SB 131 — Taxation.

Summary

(1) Existing law requires the Controller to state an account with persons that receive funds or property belonging to the state and fail to properly render account thereof to the state, and persons that fail to pay to the State Treasury any money belonging to the state. Existing law requires the Controller to offset delinquent accounts against personal income tax refunds that have been certified by the Franchise Tax Board, subject to a specified priority. Existing law, for taxable years beginning on or after January 1, 2024, prohibits the Controller from offsetting delinquent accounts against the personal income tax refunds of an individual who received the earned income tax credit or the young child tax credit for the taxable year, except as specified. This bill would additionally prohibit the Controller from offsetting delinquent accounts against the personal income tax refunds of an individual who received the foster youth tax credit. (2) Existing law requires the Department of Finance to report annually, no later than September 15, to the Legislature with regard to tax expenditures, as defined. Existing law requires the report to include specified information, including, for personal income tax expenditures, the number of taxpayers affected and returns filed, as applicable, for the most recent tax year for which full year data is available. Commencing August 1, 2023, this bill would instead require the report to be provided to the Legislature no later than November 1 of each year and would change the contents of the report by instead requiring, for personal income tax expenditures and for the most recent tax year for which full year data is available, the number of taxpayers affected and returns filed, categorized by taxpayers' income levels, as applicable, and the cost to the state resulting from these personal income tax expenditures, categorized by the taxpayers' income levels, for which data is readily available. (3) Existing law, the Personal Income Tax Law, in partial conformity with federal income tax law, imposes a tax on the taxable income of estates or of any kind of property held in trust. That law provides the taxable income of an estate or trust is computed in the same manner as in the case of an individual, except as provided, and the tax is paid by the fiduciary of the trust or estate. Existing law provides that, where the grantor or another person is treated as the owner of any portion of the trust, known as a "grantor trust," then items of income, deductions, and credits against tax of the trust are included in computing the taxable income and credits of the grantor or other owner. This bill, for taxable years beginning on or after January 1, 2023, would include the income of an incomplete gift nongrantor trust, as defined, in the gross income of the grantor to the extent the income of the trust would be taken into account in computing the grantor's taxable income if the trust were treated as a grantor trust. The bill would provide that these provisions do not apply where certain conditions are met, including an irrevocable election made by the fiduciary to be taxed as a resident nongrantor trust, as provided. (4) The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally defines "gross income" as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. This bill would, for taxable years beginning on or after January 1, 2020, and before January 1, 2028, provide exclusions from gross income for any qualified taxpayer, as defined, for amounts received in settlements associated with either the 2019 Kincade Fire in the County of Sonoma, or the 2020 Zogg Fire in the Counties of Tehama and Shasta, as provided. (5) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including, for taxable years beginning on or after January 1, 2014, and before January 1, 2026, a credit for hiring qualified full-time employees, as defined, within a designated census tract or economic development area in an amount equal to 35% of the qualified wages paid to those employees multiplied by the applicable percentage for that taxable year. That law requires a taxpayer claiming the credit to request a tentative credit reservation from the Franchise Tax Board within 30 days of complying with specified new hire reporting requirements. This bill would, for taxable years beginning on or after January 1, 2023, and before January 1, 2026, eliminate the requirement that the new employment be located within a designated census tract or economic development area if the qualified taxpayer is engaged in semiconductor manufacturing or semiconductor research and development, lithium production, manufacturing of lithium batteries, or electric airplane manufacturing, as defined, and self-certifies and verifies compliance with specified requirements. The bill would, for each taxable year beginning on or after January 1, 2023, and before January 1, 2024, allow a qualified taxpayer engaged in semiconductor manufacturing, semiconductor research and development, lithium production, manufacturing of lithium batteries, or electric airplane manufacturing to request a tentative credit reservation from the Franchise Tax Board on or before the last day of the month following the close of the taxable year for which the credit is claimed, instead of within 30 days of complying with specified new hire reporting requirements. (6) Existing law establishes the State Department of Social Services and requires the department to administer various public social services programs, such as the CalFood Program and the In-Home Supportive Services Program. Existing law also establishes the State Department of Health Care Services within the California Health and Human Services Agency, and sets forth the department's powers and duties relating to, among other things, public health, licensing and certification of certain health facilities, and the state Medi-Cal program. 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 California EITC, and requires all data provided to remain confidential and be used only for purposes directly connected with the federal and the California EITC, and other federal and state antipoverty tax credits. Existing law authorizes the Franchise Tax Board to disclose individual income tax return 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 the data provided to remain confidential and be used only for purposes of informing state residents of the availability of the Volunteer Income Tax Assistance (VITA) , CalFile, the federal EITC, the California EITC, and other federal and state antipoverty tax credits that are designed to alleviate poverty and tax burdens of low-income households. That law makes the unauthorized disclosure or use of information shared in this way a misdemeanor. This bill would extend the authorization of the Franchise Tax Board to disclose individual income tax return information to include information for taxable years beginning on or after January 1, 2020, and before January 1, 2026. By expanding the crimes established by these provisions until January 1, 2026, this bill would establish a state-mandated local program. (7) Existing federal and California income tax laws allow various credits against the taxes imposed by those laws, including, among other antipoverty tax credits, a refundable federal earned income tax credit (EITC) for certain low-income individuals who have earned income and who meet certain other requirements and a California EITC, in partial conformity with federal income tax laws, that is equal to that portion of the federal EITC as determined by the earned income tax credit adjustment factor. Existing law, the Earned Income Tax Credit Information Act, requires an employer, as defined, to notify all employees that they may be eligible for the federal and the California EITC, as specified. That law also requires specified state agencies to notify recipients of state services that they may be eligible for the federal and the California EITC. Existing law provides the form and manner of notification by employers and state agencies. This bill would recast these notification requirements to require notification of the availability of specified income tax filing assistance programs and state and federal antipoverty tax credits, including the federal and the California EITC. The bill would also rephrase the form of the notification, and would require employers to notify employees twice annually, as provided. (8) Existing law, the Better for Families Act, requires the Franchise Tax Board to make a one-time Better for Families Tax Refund payment to each qualified recipient, as defined, of an applicable amount, as specified, in the form and manner determined by the Franchise Tax Board. This bill would require the Franchise Tax Board to issue these payments no later than September 30, 2023, except as provided. (9) 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. (10) This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. (11) The bill would make legislative findings and declarations regarding the public purpose served by this bill. (12) 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. (13) This bill would, for the 2023–2024 fiscal year, appropriate the sum of $10,000, from the General Fund to the Franchise Tax Board for purposes of administering the above-described tax credit for hiring qualified full-time employees. (14) The bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Bill Text

• Chaptered 07/10/23 - Chaptered Current pdf July 10, 2023
• Enrolled 06/28/23 - Enrolled pdf June 28, 2023
• Amended 06/26/23 - Amended Assembly pdf June 26, 2023
• Introduced 01/18/23 - Introduced pdf January 18, 2023
• SB131 View text html

Action History

1. July 10, 2023

   Chaptered by Secretary of State. Chapter 55, Statutes of 2023.

2. July 10, 2023

   Approved by the Governor.

3. June 27, 2023

   Enrolled and presented to the Governor at 4:45 p.m.

4. June 27, 2023

   Assembly amendments concurred in. (Ayes 32. Noes 8. Page 1773.) Ordered to engrossing and enrolling.

5. June 27, 2023

   In Senate. Concurrence in Assembly amendments pending.

6. June 27, 2023

   Read third time. Passed. (Ayes 61. Noes 14. Page 2407.) Ordered to the Senate.

7. June 26, 2023

   Ordered to third reading.

8. June 26, 2023

   Withdrawn from committee.

9. June 26, 2023

   (Ayes 56. Noes 17. Page 2370.)

10. June 26, 2023

    Assembly Rules Suspended.

11. June 26, 2023

    From committee with author's amendments. Read second time and amended. Re-referred to Com. on BUDGET.

12. March 30, 2023

    Referred to Com. on BUDGET.

13. March 27, 2023

    In Assembly. Read first time. Held at Desk.

14. March 27, 2023

    Read third time. Passed. (Ayes 29. Noes 8. Page 495.) Ordered to the Assembly.

15. March 20, 2023

    Read second time. Ordered to third reading.

16. March 16, 2023

    Ordered to second reading.

17. March 16, 2023

    Withdrawn from committee. (Ayes 28. Noes 8. Page 357.)

18. January 25, 2023

    Referred to Com. on B. & F.R.

19. January 19, 2023

    From printer. May be acted upon on or after February 18.

20. January 18, 2023

    Introduced. Read first time. To Com. on RLS. for assignment. To print.

Sponsors

• Committee on Budget and Fiscal Review · Primary

Votes

Subjects