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AB-1002 Taxation: Earned Income Tax Credit: young child tax credit: foster youth tax credit: filing.(2023-2024)

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Date Published: 09/18/2023 09:00 PM
AB1002:v94#DOCUMENT

Enrolled  September 18, 2023
Passed  IN  Senate  September 12, 2023
Passed  IN  Assembly  September 13, 2023
Amended  IN  Senate  September 08, 2023
Amended  IN  Senate  September 01, 2023
Amended  IN  Assembly  April 17, 2023
Amended  IN  Assembly  March 23, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 1002

Introduced by Assembly Member Irwin
(Principal coauthor: Senator Caballero)

February 15, 2023

An act to amend Section 19551.3 of, and to add Section 19582.6 to, the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 1002, Irwin. Taxation: Earned Income Tax Credit: young child tax credit: foster youth tax credit: filing.
The Personal Income Tax Law, in modified conformity with federal income tax laws, allows a California Earned Income Tax Credit (CalEITC) against personal income tax and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law as determined by the earned income tax credit adjustment factor. The Personal Income Tax Law also allows a young child tax credit and a foster youth tax credit against the taxes imposed under that law to qualified taxpayers in a specified amount multiplied by the earned income tax credit adjustment factor, and allows a payment from the Tax Relief and Refund Account for an amount in excess of tax liability.
The Personal Income Tax Law requires an individual taxable under that law to make a return to the Franchise Tax Board stating specifically the items of the individual’s gross income from all sources and the deductions and credits allowable, as prescribed.
Existing law requires the State Department of Social Services and the State Department of Health Care Services to exchange data with the Franchise Tax Board, including the names, addresses, and contact information of individuals that may qualify for the CalEITC, and authorizes the Franchise Tax Board to disclose individual income tax information for taxable years beginning on or after January 1, 2020, and before January 1, 2022, to the State Department of Social Services and the State Department of Health Care Services, and requires all data provided to remain confidential and be used only for specified purposes, including informing state residents of the availability of specified services and federal and state antipoverty tax credits, and for providing an estimate of potential state antipoverty tax credits. Existing law provides that unauthorized disclosure of this information is a misdemeanor.
This bill, for taxable years beginning on or after January 1, 2026, would authorize a qualified individual, who cannot claim withholding or other credits, to claim the earned income tax credit, the young child tax credit, or the foster youth tax credit on a form that does not require the qualified individual to file an individual income tax return. The bill would exempt the Franchise Tax Board from existing contracting laws and specified approvals and oversight in administration relating to the form described above.
This bill would additionally allow the State Department of Social Services and the State Department of Health Care Services to exchange data with the Franchise Tax Board for purposes of the form described above.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
This bill would incorporate additional changes to Section 19551.3 of the Revenue and Taxation Code proposed by SB 565 to be operative only if this bill and SB 565 are enacted and this bill is enacted last.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 19551.3 of the Revenue and Taxation Code is amended to read:

19551.3.
 (a) The State Department of Social Services and the State Department of Health Care Services shall exchange data with the Franchise Tax Board upon request, including the name, date of birth, address, household or case identification number, and the individual taxpayer identification number or social security number of a program participant. The data provided shall remain confidential and shall be used only for purposes of informing individuals of the availability of the Volunteer Income Tax Assistance (VITA), CalFile, the federal Earned Income Tax Credit, the California Earned Income Tax Credit, and other federal and state antipoverty tax credits that are designed to alleviate poverty and tax burdens of low-income households, for providing an estimate of potential state antipoverty tax credits to individuals, and for the purposes of implementing Section 19582.6.
(b) Notwithstanding Section 19542 or any other law, for taxable years beginning on or after January 1, 2020, and before January 1, 2026, the Franchise Tax Board may, upon request, disclose the return information described in paragraph (1) to the State Department of Social Services and the State Department of Health Care Services.
(1) Upon receipt of the information described in subdivision (a), the Franchise Tax Board may disclose the following:
(A) Whether the program participant did not file a tax return.
(B) Whether the program participant was claimed as a dependent on a tax return.
(2) The information provided shall remain confidential and shall be used only for purposes of informing individuals of the availability of the Volunteer Income Tax Assistance (VITA), CalFile, the federal Earned Income Tax Credit, the California Earned Income Tax Credit, other federal and state antipoverty tax credits that are designed to alleviate poverty and tax burdens of low-income households, and for the purposes of implementing Section 19582.6.
(3) The Franchise Tax Board shall not disclose or provide any federal tax information.
(c) (1) The State Department of Social Services and the State Department of Health Care Services that receive data from the Franchise Tax Board shall annually provide to the Franchise Tax Board, no later than January 1 of each calendar year, the results and findings of outreach conducted to measure whether the outreach achieves its intended purpose of increasing the number of claims for the federal Earned Income Tax Credit, the California Earned Income Tax Credit, and other state and federal antipoverty tax credits.
(2) The results and findings of outreach conducted by the State Department of Social Services and the State Department of Health Care Services required under paragraph (1) shall include, but are not limited to, the following information:
(A) The number of outreach contacts.
(B) A description of each outreach program and the parameters of that program.
(C) The number of individuals responding to outreach contacts referenced in subparagraph (A), if known.
(d) For purposes of this section, the following shall apply:
(1) “Voluntary Income Tax Assistance (VITA)” means the free basic income tax return preparation program, for federal and state personal income tax returns, managed by the Internal Revenue Service and operated by Internal Revenue Service partners and trained volunteers.
(2) “CalFile” means the Franchise Tax Board’s free, direct, online program for taxpayers to complete and e-file their state personal income tax returns.
(3) “Program participant” means any individual who receives benefits from a social services program administered by the State Department of Social Services or the State Department of Health Care Services.
(e) An unauthorized disclosure or use of the information disclosed pursuant to this section is a misdemeanor pursuant to Section 19552.

SEC. 1.5.

 Section 19551.3 of the Revenue and Taxation Code is amended to read:

19551.3.
 (a) The State Department of Social Services and the State Department of Health Care Services shall exchange data with the Franchise Tax Board upon request, including the name, date of birth, address, household or case identification number, and the individual taxpayer identification number or social security number of a program participant, and the names, addresses, and contact information of individuals that may qualify for the free tax return preparation program established under Section 19587. The data provided shall remain confidential and shall be used only for purposes of informing individuals of the availability of the Volunteer Income Tax Assistance (VITA), CalFile, the federal Earned Income Tax Credit, the California Earned Income Tax Credit, and other federal and state antipoverty tax credits that are designed to alleviate poverty and tax burdens of low-income households, for providing an estimate of potential state antipoverty tax credits to individuals, and for the purposes of implementing Sections 19582.6 and 19587.
(b) Notwithstanding Section 19542 or any other law, for taxable years beginning on or after January 1, 2020, and before January 1, 2026, the Franchise Tax Board may, upon request, disclose the return information described in paragraph (1) to the State Department of Social Services and the State Department of Health Care Services.
(1) Upon receipt of the information described in subdivision (a), the Franchise Tax Board may disclose the following:
(A) Whether the program participant did not file a tax return.
(B) Whether the program participant was claimed as a dependent on a tax return.
(2) The information provided shall remain confidential and shall be used only for purposes of informing individuals of the availability of the Volunteer Income Tax Assistance (VITA), CalFile, the federal Earned Income Tax Credit, the California Earned Income Tax Credit, other federal and state antipoverty tax credits that are designed to alleviate poverty and tax burdens of low-income households, and for purposes of implementing Sections 19582.6 and 19587.
(3) The Franchise Tax Board shall not disclose or provide any federal tax information.
(c) (1) The State Department of Social Services and the State Department of Health Care Services that receive data from the Franchise Tax Board shall annually provide to the Franchise Tax Board, no later than January 1 of each calendar year, the results and findings of outreach conducted to measure whether the outreach achieves its intended purpose of increasing the number of claims for the federal Earned Income Tax Credit, the California Earned Income Tax Credit, and other state and federal antipoverty tax credits.
(2) The results and findings of outreach conducted by the State Department of Social Services and the State Department of Health Care Services required under paragraph (1) shall include, but are not limited to, the following information:
(A) The number of outreach contacts.
(B) A description of each outreach program and the parameters of that program.
(C) The number of individuals responding to outreach contacts referenced in subparagraph (A), if known.
(d) For purposes of this section, the following shall apply:
(1) “Voluntary Income Tax Assistance (VITA)” means the free basic income tax return preparation program, for federal and state personal income tax returns, managed by the Internal Revenue Service and operated by Internal Revenue Service partners and trained volunteers.
(2) “CalFile” means the Franchise Tax Board’s free, direct, online program for taxpayers to complete and e-file their state personal income tax returns.
(3) “Program participant” means any individual who receives benefits from a social services program administered by the State Department of Social Services or the State Department of Health Care Services.
(e) An unauthorized disclosure or use of the information disclosed pursuant to this section is a misdemeanor pursuant to Section 19552.

SEC. 2.

 Section 19582.6 is added to the Revenue and Taxation Code, to read:

19582.6.
 (a) (1) For taxable years beginning on or after January 1, 2026, qualified individuals may claim a qualified credit on a form that does not require the qualified individual to file an individual income tax return, subject to paragraph (2).
(2) (A) For taxable years beginning on or after January 1, 2026, and before January 1, 2027, the form shall be available for a qualified individual who is an individual with no dependents or who is a spouse filing a separate return with no dependents.
(B) For taxable years beginning on or after January 1, 2027, the form shall be available for all qualified individuals.
(b) For the purposes of this section:
(1) “Qualified credit” means the credits allowed by Section 17052, 17052.1, or 17052.2.
(2) “Qualified individual” means an individual that meets all of the following requirements for the taxable year:
(A) Is eligible for a qualified credit.
(B) Does not have a tax return filing requirement under Section 18501.
(C) Receives an invitation from the Franchise Tax Board to submit the form to claim a qualified credit.
(c) (1) The Franchise Tax Board may prepopulate the form utilizing the data received pursuant to Section 19551.3.
(2) Taxpayers shall edit and correct information, as appropriate, on the form prior to filing, including filing status and information on dependents.
(d) The form shall be filed in a form and manner prescribed by the Franchise Tax Board.
(e) The form shall be treated as a return filed pursuant to Section 18501.
(f) An individual cannot claim withholding or other credits on a form filed pursuant to this section.
(g) For the purpose of administering this section, the Franchise Tax Board shall be exempt from all provisions of state contracting laws and any approvals or oversight from the Department of Technology or the Department of General Services and shall be exempt from Project Approval Lifecycle reporting, including Stage Gates 1-4, Financial Analysis Worksheets, Project Status Reports, and Post Implementation Evaluation Reports (as described in Sections 4819.31 through 4819.38, inclusive, of the State Administrative Manual, and subdivisions (a) to (f), inclusive, of Section 19 of the Statewide Information Management Manual).

SEC. 3.

 The Legislature finds and declares that Section 1 of this act, which amends Section 19551.3 of the Revenue and Taxation Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
Sensitive information of California taxpayers should be adequately protected from disclosure to protect privacy and increase compliance.

SEC. 4.

 Section 1.5 of this bill incorporates amendments to Section 19551.3 of the Revenue and Taxation Code proposed by both this bill and Senate Bill 565. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 19551.3 of the Revenue and Taxation Code, and (3) this bill is enacted after Senate Bill 565, in which case Section 1 of this bill shall not become operative.