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AB-675 Corporation Tax Law: credits: employment: homelessness.(2021-2022)



Current Version: 03/11/21 - Amended Assembly

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AB675:v98#DOCUMENT

Amended  IN  Assembly  March 11, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 675

Introduced by Assembly Member Bloom
(Principal coauthor: Senator Durazo)

February 12, 2021

An act to amend add and repeal Section 30163 23628 of the Revenue and Taxation Code, relating to taxation. taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 675, as amended, Bloom. Cigarette tax. Corporation Tax Law: credits: employment: homelessness.
The Corporation Tax Law allows various credits against the tax imposed by that law.
This bill would allow a credit under the Corporation Tax Law for each taxable year beginning on or after January 1, 2022, and before January 1, 2027, to a qualified taxpayer that employs an eligible individual during the taxable year, in an amount between $2,500 and $10,000 per eligible individual, not to exceed $30,000 per taxable year, depending on the amount of hours worked by the eligible individual. The bill would define various terms for purposes of the credit, including defining “eligible individual” as a person who is homeless. The bill would require an eligible employer to obtain an eligible employer certification from the Employment Development Department to receive the credit, and would require the Employment Development Department to issue a certification to eligible employers, as specified. The bill would require each continuum of care to issue certifications to eligible individuals that are homeless, as specified. By increasing the duties of local continuum of care, the bill would impose a state-mandated local program.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would also include additional information required for any bill authorizing a new tax expenditure.
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, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
This bill would take effect immediately as a tax levy.

Existing law, the Cigarette and Tobacco Products Tax Law, requires, subject to specified exceptions, an appropriate stamp to be affixed to, or an appropriate meter impression to be made on, each package of cigarettes before the distribution of the cigarettes.

This bill would make nonsubstantive changes to those provisions.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  

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


SECTION 1.

 The Legislature finds and declares:
(a) The homeless population in the State of California has grown to exceed 130,000. Since 2011, Los Angeles’s homeless population has grown by 52 percent to over 50,000. Statewide, from 2015 to 2017, inclusive, California’s homeless population grew by 16 percent. Despite significant investment by the state and local jurisdictions, including the County of Los Angeles, additional resources are needed to combat homelessness. In the face of reports that the economy is at “full employment,” many homeless individuals experience stigma and difficulty when attempting to attain full-time, unsubsidized employment. The purpose of the California Homeless Hiring Tax Credit is to encourage qualified employers that provide family-sustaining career pathways to hire and retain employees from the homeless population who have systematically faced barriers to employment.
(b) The Legislature finds and declares that the federal Equal Employment Opportunity Commission (EEOC) has considered the questions and forms required for the related federal Work Opportunity Tax Credit (WOTC) and found that the proper use of these questions and forms, which are used solely for purposes of applying for the WOTC based on qualifying barriers to employment, does not violate federal equal employment opportunity laws. Moreover, the proper use of the WOTC benefits those that equal employment opportunity laws seek to protect. However, despite the EEOC approving the WOTC application forms, if an employer were to use the information for purposes other than to apply for the WOTC, for example, to discriminate in a hiring decision, the EEOC declared that the employer would not be protected from liability under equal employment opportunity laws. The Legislature further finds and declares that compliance with the Homeless Hiring Tax Credit questions and forms is necessary to ensure proper documentation and certification for employees eligible for the credit allowed by this measure.

SEC. 2.

 Section 23628 is added to the Revenue and Taxation Code, to read:

23628.
 (a) (1) For each taxable year beginning on or after January 1, 2022, and before January 1, 2027, there shall be allowed to a qualified taxpayer that employs an eligible individual a credit against the “tax,” as defined in Section 23036, an amount as determined pursuant to paragraph (2), not to exceed thirty thousand dollars ($30,000) per taxable year.
(2) A qualified taxpayer shall be allowed the credit pursuant to this section in the following amounts per taxable year:
(A) Two thousand five hundred dollars ($2,500), for each eligible individual that works 500 hours for the eligible employer during the taxable year in which the credit is claimed.
(B) Five thousand dollars ($5,000), for each eligible individual that works 1,000 hours for the eligible employer during the taxable year in which the credit is claimed.
(C) Seven thousand five hundred dollars ($7,500), for each eligible individual that works 1,500 hours for the eligible employer during the taxable year in which the credit is claimed.
(D) Ten thousand dollars ($10,000), for each eligible individual that works 2,000 hours for the eligible employer during the taxable year in which the credit is claimed.
(b) For purposes of this section:
(1) “Continuum of care” has the same meaning as in Section 578.3 of Title 24 of the Code of Federal Regulations.
(2) “Eligible employer” means a taxpayer that is either of the following:
(A) An employer that meets all of the following requirements:
(i) Has 500 employees or less.
(ii) Pays wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code.
(iii) Pays family-supporting wages at or exceeding the jurisdiction’s prevailing wage, as determined by the Employment Development Department.
(B) An employer that meets the requirements of subparagraph (A) and is certified as a “high-road” employer by the Labor and Workforce Development Agency.
(3) “Eligible individual” means a person who is homeless on the date of the hire or anytime during the 60-day period immediately before the hire, or someone who is receiving supportive services from a homeless services provider as designated by a local continuum of care or coordinated entry system.
(4) “ ‘High-road’ employer” means an employer that pays family-supporting wages at or exceeding the jurisdiction’s prevailing wage, competes based on the quality of their services and products, and engages workers and their representatives in the project of building skills and competitiveness in an effort to advance the workers’ career objectives.
(5) (A) “Person who is homeless” means an individual whose primary nighttime residence is any of the following:
(i) A public or private place not designated for or ordinarily used as a regular housing accommodation.
(ii) Sleeping accommodation for an individual, including a car, park, abandoned building, bus station, train station, airport, or camping ground.
(iii) A publicly or privately operated shelter designated to provide temporary living arrangements, including a permanent housing, permanent supportive, or transitional facility.
(B) “Person who is homeless” includes any of the following:
(i) An individual who is fleeing, or is attempting to flee, domestic violence, has no other residence, and lacks the resources or support networks to obtain other permanent housing.
(ii) An individual who will imminently lose their primary nighttime residence, provided that, the residence will be lost within 14 days of receiving certification pursuant to paragraph (3) of subdivision (c), no subsequent residence has been identified, and the individual lacks the resources or support networks needed to obtain other permanent housing.
(iii) An individual that has not had a lease, ownership interest, or occupancy agreement in permanent housing in the 60 days before receiving certification pursuant to paragraph (3) of subdivision (c).
(6) “Qualified taxpayer” means an eligible employer that pays wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code to an eligible individual.
(c) (1) A credit shall not be allowed under this section unless the eligible employer submits to the Franchise Tax Board an eligible employer certification issued pursuant to paragraph (2) and submits an eligible individual certification issued pursuant to paragraph (3) for each eligible individual employed.
(2) (A) An employer shall submit a request for an eligible employer certification to the Employment Development Department.
(B) The Employment Development Department shall issue an eligible employer certification to an employer that qualifies as an eligible employer under paragraph (2) of subdivision (b).
(C) An eligible employer certification issued pursuant to this subdivision shall expire two years after issuance.
(3) (A) A continuum of care, in coordination with the Employment Development Department, shall issue certifications to eligible individuals who meet the definition of “person who is homeless.”
(B) A certification issued pursuant to this paragraph shall expire one year after issuance.
(d) (1) The total aggregate amount of the credit that may be allowed to all qualified taxpayers pursuant to this section shall not exceed thirty million dollars ($30,000,000) per calendar year.
(2) A qualified taxpayer shall claim the credit on a timely filed original return.
(3) (A) The Franchise Tax Board shall allocate credits to qualified taxpayers on a first-come-first-served basis.
(B) If the confirmations of two or more qualified taxpayers are received on the same day and the remaining amount of credit to be allocated is insufficient to be allocated fully to each, the credit shall be allocated to those qualified taxpayers on a pro rata basis.
(C) The date a confirmation is received shall be determined by the Franchise Tax Board. The determinations of the Franchise Tax Board with respect to the date a confirmation is received, and whether a return has been timely filed for purposes of this subdivision, may not be reviewed in any administrative or judicial proceeding.
(D) Any disallowance of a credit claimed due to a determination under this section shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from that disallowance may be assessed by the Franchise Tax Board in the same manner as provided by Section 19051.
(e) 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 two years if necessary, until the credit is exhausted.
(f) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under 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.
(g) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 3.

 For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to Section 23628 of the Revenue and Taxation Code as added by this act, hereafter the “credit,” the Legislature finds and declares the following:
(a) The goal of the credit is to encourage employers to hire and retain individuals from the homeless population which have been found to face systemic barriers to employment.
(b) (1) The effectiveness of the credit shall be measured by an annual written report created by the Labor and Workforce Development Agency that contains all of the following information:
(A) The number of employers, based on employer identification numbers, who applied for certification.
(B) The number and percentage of employees that applied for and received certification.
(C) The distribution of employers based on industry sectors.
(D) The distribution of employees based on industry sectors.
(E) The wages of workers hired as a result of the credit.
(2) (A) On or before October 1, 2022, and annually thereafter while the credit is in effect, the Employment Development Department shall post on its internet website the written report required by subdivision (b).
(B) A letter indicating that the report is posted on the Employment Development Department internet website shall be delivered to the Chief Clerk of the Assembly and the Secretary of the Senate within four calendar days of the report being posted. The Chief Clerk of the Assembly and the Secretary of the Senate shall distribute the notice, as they deem appropriate.

SEC. 4.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

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.
SECTION 1.Section 30163 of the Revenue and Taxation Code is amended to read:
30163.

(a)Except as otherwise provided in this section, an appropriate stamp shall be affixed to, or an appropriate meter impression shall be made on, each package of cigarettes before the distribution of the cigarettes.

(b)A stamp or meter impression shall not be affixed to, or made upon, any package of cigarettes if any one of the following occurs:

(1)The package does not comply with all requirements of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. Sec. 1331 and following) for the placement of labels, warnings, or any other information upon a package of cigarettes that is to be sold within the United States.

(2)The package is labeled “For Export Only,” “U.S. Tax Exempt,” “For Use Outside U.S.,” or similar wording indicating that the manufacturer did not intend that the product be sold in the United States.

(3)The package, or a package containing individually stamped packages, has been altered by adding or deleting the wording, labels, or warnings described in paragraph (1) or (2).

(4)The package was imported into the United States after January 1, 2000, in violation of Section 5754 of Title 26 of the United States Code.

(5)(A)The package bears a cigarette brand name that is a registered United States trademark of a participating manufacturer, and the package was imported by anyone other than the participating manufacturer of that cigarette brand.

(B)For purposes of this paragraph, “participating manufacturer” has the same meaning as defined in paragraph (1) of subdivision (a) of Section 104557 of the Health and Safety Code and in Section II(jj) of the Master Settlement Agreement described in Article 3 (commencing with Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health and Safety Code.

(c)Pursuant to its authority under Section 30148, the board shall revoke the license issued to a distributor that is determined to be in violation of this section.

(d)A violation of subdivision (b) shall constitute unfair competition under Section 17200 of the Business and Professions Code.