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AB-1515 Outreach, Education, and Free Tax Assistance Grant Program.(2021-2022)



Current Version: 08/01/22 - Amended Senate

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AB1515:v94#DOCUMENT

Amended  IN  Senate  August 01, 2022
Amended  IN  Senate  May 26, 2022
Amended  IN  Assembly  April 26, 2021
Amended  IN  Assembly  April 12, 2021
Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1515

Introduced by Assembly Member Santiago

February 19, 2021

An act to add Part 10.3.5 (commencing with Section 19859) to Division 2 of the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 1515, as amended, Santiago. Outreach, Education, and Free Tax Assistance Grant Program.
The Personal Income Tax Law imposes a tax on the entire taxable income of an individual taxpayer subject to that law, and provides for a specified treatment of the income of nonresidents. The Personal Income Tax Law, beginning on or after January 1, 2015, in modified conformity with federal income tax laws, allows an earned income tax credit 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, as specified. For taxable years beginning on and after January 1, 2020, this tax credit is available to any eligible individuals using an individual taxpayer identification number (ITIN).
The Personal Income Tax Law additionally allows, for each taxable year beginning on or after January 1, 2019, a young child tax credit against the taxes imposed under that law and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability to a qualified taxpayer in a specified amount multiplied by the earned income tax credit adjustment factor, as provided.
Existing federal income tax law allows a credit against federal income tax in an amount of $2,000 for each qualifying child, as defined, for each taxable year beginning before January 1, 2026, and in an amount of $1,000 for each qualifying child for each taxable year beginning on or after January 1, 2026, unless otherwise specified.
This bill would enact the Free Tax Prep and Community Engagement Act, which would establish the Outreach, Education, and Free Tax Assistance Grant Program. Upon appropriation by the Legislature, the bill would require the Franchise Tax Board to allocate grants to qualified nonprofit community-based organizations or local government agencies with the goal of increasing the number of eligible households claiming the state and federal Earned Income Tax Credit, the federal Child Tax Credit, the Young Child Tax Credit, and the Foster Youth Tax Credit, and to increase awareness of ITIN tax status eligibility. The bill would authorize the Franchise Tax Board to administratively partner with the Department of Community Services and Development to administer the program. The bill would establish the Outreach, Education, and Free Tax Assistance Grant Fund in the State Treasury for these purposes.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 This measure shall be known, and may be cited, as the Free Tax Prep and Community Engagement Act.

SEC. 2.

 The Legislature finds and declares all of the following:
(a) Research shows that the California Earned Income Tax Credit (CalEITC) can improve child and maternal health and spur local economic growth. Children in families that receive the CalEITC have better outcomes in both the short and long term.
(b) Individual Taxpayer Identification Number (ITIN) holders are ineligible for the majority of federal tax benefits, but California made the decision to end the exclusion of ITIN filers for credits, like the CalEITC and the young child tax credit (YCTC), for taxable years beginning on or after January 1, 2020.
(c) With more Californians now eligible for tax credits, it is critical that trusted community partners are funded to provide linguistically and culturally competent outreach, education, and free tax filing services.
(d) The CalEITC is one of California’s best tools to help alleviate poverty, stimulate local economies and businesses, and act as a frontline defense against the deepest risks of economic downturn.
(e) The CalEITC and the YCTC are key to tackling California’s poverty crisis as one in three Californians struggle to meet basic needs, according to United Ways of California’s Real Cost Measure report. Of the estimated 3,500,000 households in California that fall below the Real Cost Measure, 97 percent have at least one working adult.
(f) California has championed the CalEITC for years, continually expanding access to the credit, most recently to workers who file their taxes with an Individual Taxpayer Identification Number (ITIN), underscoring the need to have effective outreach, education, and free tax filing services for those who are newly eligible for the CalEITC, YCTC, and other programs built on the CalEITC standards.
(g) California must consistently invest in a robust infrastructure of free tax assistance and a growing network of Certified Acceptance Agents who are culturally and linguistically competent to help process ITIN applications so that all Californians are able to leverage the full power and potential of all credits available.
(h) To make the CalEITC outreach, education, and free tax assistance grants even more effective, California should adjust the timing of these grants to make them year-round and over two-year increments to align with IRS programs and ensure equitable access to services for all Californians.

SEC. 3.

 Part 10.3.5 (commencing with Section 19859) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 10.3.5. Outreach, Education, and Free Tax Assistance Grant Program

19859.
 This part shall be known and may be cited as the Outreach, Education, and Free Tax Assistance Grant Program.

19859.1.
 (a) The Franchise Tax Board shall administer the Outreach, Education, and Free Tax Assistance Grant Program in accordance with this part.
(b) The Franchise Tax Board may contract or administratively partner with the Department of Community Services and Development to administer any provisions of this part as the Franchise Tax Board deems necessary.
(c) The Franchise Tax Board may adopt regulations for necessary and appropriate to carry out the purposes of this part in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.

19859.2.
 (a) Upon appropriation by the Legislature, the Franchise Tax Board shall allocate grants that cover at least a 12-month period to qualified nonprofit community-based organizations or local government agencies with the goal of increasing the number of eligible households claiming the state and federal Earned Income Tax Credit, the federal Child Tax Credit, the Young Child Tax Credit, and the Foster Youth Tax Credit, and to increase awareness of ITIN tax status eligibility, pursuant to the requirements in this section.
(b) The Franchise Tax Board shall prioritize allocate funding for the following purposes:
(1) Provide timely distribution of funds for education and outreach for the state and federal Earned Income Tax Credit, the federal Child Tax Credit, the Young Child Tax Credit, and the Foster Youth Tax Credit, and for awareness of ITIN eligibility.
(2) To community-based organization partners with demonstrated experience in outreach or free tax preparation.
(3) To organizations with prior experience with the Volunteer Income Tax Assistance (VITA) program to provide free tax preparation assistance and ITIN application assistance.
(4) Focus funding in regions of the state with low participation in the CalEITC relative to the estimated eligible population in that area.
(5) Focus funding in regions of the state with estimated high percentages of ITIN filers and ITIN eligible workers who do not have a current ITIN status.
(6) Emphasize collaboration of grantees with other community-based organizations and local government agencies.
(7) Encourage targeting of specific underserved communities, particularly those that experience barriers to taking advantage of the credit, with a focus on extremely low income households, likely ITIN eligible workers, populations with limited English proficiency, rural communities, current and former foster youth, and other hard-to-reach populations.
(c) Grant contracts allocated under this part shall be effective for at least 12 months to ensure continuity of services.

(d)(1)The award of grants under this part shall be exempt from the State Contract Act (Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code).

(2)Grants awarded under this part shall be at the sole discretion of the Executive Officer of the Franchise Tax Board or the Executive Officer’s designee.

(e)

(d) (1) Beginning January March 1, 2024, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature annually, pursuant to Section 9795 of the Government Code, on the effectiveness of the program.
(2) The Franchise Tax Board, in consultation with the Department of Community Services and Development and with grantees, shall develop metrics to analyze the effectiveness of the program.

19859.3.
 (a) There is hereby established in the State Treasury the Outreach, Education, and Free Tax Assistance Grant Fund.
(b) The Franchise Tax Board shall use moneys in the fund, upon appropriation by the Legislature, to allocate grants to qualified nonprofit community-based organizations or local government agencies pursuant to Section 19859.2.