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AB-769 Personal Income Tax Law: exclusions: student loan debt.(2023-2024)

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Date Published: 01/03/2024 02:00 PM
AB769:v98#DOCUMENT

Amended  IN  Assembly  January 03, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 769

Introduced by Assembly Member Bauer-Kahan

February 13, 2023

An act to add and repeal Sections 17053.76 and 23622 Section 17144.9 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 769, as amended, Bauer-Kahan. Personal Income Tax Law: Corporation Tax Law: credits: carbon reduction. exclusions: student loan debt.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would allow a credit against the taxes imposed by those laws for a qualified taxpayer in an amount equal to $800 per ton of criteria air pollutant reduced beyond the baseline amount. The bill would define “qualified taxpayer” for this purpose to mean a major source emitter, as defined, that has emissions levels of criteria air pollutants for the taxable year at least 5% below the requirements set by the federal Clean Air Act. The bill would also define “baseline amount” with respect to criteria air pollutants to mean the level of criteria air pollutants the taxpayer may emit to meet the requirements of the federal Clean Air Act.

The Personal Income Tax Law, in modified conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, including an exclusion for the amount of student loan indebtedness repaid or canceled pursuant to a specified federal law.
This bill, for taxable years beginning on or after January 1, 2024, and before January 1, 2029, would exclude qualified discharge of indebtedness income from gross income. The bill would define “qualified discharge of indebetedness income” for this purpose to mean income that would otherwise be realized from the discharge of student loan debt, as defined, or medical debt that is discharged by a qualifying nonprofit organization.
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.
This bill would include additional information required for any 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 17144.9 is added to the Revenue and Taxation Code, to read:

17144.9.
 (a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income does not include qualified discharge of indebtedness income.
(b) For purposes of this section, the following definitions shall apply:
(1) “Student loan” shall have the same meaning as that term is defined in subdivision (q) of Section 1788.100 of the Civil Code.
(2) (A) “Qualified discharge of indebtedness income” means income that arises from the discharge of a debt if the debt discharged satisfies both of the following conditions:
(i) The source of the debt was either a student loan or medical debt.
(ii) The debt was discharged or otherwise terminated by a qualifying entity.
(B) Notwithstanding subparagraph (A), “qualified discharge of indebtedness income” shall not include income resulting from the discharge of a debt if the discharge is in exchange for services provided to the qualifying entity.
(3) “Qualifying entity” means an entity that is exempt from federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code.
(c) (1) For purposes of complying with Section 41, the Legislature finds as follows:
(A) The specific goal, purpose, and objective of the exclusion provided by this section is to provide relief to individuals that would otherwise be penalized for the gratuity of nonprofit organizations.
(B) The performance indicators for the Legislature to use in determining if the exclusion has achieved this goal shall be the number of taxpayers excluding discharged indebtedness from income based on this section, and the total dollar value of income so excluded.
(2) The Legislative Analyst’s Office shall, no later than December 1, 2029, submit a report to the Legislature, in accordance with Section 9795 of the Government Code, that estimates the number of taxpayers with discharged indebtedness excluded from income, and estimates the total dollar value of the qualified discharge of indebtedness income received, to the extent data is available.
(d) This section shall remain operative until December 1, 2029, and as of that date is repealed.

SEC. 2.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SECTION 1.Section 17053.76 is added to the Revenue and Taxation Code, to read:
17053.76.

(a)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 that term is defined in Section 17039, of a qualified taxpayer in an amount equal to eight hundred dollars ($800) per ton of criteria air pollutant reduced beyond the baseline amount.

(b)For purposes of this section, the following definitions apply:

(1)“Baseline amount,” with respect to criteria air pollutants, means the level of criteria air pollutants the taxpayer may emit to meet the requirements of the federal Clean Air Act.

(2)“Qualified taxpayer” means a taxpayer that satisfies all of the following:

(A)Is a “major source” emitter, as that term is defined in Section 63.2 of Title 40 of the Code of Federal Regulations.

(B)Has emissions levels of criteria air pollutants for the taxable year that are at least 5 percent lower than the requirements set by the federal Clean Air Act.

(c)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 succeeding four years, if necessary, until the credit is exhausted.

(d)(1)The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed or improper payments from being made with respect to net earnings from self-employment.

(2)The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of this section. 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 rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section.

(e)(1)For purposes of complying with Section 41 as it related to the credit allowed by this section and Section 23622, the Legislature finds and declares as follows:

(A)The goals, purposes, and objectives of the credit are to encourage businesses to surpass their requirements under the federal Clean Air Act and to improve the health of local communities.

(B)The performance indicators for the Legislature to use in determining whether the credit is achieving its stated goal are the number of taxpayers allowed a credit pursuant to this section or Section 23622, and the average dollar value of credits allowed.

(2)(A)No later than June 1, 2024, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, reporting the number of taxpayers allowed a credit under this section or Section 23622, and the average dollar value of credits allowed.

(B)The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.

(f)This section shall remain in effect only until December 1, 2008, and as of that date is repealed.

SEC. 2.Section 23622 is added to the Revenue and Taxation Code, to read:
23622.

(a)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 “tax,” as that term is defined in Section 23036, of a qualified taxpayer in an amount equal to eight hundred dollars ($800) per ton of criteria air pollutant reduced beyond the baseline amount.

(b)For purposes of this section, the following definitions apply:

(1)“Baseline amount,” with respect to criteria air pollutants, means the level of criteria air pollutants a person may emit to meet the requirements of the federal Clean Air Act.

(2)“Qualified taxpayer” means a taxpayer that satisfies all of the following:

(A)Is a “major source” emitter, as that term is defined in Section 63.2 of Title 40 of the Code of Federal Regulations.

(B)Has emissions levels of criteria air pollutants for the taxable year that are at least 5 percent lower than the requirements set by the federal Clean Air Act.

(c)In the case where 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 four years, if necessary, until the credit is exhausted.

(d)(1)The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed or improper payments from being made with respect to net earnings from self-employment.

(2)The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of this section. 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 rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section.

(e)This section shall remain in effect only until December 1, 2008, and as of that date is repealed.

SEC. 3.

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