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SB-408 Income and corporation taxes: credits: restaurants, bars, and hotels.(2021-2022)



Current Version: 04/29/21 - Amended Senate

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SB408:v97#DOCUMENT

Amended  IN  Senate  April 29, 2021
Amended  IN  Senate  March 10, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 408

Introduced by Senator Min

February 12, 2021

An act to add and repeal Sections 17059 and 23659 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 408, as amended, Min. Income and corporation taxes: credits: restaurants, bars, and hotels.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
This bill, for taxable years beginning on or after January 1, 2021, and before January 1, 2022, 2027, would allow a credit against those taxes to a qualified taxpayer in an unspecified amount. the amount of $10,000. The bill would define a qualified taxpayer as a taxpayer that owned and operated, in any taxable year beginning on or after January 1, 2021, and before January 1, 2022, owns and operates a bar, hotel, or restaurant that employs 50 or fewer employees. The that meets specified requirements, including that the taxpayer temporarily ceased business operations for the bar, hotel, or restaurant for at least 30 consecutive days during the 2020 or 2021 taxable year in response to an emergency order, as defined. The bill would require a qualified taxpayer claiming the credit to declare, under penalty of perjury, that they complied with all applicable emergency orders, in the form and manner prescribed by the Franchise Tax Board. By expanding the crime of perjury, the bill would impose a state-mandated local program.
This bill would include additional information required for any bill authorizing a new income tax credit.
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 no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

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


SECTION 1.

 Section 17059 is added to the Revenue and Taxation Code, to read:

17059.
 (a) For each taxable year beginning on or after January 1, 2021, and before January 1, 2022, 2027, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer in the amount of ___ ($___). ten thousand dollars ($10,000).
(b) For purposes of this section, all of the following definitions apply:
(1) “Bar” means any retail establishment that prepares, serves, and vends alcoholic beverages and holds any of the following license types under Section 23320 of the Business and Professions Code: 40, 41, 42, 47, 48, 49, 50, 52, 57, 59, 60, 61, 68, 70, 75, and 80.
(2) “Emergency order” means any order issued by the Governor pursuant to the Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code), by any state agency, or by any local government that requires the closure of businesses in response to a state of emergency.

(2)

(3) “Hotel” means any hotel, motel, bed and breakfast inn, or other similar transient lodging establishment, but not a residential hotel, as defined in Section 50519 of the Health and Safety Code. “Hotel” shall not include any short-term rentals on residential property.

(3)

(4) “Residential property” means improved real property used or occupied, or intended to be used or occupied, for residential purposes, including a single-family home, multifamily home, apartment, or condominium.

(4)

(5) “Restaurant” means a retail food establishment that prepares, serves, and vends food directly to the consumer.
(6) “State of emergency” means a state of emergency proclaimed by the Governor pursuant to Article 13 (commencing with Section 8625) of Chapter 7 of Division 1 of Title 2 of the Government Code.

(5)

(7) “Qualified taxpayer” means a taxpayer that owns and operates, in any taxable year beginning on or after January 1, 2021, and before January 1, 2022, operates a bar, hotel, or restaurant that employs 50 or fewer employees. for which all of the following apply:
(A) The operation of the bar, hotel, or restaurant requires substantial in-person contact to conduct its business operations.
(B) The taxpayer temporarily ceased business operations for the bar, hotel, or restaurant for at least 30 consecutive days during the 2020 or 2021 taxable year in response to an emergency order.
(C) The taxpayer had gross receipts of five million dollars ($5,000,000) or less during the taxable year that it temporarily ceased business operations, as described in subparagraph (B).
(c) A qualified taxpayer claiming a credit pursuant to this section shall not be eligible for the credit under Section 23659.
(d) A qualified taxpayer claiming a credit allowed by this section shall declare, under penalty of perjury, that the qualified taxpayer has complied with all applicable emergency orders, in the form and manner prescribed by the Franchise Tax Board.
(e) 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 the succeeding six years if necessary, until the credit is exhausted.

(d)

(f) This section shall remain in effect only until December 1, 2022, 2027, and as of that date is repealed. However, any unused credit may continue to be carried forward, as provided in subdivision (e), until the credit is exhausted.

SEC. 2.

 Section 23659 is added to the Revenue and Taxation Code, to read:

23659.
 (a) For each taxable year beginning on or after January 1, 2021, and before January 1, 2022, 2027, there shall be allowed as a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer in the amount of ___ ($___). ten thousand dollars ($10,000).
(b) For purposes of this section, all of the following definitions apply:
(1) “Bar” means any retail establishment that prepares, serves, and vends alcoholic beverages and holds any of the following license types under Section 23320 of the Business and Professions Code: 40, 41, 42, 47, 48, 49, 50, 52, 57, 59, 60, 61, 68, 70, 75, and 80.
(2) “Emergency order” means any order issued by the Governor pursuant to the Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code), by any state agency, or by any local government that requires the closure of businesses in response to a state of emergency.

(2)

(3) “Hotel” means any hotel, motel, bed and breakfast inn, or other similar transient lodging establishment, but not a residential hotel, as defined in Section 50519 of the Health and Safety Code. “Hotel” shall not include any short-term rentals on residential property.

(3)

(4) “Residential property” means improved real property used or occupied, or intended to be used or occupied, for residential purposes, including a single-family home, multifamily home, apartment, or condominium.

(4)

(5) “Restaurant” means a retail food establishment that prepares, serves, and vends food directly to the consumer.
(6) “State of emergency” means a state of emergency proclaimed by the Governor pursuant to Article 13 (commencing with Section 8625) of Chapter 7 of Division 1 of Title 2 of the Government Code.

(5)

(7) “Qualified taxpayer” means a taxpayer that owns and operates, in any taxable year beginning on or after January 1, 2021, and before January 1, 2022, operates a bar, hotel, or restaurant that employs 50 or fewer employees. for which all of the following apply:
(A) The operation of the bar, hotel, or restaurant requires substantial in-person contact to conduct its business operations.
(B) The taxpayer temporarily ceased business operations for the bar, hotel, or restaurant for at least 30 consecutive days during the 2020 or 2021 taxable year in response to an emergency order.
(C) The taxpayer had gross receipts of five million dollars ($5,000,000) or less during the taxable year that it temporarily ceased business operations, as described in subparagraph (B).
(c) A qualified taxpayer claiming a credit pursuant to this section shall not be eligible for the credit under Section 17059.
(d) A qualified taxpayer claiming a credit allowed by this section shall declare, under penalty of perjury, that the qualified taxpayer has complied with all applicable emergency orders, in the form and manner prescribed by the Franchise Tax Board.
(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 the succeeding six years if necessary, until the credit is exhausted.

(d)

(f) This section shall remain in effect only until December 1, 2022, 2027, and as of that date is repealed. However, any unused credit may continue to be carried forward, as provided in subdivision (e), until the credit is exhausted.

SEC. 3.

 For purposes of complying with Section 41 of the Revenue and Taxation Code, the Legislature declares the following with respect to Sections 17059 and 23659 of the Revenue and Taxation Code, as added by this act, hereafter referred to as “the tax credits”:
(a) The specific goal, purpose, and objective that the tax credits will achieve is to provide necessary economic relief to taxpayers that own and operate businesses that have been heavily impacted by the COVID-19 pandemic.
(b) A Detailed detailed performance indicator for the Legislature to use in determining whether the tax credits allowed by this act meet that goal, purpose, and objective is the number of taxpayers claiming the tax credits and the type of businesses claiming the credits.
(c) The Legislative Analyst’s Office shall, by December 1, 2022, collaborate with the Franchise Tax Board to review the effectiveness of the tax credits. The office shall report its findings to the Legislature in compliance with Section 9795 of the Government Code.
(1) To assist the Legislature in determining whether the tax credits allowed by this act meet the goal, purpose, and objective specified in subdivision (a), and in carrying out their duties under subdivision (c), the Legislative Analyst’s Office may request information from the Franchise Tax Board.
(2) Notwithstanding Section 19542 of the Revenue and Taxation Code, the Franchise Tax Board shall provide any data requested by the Legislative Analyst’s Office pursuant to this subdivision.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 4.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.