BILL NUMBER: AB 2127 CHAPTERED 09/17/02 CHAPTER 620 FILED WITH SECRETARY OF STATE SEPTEMBER 17, 2002 APPROVED BY GOVERNOR SEPTEMBER 17, 2002 PASSED THE ASSEMBLY AUGUST 28, 2002 PASSED THE SENATE AUGUST 27, 2002 AMENDED IN SENATE AUGUST 22, 2002 AMENDED IN SENATE AUGUST 8, 2002 AMENDED IN ASSEMBLY APRIL 29, 2002 AMENDED IN ASSEMBLY APRIL 10, 2002 INTRODUCED BY Assembly Member Matthews (Coauthors: Assembly Members Alquist, Cardoza, Koretz, Negrete McLeod, and Zettel) (Coauthor: Senator Romero) FEBRUARY 20, 2002 An act to repeal and add Article 12 (commencing with Section 18831) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 2127, Matthews. Taxpayer contributions: Asthma and Lung Disease Research 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. Existing law allowed, until September 1, 2001, taxpayers to designate on their tax returns that a specified amount in excess of their tax liability be transferred to the California Lung Disease and Asthma Research Fund. This bill would repeal those obsolete provisions and instead allow taxpayers to designate on their tax returns that a specified amount in excess of their tax liability be transferred to the Asthma and Lung Disease Research 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 from that return. This bill would provide that all moneys contributed to the fund pursuant to these provisions, upon appropriation by the Legislature, would be allocated to the Franchise Tax Board and the State Department of Health Services, as provided. This bill would also provide that these voluntary contribution provisions are repealed on January 1 of the 5th taxable year following the taxable year the fund first appears on the tax return. The provisions are repealed for taxable years beginning on or after January 1 of the calendar year in which the Franchise Tax Board estimates by September 1 that the contributions made on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, and an adjusted amount for subsequent taxable years. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Article 12 (commencing with Section 18831) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 2. Article 12 (commencing with Section 18831) is added to Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, to read: Article 12. Asthma and Lung Disease Research Fund 18831. (a) An individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the Asthma and Lung Disease Research Fund established by Section 18832. 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 "Asthma and Lung Disease Research 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 asthma and lung disease research. (f) Notwithstanding any other provision, a voluntary contribution designation for the Asthma and Lung Disease Research 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). 18832. There is in the State Treasury the Asthma and Lung Disease Research Fund to receive contributions made pursuant to Section 18831. 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 18831 to be transferred to the Asthma and Lung Disease Research Fund. The Controller shall transfer from the Personal Income Tax Fund to the Asthma and Lung Disease Research Fund an amount not in excess of the sum of the amounts designated by individuals pursuant to Section 18831 for payment into that fund. 18833. All moneys transferred to the Asthma and Lung Disease Research 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 to the American Lung Association of California to provide research grants to develop and advance the understanding, causes, techniques, and modalities effective in the prevention, care, treatment, and cure of lung disease. The department shall have no oversight authority over these moneys or their uses and shall allocate these moneys to the American Lung Association of California for the purposes described in this subdivision. The funds may not be used for the administrative costs of the State Department of Health Services. (c) For purposes of this section, the lung diseases and research areas shall include, but not be limited to, the following: (1) Asthma. (2) Health effects of air pollution. (3) Tuberculosis. (4) Chronic obstructive pulmonary disease. (5) Emphysema. 18834. It is the intent of the Legislature that this article create an additional funding source for asthma and lung disease research and shall be used to supplement, not supplant, other funding sources for this research. 18835. (a) This article shall remain in effect only until January 1 of the fifth taxable year following the first appearance of the Asthma and Lung Disease Research 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 the second calendar year after the first taxable year the Asthma and Lung Disease Research 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 that the Asthma and Lung Disease Research 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. SEC. 3. Notwithstanding the repeal of Article 12 (commencing with Section 18831) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code made by Section 1, any contribution amounts designated pursuant to that article prior to its repeal shall continue to be transferred and disbursed in accordance with that article as in effect on January 1, 2002. Pursuant to the preceding sentence, the contribution amounts designated for the California Lung Disease and Asthma Research Fund for the 2000 taxable year shall be transferred to the State Department of Health Services for allocation to the American Lung Association of California for the purposes set forth in subdivision (b) of Section 18833 of the Revenue and Taxation Code, as that section read on January 1, 2002.