BILL NUMBER: SBX8 59	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Dutton

                        FEBRUARY 12, 2010

   An act to add Sections 17053.76 and 23622.9 to the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 59, as introduced, Dutton. Taxes: credits: qualified employees.

    The Personal Income Tax Law and the Corporation Tax Law authorize
various credits against the taxes imposed by those laws, including a
hiring credit for qualified taxpayers who hire qualified employees,
as defined, within enterprise zones, Manufacturing Enhancement Areas,
targeted tax areas, and LAMBRAS, subject to specified criteria.
   This bill would, for taxable years beginning on or after January
1, 2010, authorize a hiring credit under those respective laws for
qualified taxpayers who hire qualified employees, as defined.
   The California Constitution authorizes the Governor to declare a
fiscal emergency and to call the Legislature into special session for
that purpose. The Governor issued a proclamation declaring a fiscal
emergency, and calling a special session for this purpose, on January
8, 2010.
   This bill would state that it addresses the fiscal emergency
declared by the Governor by proclamation issued on January 8, 2010,
pursuant to the California Constitution.
   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.  Section 17053.76 is added to the Revenue and Taxation
Code, to read:
   17053.76.  (a) For each taxable year beginning on or after January
1, 2010, there shall be allowed a credit against the "net tax," as
defined in Section 17039, an amount equal to the sum of the following
percentages of wages paid or incurred by the taxpayer during the
taxable year to each qualified employee of the taxpayer:
   (1) Twenty-five percent for each qualified employee employed by
the qualified taxpayer for at least 120 hours, but less than 400
hours, during the taxable year.
   (2) Forty percent for each qualified employee employed by the
qualified taxpayer for at least 400 hours during the taxable year.
   (b) The credit under subdivision (a) shall be allowed only with
respect to the first six thousand dollars ($6,000) of wages paid or
incurred during the taxable year to each qualified employee.
   (c) For purposes of this section, all of the following definitions
apply:
   (1) "Qualified employee" means an individual who is any of the
following, as documented by the Employment Development Department:
   (A) A recipient of CalWORKs benefits.
   (B) A parolee.
   (C) A veteran, as defined in Section 980 of the Military and
Veterans Code.
   (D) Eligible for receipt of unemployment insurance benefits or
currently receiving unemployment insurance benefits.
   (E) A person on probation.
   (2) "Qualified taxpayer" means a taxpayer that is a person or
entity engaged in a trade or business within California that has its
principal office located in California.
   (d) For purposes of this section the qualified taxpayer shall do
both of the following:
   (1) Obtain a certificate from the Employment Development
Department certifying that a qualified employee is employed by the
qualified taxpayer.
   (2) Retain a copy of the certification and provide it upon request
to the Franchise Tax Board.
   (e) (1) For purposes of this section:
   (A) All employees of trades or businesses, which are not
incorporated, that are under common control shall be treated as
employed by a single qualified taxpayer.
   (B) The credit, if any, allowable by this section with respect to
each trade or business shall be determined by reference to its
proportionate share of the expense of the qualified wages giving rise
to the credit, and shall be allocated in that manner.
   (C) Principles that apply in the case of controlled groups of
corporations, as specified in subdivision (e) of Section 23622.9,
shall apply with respect to determining employment.
   (2) If an employer acquires the major portion of a trade or
business of another employer (hereafter in this paragraph referred to
as the "predecessor") or the major portion of a separate unit of a
trade or business of a predecessor, then, for purposes of applying
this section, other than subdivision (f), for any calendar year
ending after that acquisition, the employment relationship between a
qualified employee and an employer shall not be treated as terminated
if the employee continues to be employed in that trade or business.
   (f) Any deduction otherwise allowed under this part for the wages
or salaries paid or incurred by the qualified taxpayer upon which the
credit is based shall be reduced by the amount of the credit, prior
to any reduction required by subdivision (g).
   (g) 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.
  SEC. 2.  Section 23622.9 is added to the Revenue and Taxation Code,
to read:
   23622.9.  (a) For each taxable year beginning on or after January
1, 2010, there shall be allowed a credit against the "tax," as
defined in Section 23036, an amount equal to the sum of the following
percentages of wages paid or incurred by the taxpayer during the
taxable year to each qualified employee of the taxpayer.
   (1) Twenty-five percent for each qualified employee employed by
the qualified taxpayer for at least 120 hours, but not less than 400
hours, during the taxable year.
   (2) Forty percent for each qualified employee employed by the
qualified taxpayer for at least 400 hours during the taxable year.
   (b) The credit under subdivision (a) shall be allowed only with
respect to the first six thousand dollars ($6,000) of wages paid or
incurred during the taxable year to each qualified employee.
   (c) For purposes of this section, all of the following definitions
apply:
   (1) "Qualified employee" means an individual who is any of the
following, as documented by the Employment Development Department:
   (A) A recipient of CalWORKs benefits.
   (B) A parolee.
   (C) A veteran, as defined in Section 980 of the Military and
Veterans Code.
   (D) Eligible for receipt of unemployment insurance benefits or
currently receiving unemployment insurance benefits.
   (E) A person on probation.
   (2) "Qualified taxpayer" means a taxpayer that is a person or
entity engaged in a trade or business within California that has its
principal office located in California.
   (d) For purposes of this section the qualified taxpayer shall do
both of the following:
   (1) Obtain a certificate from the Employment Development
Department certifying that a qualified employee is employed by the
qualified taxpayer.
   (2) Retain a copy of the certification and provide it upon request
to the Franchise Tax Board.
   (e) (1) For purposes of this section:
   (A) All employees of trades or businesses, which are not
incorporated, that are under common control shall be treated as
employed by a single qualified taxpayer.
   (B) The credit, if any, allowable by this section with respect to
each trade or business shall be determined by reference to its
proportionate share of the expense of the qualified wages giving rise
to the credit, and shall be allocated in that manner.
   (C) Principles that apply in the case of controlled groups of
corporations, as specified in subdivision (e) of Section 23622.9,
shall apply with respect to determining employment.
   (2) If an employer acquires the major portion of a trade or
business of another employer (hereafter in this paragraph referred to
as the "predecessor") or the major portion of a separate unit of a
trade or business of a predecessor, then, for purposes of applying
this section, other than subdivision (f), for any calendar year
ending after that acquisition, the employment relationship between a
qualified employee and an employer shall not be treated as terminated
if the employee continues to be employed in that trade or business.
   (f) Any deduction otherwise allowed under this part for the wages
or salaries paid or incurred by the qualified taxpayer upon which the
credit is based shall be reduced by the amount of the credit, prior
to any reduction required by subdivision (g).
   (g) In the case where the credit otherwise allowed under this
section exceeds the "tax" for the taxable year, that portion of the
credit that exceeds the "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.
  SEC. 3.  This act addresses the fiscal emergency declared by the
Governor by proclamation on January 8, 2010, pursuant to subdivision
(f) of Section 10 of Article IV of the California Constitution.
  SEC. 4.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.