BILL NUMBER: AB 1159 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 11, 2009
INTRODUCED BY Assembly Member V. Manuel Perez
FEBRUARY 27, 2009
An act to add and repeal Sections 17053.71 and 23671
amend Sections 17053.70 and 23612.2 of the
Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1159, as amended, V. Manuel Perez. Income and corporation tax
credits: sales and use taxes: enterprise
zones: qualified property.
The Enterprise Zone Act provides for the designation of enterprise
zones by the Trade and Commerce Agency, according to specified
criteria, pursuant to which certain entities may receive regulatory,
tax, and other incentives for private investment and employment.
The Personal Income Tax Law and the Corporation Tax Law authorize
various credits against the taxes imposed by those laws ,
including a credit in an amount equal to the sales or use tax paid or
incurred during the taxable year by a taxpayer engaged in a trade or
business in an enterprise zone by the taxpayer in connection with
the taxpayer's's purchase of specified property .
This bill would, for taxable years beginning on or after January
1, 2009, and before January 1, 2016, allow a credit in an
amount equal to the sales and use tax paid or incurred for the
purchase of qualified property, as defined 1, 2010,
authorize a taxpayer engaged in a trade or business in enterprise
zones to aggregate the value of sales and use tax credits
attributable to the purchase, and placement in service, of machinery
and machinery parts used for the production of renewable energy
resources in all of the enterprise zones in which the taxpayer is
engaged in a trade or business and apply the tax credit to tax
liabilities attributable to activities within one or more enterprise
zones, as provided .
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as the
California Cleantech Advantage Act of 2009.
SEC. 2. (a) The Legislature finds and declares all of the
following:
(1) That the enactment of Assembly Bill 32 (Chapter 488, Statutes
of 2006) made California a national and global policy leader in the
effort to reduce greenhouse gases that pose serious threats to our
natural environment and to our residents' health and safety.
(2) That the prospect of global warming is very real and may
already be impacting our climate and ecosystems.
(3) That there is an urgent need to develop, market, and use
products, equipment, and services that reduce the formation of
greenhouse gases.
(b) The Legislature further finds and declares:
(1) That the level of national and global concern over greenhouse
gas emissions has begun to focus American technological research and
investment on developing industrial and consumer products and
processes that produce zero or ultra-low emissions of carbon dioxide,
the primary greenhouse gas.
(2) It is in the best interest of this state to expeditiously
foster a competitive cleantech industry in California by offering
investors financial incentives to spur cleantech research and
development, production, and utilization of environmentally clean
products.
(3) That Cleantech Venture reached eight billion four hundred
million dollars ($8,400,000,000) in 2008.
(4) That growing cleantech investment will help create as many as
114,000 new, high-paying, skilled jobs, improve the state's air and
water quality, and offer businesses reliable and affordable sources
of alternative energy.
(c) Therefore, it is the intent of the Legislature to enact and
enhance targeted tax credits to increase investment in cleantech
activities and renewable energy, as well as maintain and enhance this
state's competitive lead in attracting investment capital, clean
industry, and high-paying, skilled jobs.
SEC. 3. Section 17053.71 is added to the
Revenue and Taxation Code, to read:
17053.71. (a) For each taxable year beginning on or after January
1, 2009, and before January 1, 2016, there shall be allowed as a
credit against the "net tax," as defined by Section 17039, an amount
equal to the sales and use tax paid or incurred during the taxable
year by the taxpayer for the taxpayer's purchase of qualified
property.
(b) For purposes of this section, "qualified property" means any
property used in an enterprise zone, targeted tax area, or a local
military base realignment area for the production or generation of
renewable energy.
(c) 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 year, and the four succeeding years if necessary,
until the credit is exhausted.
(d) This section shall remain in effect only until December 1,
2016, and as of that date is repealed.
SEC. 4. Section 23671 is added to the Revenue
and Taxation Code, to read:
23671. (a) For each taxable year beginning on or after January 1,
2009, and before January 1, 2016, there shall be allowed as a credit
against the "tax," as defined by Section 23036, an amount equal to
the sales and use tax paid or incurred during the taxable year by the
taxpayer for the taxpayer's purchase of qualified property.
(b) For purposes of this section, "qualified property" means any
property used in an enterprise zone, targeted tax area, or a local
military base realignment area for the production or generation of
renewable energy.
(c) 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 year, and the four succeeding years if necessary, until the
credit is exhausted.
(d) This section shall remain in effect only until December 1,
2016, and as of that date is repealed.
SEC. 3. Section 17053.70 of the Revenue
and Taxation Code is amended to read:
17053.70. (a) There shall be allowed as a credit against the "net
tax" (as defined in Section 17039) for the taxable year an amount
equal to the sales tax reimbursement or use tax paid or
incurred during the taxable year by the taxpayer in connection with
the taxpayer's purchase of qualified property.
(b) For purposes of this section:
(1) "Taxpayer" means a person or entity engaged in a trade or
business within an enterprise zone.
(2) "Qualified property" means:
(A) Any of the following:
(i) Machinery and machinery parts used for fabricating,
processing, assembling, and manufacturing.
(ii) Machinery and machinery parts used for the production of
renewable energy resources.
(iii) Machinery and machinery parts used for either of the
following:
(I) Air pollution control mechanisms.
(II) Water pollution control mechanisms.
(iv) Data processing and communications equipment, including, but
not limited, to computers, computer-automated drafting systems, copy
machines, telephone systems, and faxes.
(v) Motion picture manufacturing equipment central to production
and postproduction, including, but not limited to, cameras, audio
recorders, and digital image and sound processing equipment.
(B) The total cost of qualified property purchased and placed in
service in any taxable year that may be taken into account by any
taxpayer for purposes of claiming this credit shall not exceed one
million dollars ($1,000,000).
(C) The qualified property is used by the taxpayer exclusively in
an enterprise zone.
(D) The qualified property is purchased and placed in service
before the date the enterprise zone designation expires, is no longer
binding, or becomes inoperative.
(3) "Enterprise zone" means the area designated as an enterprise
zone pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(c) If the taxpayer has purchased property upon which a use tax
has been paid or incurred, the credit provided by this section shall
be allowed only if qualified property of a comparable quality and
price is not timely available for purchase in this state.
(d) In the case where the credit otherwise allowed under this
section exceeds the "net tax" for the taxable year, that portion of
the credit that exceeds the "net tax" may be carried over and added
to the credit, if any, in succeeding taxable years, until the credit
is exhausted. The credit shall be applied first to the earliest
taxable years possible.
(e) Any taxpayer who elects to be subject to this section shall
not be entitled to increase the basis of the qualified property as
otherwise required by Section 164(a) of the Internal Revenue Code
with respect to sales or use tax paid or incurred in connection with
the taxpayer's purchase of qualified property.
(f) (1) The Except as provided in
subdivision (g), the amount of the credit otherwise allowed
under by this section and Section
17053.74, including any credit carryover from prior years, that may
reduce the "net tax" for the taxable year shall not exceed the amount
of tax that would be imposed on the taxpayer's business income
attributable to the enterprise zone determined as if that
attributable income represented all of the income of the taxpayer
subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to the
enterprise zone. For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101) of Part
11. That business income shall be further apportioned to the
enterprise zone in accordance with Article 2 (commencing with Section
25120) of Chapter 17 of Part 11, modified for purposes of this
section in accordance with paragraph (3).
(3) Business income shall be apportioned to the enterprise zone by
multiplying the total California business income of the taxpayer by
a fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction, the numerator of which is
the average value of the taxpayer's real and tangible personal
property owned or rented and used in the enterprise zone during the
taxable year, and the denominator of which is the average value of
all the taxpayer's real and tangible personal property owned or
rented and used in this state during the taxable year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in the enterprise zone during
the taxable year for compensation, and the denominator of which is
the total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "net tax" for the
taxable year, as provided in subdivision (d).
(g) (1) Notwithstanding the limitations established in
subdivisions (d) and (f), the amount of the credit otherwise allowed
by this section for machinery and machinery parts used for the
production of renewable energy resources pursuant to clause (ii) of
subparagraph (A) of paragraph (2) of subdivision (b), including any
credit carryover from prior years, and the credit otherwise allowed
by Section 17053.74 for employing qualified employees, including any
credit carryover from prior years, that may reduce the "net tax" for
the taxable year shall not exceed the amount of tax that would be
imposed on the taxpayer's business income attributable to all of the
enterprise zones in which the taxpayer is engaged in a trade or
business, determined as if that attributable income represented all
of the income of the taxpayer subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to all of the
enterprise zones in which the taxpayer is engaged in a trade or
business. For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101) of Part
11. That business income shall be further apportioned to the
enterprise zones in accordance with Article 2 (commencing with
Section 25120) of Chapter 17 of Part 11, modified for purposes of
this section in accordance with paragraph (3).
(3) Business income shall be apportioned to all of the enterprise
zones in which the taxpayer is engaged in a trade or business by
multiplying the total California business income of the taxpayer by a
fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction, the numerator of which is
the average value of the taxpayer's real and tangible personal
property owned or rented and used in all of the enterprise zones in
which the taxpayer is engaged in a trade or business during the
taxable year, and the denominator of which is the average value of
all the taxpayer's real and tangible personal property owned or
rented and used in this state during the taxable year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in all of the enterprise zones
in which the taxpayer is engaged in a trade or business during the
taxable year for compensation, and the denominator of which is the
total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "net tax" for the
taxable year, as provided in subdivision (d).
(g)
(h) The amendments made to this section by the
act adding this subdivision Chapter 323 of the
Statutes of 1998 shall apply to taxable years beginning on or
after January 1, 1998.
(i) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 2010.
SEC. 4. Section 23612.2 of the Revenue
and Taxation Code is amended to read:
23612.2. (a) There shall be allowed as a credit against the "tax"
(as defined by Section 23036) for the taxable year an amount equal
to the sales tax reimbursement or use tax paid or incurred
during the taxable year by the taxpayer in connection with the
taxpayer's purchase of qualified property.
(b) For purposes of this section:
(1) "Taxpayer" means a corporation engaged in a trade or business
within an enterprise zone.
(2) "Qualified property" means:
(A) Any of the following:
(i) Machinery and machinery parts used for fabricating,
processing, assembling, and manufacturing.
(ii) Machinery and machinery parts used for the production of
renewable energy resources.
(iii) Machinery and machinery parts used for either of the
following:
(I) Air pollution control mechanisms.
(II) Water pollution control mechanisms.
(iv) Data-processing and communications equipment, including, but
not limited to, computers, computer-automated drafting systems, copy
machines, telephone systems, and faxes.
(v) Motion picture manufacturing equipment central to production
and postproduction, including, but not limited to, cameras, audio
recorders, and digital image and sound processing equipment.
(B) The total cost of qualified property purchased and placed in
service in any taxable year that may be taken into account by any
taxpayer for purposes of claiming this credit shall not exceed twenty
million dollars ($20,000,000).
(C) The qualified property is used by the taxpayer exclusively in
an enterprise zone.
(D) The qualified property is purchased and placed in service
before the date the enterprise zone designation expires, is no longer
binding, or becomes inoperative.
(3) "Enterprise zone" means the area designated as an enterprise
zone pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(c) If the taxpayer has purchased property upon which a use tax
has been paid or incurred, the credit provided by this section shall
be allowed only if qualified property of a comparable quality and
price is not timely available for purchase in this state.
(d) In the case where the credit otherwise allowed under this
section exceeds the "tax" for the taxable year, that portion of the
credit which exceeds the "tax" may be carried over and added to the
credit, if any, in the following year, and succeeding years if
necessary, until the credit is exhausted. The credit shall be applied
first to the earliest taxable years possible.
(e) Any taxpayer who elects to be subject to this section shall
not be entitled to increase the basis of the qualified property as
otherwise required by Section 164(a) of the Internal Revenue Code
with respect to sales or use tax paid or incurred in connection with
the taxpayer's purchase of qualified property.
(f) (1) The Except as provided in
subdivision (g), the amount of credit otherwise allowed
under by this section and Section
23622.7, including any credit carryover from prior years, that may
reduce the "tax" for the taxable year shall not exceed the amount of
tax which would be imposed on the taxpayer's business income
attributable to the enterprise zone determined as if that
attributable income represented all of the income of the taxpayer
subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to the
enterprise zone. For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101). That
business income shall be further apportioned to the enterprise zone
in accordance with Article 2 (commencing with Section 25120) of
Chapter 17, modified for purposes of this section in accordance with
paragraph (3).
(3) Business income shall be apportioned to the enterprise zone by
multiplying the total California business income of the taxpayer by
a fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction, the numerator of which is
the average value of the taxpayer's real and tangible personal
property owned or rented and used in the enterprise zone during the
taxable year, and the denominator of which is the average value of
all the taxpayer's real and tangible personal property owned or
rented and used in this state during the taxable year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in the enterprise zone during
the taxable year for compensation, and the denominator of which is
the total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "tax" for the taxable
year, as provided in subdivision (d).
(g) (1) Notwithstanding the limitations established in
subdivisions (d) and (f), the amount of the credit otherwise allowed
by this section for machinery and machinery parts used for the
production of renewable energy resources, pursuant to clause (ii) of
subparagraph (A) of paragraph (2) of subdivision (b), including any
credit carryover from prior years, and the credit otherwise allowed
by Section 23622.7 for employing qualified employees, including any
credit carryover from prior years, that may reduce the "tax" for the
taxable year shall not exceed the amount of tax that would be imposed
on the taxpayer's business income attributable to all of the
enterprise zones in which the taxpayer is engaged in a trade or
business, determined as if that attributable income represented all
of the income of the taxpayer subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to all of the
enterprise zones in which the taxpayer is engaged in a trade or
business. For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101) of Part
11. That business income shall be further apportioned to the
enterprise zones in accordance with Article 2 (commencing with
Section 25120) of Chapter 17 of Part 11, modified for purposes of
this section in accordance with paragraph (3).
(3) Business income shall be apportioned to all of the enterprise
zones in which the taxpayer is engaged in a trade or business by
multiplying the total California business income of the taxpayer by a
fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction,
the numerator of which is the average value of the taxpayer's real
and tangible personal property owned or rented and used in all of the
enterprise zones in which the taxpayer is engaged in a trade or
business during the taxable year, and the denominator of which is the
average value of all the taxpayer's real and tangible personal
property owned or rented and used in this state during the taxable
year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in all of the enterprise zones
in which the taxpayer is engaged in a trade or business during the
taxable year for compensation, and the denominator of which is the
total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "tax" for the taxable
year, as provided in subdivision (d).
(g)
(h) The amendments made to this section by the
act adding this subdivision Chapter 323 of the
Statutes of 1998 shall apply to taxable years beginning on or
after January 1, 1998.
(i) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 2010.
SEC. 5. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.