Workforce Development Board, and the State Council on Developmental Disabilities shall carry out their existing mandates to notify employers of the availability of the credit.

(e)(1)For the purposes of complying with Section 41, the Legislature finds and declares the following:

(A)Individuals with disabilities have historically been unemployed or underemployed compared to individuals without disabilities.

(B)Additional incentives must be provided to incentivize employers to hire employees with disabilities.

(2)The goal of this credit is to encourage employers to hire individuals with disabilities, as specified in subparagraph (B) of paragraph (1) of subdivision (b), who are seeking employment.

(3)On or before March 1, 2024, and annually thereafter, the Franchise Tax Board shall submit a report, in compliance with Section 9795 of the Government Code, to the Joint Legislative Budget Committee related to the goals, purposes, objectives, performance indicators, and data collection requirements for this credit, that includes all of the following for the prior taxable year:

(A)The total dollar amount of the credit claimed.

(B)A comparison of the total dollar amount of the credit claimed to the Franchise Tax Board’s prior estimate of the total dollar amount of the credit expected to be claimed in that fiscal year.

(C)The number of qualified taxpayers claiming the credit and the number of qualified employees represented in those claims.

(4)On or before October 1, 2024, and annually thereafter, the Employment Development Department shall submit a report, in compliance with Section 9795 of the Government Code, to the Joint Legislative Budget Committee related to the goals, purposes, objectives, performance indicators, and data collection requirements for this credit, that includes all of the following for the prior taxable year:

(A)The percentage of newly hired employees in the state that are qualified employees.

(B)The distribution of qualified taxpayers based on industry sectors.

(C)The distribution of qualified employees based on industry sectors.

(5)The disclosure provisions of this subdivision shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2.

(e) If the credit allowed by this section is claimed by a qualified taxpayer, a deduction otherwise allowed under this part for any amount of wages paid or incurred by the qualified taxpayer as a trade or business expense to an eligible individual shall be reduced by the amount of credit allowed by this section.
(f)  This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

SEC. 2.

 Section 23632 is added to the Revenue and Taxation Code, to read:

23632.
 (a) (1) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed a credit against the “tax,” as defined in Section 23036, in an amount as determined pursuant to paragraph (2), not to exceed thirty thousand dollars ($30,000) per qualified taxpayer per taxable year.
(2) A qualified taxpayer shall be allowed the credit pursuant to this section in an amount equal to 40 percent of the amount paid or incurred by a qualified taxpayer during the taxable year for qualified wages of qualified employees not to exceed six thousand dollars ($6,000) per qualified employee.
(b) For purposes of this section:
(1) “Qualified employee” means an employee that meets all of the following criteria:
(A) Was hired on or after January 1, 2023.
(B) Is one of the following:
(i) A vocational rehabilitation referral.
(ii) A qualified SSI recipient.
(iii) A qualified SSDI recipient.
(C) Was not an employee of the qualified taxpayer in the previous five taxable years.
(2) “Qualified SSI recipient” means an individual who is receiving supplemental security income benefits under Title XVI of the Social Security Act, including supplemental security income benefits of the type described in Section 1616 of the Social Security Act (42 U.S.C. Sec. 1382e) or Section 212 of Public Law 93-66, for any month ending within 60 days of the date that the qualified taxpayer hired the qualified employee.
(3) “Qualified SSDI recipient” means an individual who is certified by a designated local agency as receiving disability insurance benefits under Section 223 of the Social Security Act (42 U.S.C. Sec. 423) for any month ending within 60 days of the date that the qualified taxpayer hired the qualified employee.
(4) “Qualified taxpayer” means a taxpayer that operates a business and does not hold a certificate pursuant to subsection (c) of Section 214 of Title 29 of the United States Code.
(5) “Qualified wages” means wages for work performed in California for the first 12 months that a qualified employee is employed by the qualified taxpayer.
(6) “Vocational rehabilitation referral” means an individual who is certified by the Department of Rehabilitation as having both of the following:
(A) A physical or mental disability that constitutes or results in a substantial handicap to employment.
(B) A referral to the employer upon completion of or while receiving rehabilitative services pursuant to any of the following:
(i) An individualized written plan for employment under California’s plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973 (29 U.S.C. Sec. 701).
(ii) A program of vocational rehabilitation carried out under Chapter 31 of Title 38 of the United States Code.
(iii) An individual work plan developed and implemented by an employment network pursuant to subsection (g) of Section 1148 of the Social Security Act (42 U.S.C. Sec. 1320b-19).
(c) If the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following taxable year, and succeeding two years if necessary, until the credit is exhausted.
(d) The Employment Development Department, the Department of Rehabilitation, the California Workforce Development Board, and the State Council on Developmental Disabilities shall carry out their existing mandates to notify employers of the availability of the credit.
(e) If the credit allowed by this section is claimed by a qualified taxpayer, a deduction otherwise allowed under this part for any amount of wages paid or incurred by the qualified taxpayer as a trade or business expense to an eligible individual shall be reduced by the amount of credit allowed by this section.
(f)  This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

SEC. 3.

 (a) For the purpose of complying with Section 41 of the Revenue and Taxation Code with respect to the additions of Sections 17053.75 and 23632 to the Revenue and Taxation Code made by this act, the Legislature finds and declares all of the following:
(1) (A) Individuals with disabilities have historically been unemployed or underemployed compared to individuals without disabilities.
(B) Additional incentives must be provided to incentivize employers to hire employees with disabilities.
(2) The goal of this credit is to encourage employers to hire individuals with disabilities who are seeking employment.
(3) On or before June 1, 2025, and annually thereafter, the Franchise Tax Board shall submit a report, in compliance with Section 9795 of the Government Code, to the Joint Legislative Budget Committee related to the goals, purposes, objectives, performance indicators, and data collection requirements for this credit, that includes all of the following for the prior taxable year:
(A) The total dollar amount of the credit claimed.
(B) A comparison of the total dollar amount of the credit claimed to the Franchise Tax Board’s prior estimate of the total dollar amount of the credit expected to be claimed in that fiscal year.
(C) The number of qualified taxpayers claiming the credit and the number of qualified employees represented in those claims.
(4) On or before October 1, 2024, and annually thereafter, the Employment Development Department shall submit a report, in compliance with Section 9795 of the Government Code, to the Joint Legislative Budget Committee related to the goals, purposes, objectives, performance indicators, and data collection requirements for this credit, that includes all of the following for the prior taxable year:
(A) The percentage of newly hired employees in the state that are qualified employees.
(B) The distribution of qualified taxpayers based on industry sectors.
(C) The distribution of qualified employees based on industry sectors.
(b) The disclosure provisions of this section shall be treated as an exception to Section 19542 under Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation Code.
(c) The reports required by this section shall be required only in a year in which Section 17053.75 or 23632 of the Revenue and Taxation Code is operative.

SEC. 2.SEC. 4.

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