BILL NUMBER: AB 402 CHAPTERED 10/03/01 CHAPTER 455 FILED WITH SECRETARY OF STATE OCTOBER 3, 2001 APPROVED BY GOVERNOR OCTOBER 2, 2001 PASSED THE SENATE AUGUST 30, 2001 PASSED THE ASSEMBLY MAY 17, 2001 AMENDED IN ASSEMBLY APRIL 17, 2001 AMENDED IN ASSEMBLY MARCH 26, 2001 INTRODUCED BY Assembly Member Papan (Principal coauthor: Senator Monteith) (Coauthor: Assembly Members Alquist, Aroner, Corbett, Harman, Koretz, and Simitian) FEBRUARY 20, 2001 An act to add and repeal Article 12.5 (commencing with Section 18836) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 402, Papan. Taxpayer contributions: Lupus Foundation of America, California Chapters Fund. Provisions relating to the administration of personal income taxes allow individual taxpayers to contribute amounts in excess of their tax liability for the support of specified funds. This bill would additionally allow taxpayers to designate on their tax returns that a specified amount in excess of their tax liability be transferred to the Lupus Foundation of America, California Chapters Fund, which would be created by this bill. However, the bill would provide that a voluntary contribution designation for this fund shall not be added on the tax return until another voluntary contribution designation is removed. This bill would provide that all money contributed to the fund pursuant to these provisions would be subject to appropriation by the Legislature, as specified. This bill would provide that these voluntary contribution provisions are repealed on January 1 of the fifth taxable year following the taxable year the fund first appears on the tax return. The bill would also provide that the provisions are repealed for taxable years beginning on or after January 1 of the calendar year in which the Franchise Tax Board estimates, by September 1, that the contributions made on returns filed in that calendar year will be less than $250,000, or an adjusted amount for certain subsequent taxable years. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Article 12.5 (commencing with Section 18836) is added to Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, to read: Article 12.5. Lupus Foundation of America, California Chapters Fund 18836. (a) An individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the Lupus Foundation of America, California Chapters Fund, which is established by Section 18837. That designation is to be used as a voluntary contribution on the tax return. (b) The contributions shall be in full dollar amounts and may be made individually by each signatory on a joint return. (c) A designation shall be made for any taxable year on the initial return for that taxable year and once made is irrevocable. If payments and credits reported on the return, together with any other credits associated with the taxpayer's account, do not exceed the taxpayer's liability, the return shall be treated as though no designation has been made. If no designee is specified, the contribution shall be transferred to the General Fund after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and administration of funds under this article. (d) If an individual designates a contribution to more than one account or fund listed on the tax return, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the form of the return to include a space labeled the "Lupus Foundation of America, California Chapters Fund" to allow for the designation permitted. The form shall also include in the instructions information that the contribution may be in the amount of one dollar ($1) or more and that the contribution shall be used for lupus education, awareness, and research. (f) Notwithstanding any other provision, a voluntary contribution designation for the Lupus Foundation of America, California Chapters Fund shall not be added on the tax return until another voluntary contribution designation is removed. (g) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18837. There is in the State Treasury the Lupus Foundation of America, California Chapters Fund to receive contributions made pursuant to Section 18836. The Franchise Tax Board shall notify the Controller of both the amount of money paid by taxpayers in excess of their tax liability and the amount of refund money that taxpayers have designated pursuant to Section 18836 to be transferred to the Lupus Foundation of America, California Chapters Fund. The Controller shall transfer from the Personal Income Tax Fund to the Lupus Foundation of America, California Chapters Fund an amount not in excess of the sum of the amounts designated by individuals pursuant to Section 18836 for payment into that fund. 18838. All money transferred to the Lupus Foundation of America, California Chapters Fund, upon appropriation by the Legislature, shall be allocated as follows: (a) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (b) To the State Department of Health Services for allocation on an equal basis to all California-based operating chapters of the Lupus Foundation of America for education and awareness, and to provide research grants to develop and advance the understanding, causes, techniques, and modalities effective in the prevention, care, treatment, and cure of lupus. Funds may not be used for the department's administrative costs. 18839. It is the intent of the Legislature that this article create an additional funding source for lupus education, awareness, and research and shall be used to supplement, not supplant, other funding sources for education, awareness, and research. 18840. (a) Unless repealed earlier pursuant to subdivision (b), this article shall remain in effect only until January 1 of the fifth taxable year following the first appearance of the Lupus Foundation of America, California Chapters Fund on the tax return, and as of that date is repealed, unless a later enacted statute, that is enacted before the applicable date, deletes or extends that date. (b) If, in any calendar year after the second taxable year the Lupus Foundation of America, California Chapters Fund appears on the tax return, the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c) for subsequent taxable years, as may be applicable, then this article is repealed with respect to taxable years beginning on or after January 1 of that calendar year. The Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contribution. (c) For each calendar year, beginning with the third calendar year the Lupus Foundation of America, California Chapters Fund appears on the tax return, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal.