BILL NUMBER: AB 246 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 8, 2012
AMENDED IN SENATE FEBRUARY 13, 2012
AMENDED IN ASSEMBLY MARCH 29, 2011
INTRODUCED BY Assembly Member Wieckowski
(Coauthors: Assembly Members Alejo, Bonilla, and Williams)
( Coauthor: Senator Pavley
)
FEBRUARY 3, 2011
An act to repeal and amend Sections 17053.80 and 23623 of the
Revenue and Taxation Code, relating to tax, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 246, as amended, Wieckowski. Income taxes: credit: hiring.
The Personal Income Tax Law and the Corporation Tax Law
authorize allow various credits against the
taxes imposed by those laws, including a credit for taxable years
beginning on or after January 1, 2009, in the amount of $3,000 for
each full-time employee hired by a qualified employer, with a maximum
cumulative credit of $400,000,000 for all taxable years. Those laws
define "qualified employer" as a taxpayer that employed 20 or fewer
employees as of the last day of the preceding taxable year.
This bill would, under both laws, for taxable years beginning on
or after January 1, 2012, redefine "qualified employer" to mean a
disabled veteran business enterprise, a disadvantaged business
enterprise, a microbusiness, or a small business, as defined. This
bill would, for taxable years beginning on or after January 1, 2012,
allow a credit in the amount of $4,500 for each net increase in
full-time employees, who are paid qualified wages of less than $16
per hour and a credit in the amount of $9,100 for each net increase
in full-time employees, who are paid qualified wages of $16 or more
per hour, as provided.
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 XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
This bill would take effect immediately as a tax levy.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17053.80 of the Revenue and Taxation Code, as
added by Section 3 of Chapter 10 of the Third Extraordinary Session
of the Statutes of 2009, is repealed.
SEC. 2. Section 17053.80 of the Revenue and Taxation Code, as
added by Section 3 of Chapter 17 of the Third Extraordinary Session
of the Statutes of 2009, is amended to read:
17053.80. (a) (1) For each taxable year beginning on or after
January 1, 2009, and before January 1, 2012, there shall be allowed
as a credit against the "net tax," as defined in Section 17039, three
thousand dollars ($3,000) for each net increase in qualified
full-time employees, as specified in subdivision (c), hired during
the taxable year by a qualified employer.
(2) For each taxable year beginning on or after January 1, 2012,
there shall be allowed as a credit against the "net tax," as defined
in Section 17039, an amount as specified in subparagraphs (A), (B),
and (C) for each net increase in qualified full-time employees, or
portion thereof, as specified in subdivision (c), for the taxable
year by the a qualified employer.
(A) For each net increase in qualified full-time employees, or
portion thereof, who are paid qualified wages of less than sixteen
dollars ($16) per hour, or an equivalent amount if the qualified
wages are paid other than on an hourly basis, four thousand five
hundred dollars ($4,500).
(B) For each net increase in qualified full-time employees, or
portion thereof, who are paid qualified wages of sixteen dollars
($16) per hour or more, or an equivalent amount if paid other than on
an hourly basis, nine thousand one hundred dollars ($9,100).
(C) If the net increase in qualified full-time employees for a
taxable year, as determined under subdivision (c), is less than the
sum of the net increase in qualified full-time employees determined
under subparagraphs (A) and (B), the amount of credit allowed shall
equal the net increase in qualified full-time employees determined
under subdivision (c) multiplied by the amount under subparagraph (A)
or (B), depending on which net increase in qualified full-time
employees calculated under that subparagraph is greater than zero.
(D) A credit shall only be allowed if the qualified employer has a
net increase in qualified full-time employees for the taxable year,
as determined under subdivision (c).
(b) For purposes of this section:
(1) "Acquired" includes any a gift,
inheritance, transfer incident to divorce, or any other transfer,
whether or not for consideration.
(2) "Qualified full-time employee" means:
(A) A qualified employee who was paid qualified wages during the
taxable year by the qualified employer for services of not less than
an average of 35 hours per week.
(B) A qualified employee who was a salaried employee and was paid
compensation during the taxable year for full-time employment, within
the meaning of Section 515 of the Labor Code, by the qualified
employer.
(3) A "qualified employee" shall not include any of the following:
(A) An employee certified as a qualified employee in an enterprise
zone designated in accordance with Chapter 12.8 (commencing with
Section 7070) of Division 7 of Title 1 of the Government Code.
(B) An employee certified as a qualified disadvantaged individual
in a manufacturing enhancement area designated in accordance with
Section 7073.8 of the Government Code.
(C) An employee certified as a qualified employee in a targeted
tax area designated in accordance with Section 7097 of the Government
Code.
(D) An employee certified as a qualified disadvantaged individual
or a qualified displaced employee in a local agency military base
recovery area (LAMBRA) designated in accordance with Chapter 12.97
(commencing with Section 7105) of Division 7 of Title 1 of the
Government Code.
(E) An employee whose wages are included in calculating any other
credit allowed under this part.
(4) (A) For taxable years beginning on or after January 1, 2009,
and before January 1, 2012, "qualified employer" means a taxpayer
that, as of the last day of the preceding taxable year, employed a
total of 20 or fewer employees.
(B) For taxable years beginning on or after January 1, 2012,
"qualified employer" means an employer that as of the last day of the
preceding taxable year and the last day of the current taxable year,
was any of the following:
(i) A "disabled veteran business enterprise" as defined in
paragraph (7) of subdivision (b) of Section 999 of the Military and
Veterans Code.
(ii) A "disadvantaged business enterprise" as defined in
subdivision (f) of Section 2051 of the Public Contract
Code.
(iii) A "microbusiness" as defined in paragraph (2) of subdivision
(d) of Section 14837 of the Government Code.
(iv) A "small business" as defined in paragraph (1) of subdivision
(d) of Section 14837 of the Government Code.
(5) "Qualified wages" means wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code.
(6) "Annual full-time equivalent" means either of the following:
(A) In the case of a full-time employee paid hourly qualified
wages, "annual full-time equivalent" means the total number of hours
worked for the taxpayer qualified employer
by the employee (not to exceed 1,820 hours per employee)
divided by 1,820.
(B) In the case of a salaried full-time employee, "annual
full-time equivalent" means the total number of weeks worked for the
taxpayer qualified employer by the
employee divided by 52.
(c) The net increase in qualified full-time employees of a
qualified employer shall be determined as provided by this
subdivision:
(1) (A) The net increase in qualified full-time employees shall be
determined on an annual full-time equivalent basis by subtracting
from the amount determined in subparagraph (C) the amount determined
in subparagraph (B).
(B) The total number of qualified full-time employees employed in
the preceding taxable year by the taxpayer
qualified employer and by any a
trade or business acquired by the taxpayer
qualified employer during the current taxable year.
(C) The total number of qualified full-time employees employed in
the current taxable year by the taxpayer
qualified employer and by any a
trade or business acquired during the current taxable year.
(2) For taxpayers who a qualified employer
that first commence commences
doing business in this state during the taxable year, the number of
qualified full-time employees for the immediately preceding prior
taxable year shall be zero.
(d) 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 succeeding seven years if necessary,
until the credit is exhausted.
(e) Any A deduction otherwise
allowed under this part for qualified wages shall not be reduced by
the amount of the credit allowed under this section.
(f) For purposes of this section:
(1) All employees of the trades or businesses that are treated as
related under either Section 267, 318, or 707 of the Internal Revenue
Code shall be treated as employed by a single taxpayer.
(2) In determining whether the taxpayer has first commenced doing
business in this state during the taxable year, the provisions of
subdivision (f) of Section 17276.20, without application of paragraph
(7) of that subdivision, shall apply.
(g) (1) (A) Credit A credit
under this section and Section 23623 shall be allowed only for
credits claimed on timely filed original returns received by the
Franchise Tax Board on or before the cut-off date established by the
Franchise Tax Board.
(B) For purposes of this paragraph, the cut-off date shall be the
last day of the calendar quarter within which the Franchise Tax Board
estimates it will have received timely filed original returns
claiming credits under this section and Section 23623 that
cumulatively total four hundred million dollars ($400,000,000) for
all taxable years.
(2) The date a return is received shall be determined by the
Franchise Tax Board.
(3) (A) The determinations of the Franchise Tax Board with respect
to the cut-off date, the date a return is received, and whether a
return has been timely filed for purposes of this subdivision may not
be reviewed in any an administrative
or judicial proceeding.
(B) Any A disallowance of a credit
claimed due to a determination under this subdivision, including the
application of the limitation specified in paragraph (1), shall be
treated as a mathematical error appearing on the return. Any
An amount of tax resulting from such
disallowance may be assessed by the Franchise Tax Board in the same
manner as provided by Section 19051.
(4) The Franchise Tax Board shall periodically provide notice on
its Internet Web site with respect to the amount of credit under this
section and Section 23623 claimed on timely filed original returns
received by the Franchise Tax Board.
(h) (1) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes of
this section, including any guidelines regarding
the limitation on total credits allowable under this section and
Section 23623 and guidelines necessary to avoid the application of
paragraph (2) of subdivision (f) through split-ups, shell
corporations, partnerships, tiered ownership structures, or
otherwise.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any a standard, criterion, procedure,
determination, rule, notice, or guideline established or issued by
the Franchise Tax Board pursuant to this section.
(i) This section shall remain in effect only until December 1 of
the calendar year after the year of the cut-off date, and as of that
December 1 is repealed.
SEC. 3. Section 23623 of the Revenue and Taxation Code, as added
by Section 8 of Chapter 10 of the Third Extraordinary Session of the
Statutes of 2009, is repealed.
SEC. 4. Section 23623 of the Revenue and Taxation Code, as added
by Section 8 of Chapter 17 of the Third Extraordinary Session of the
Statutes of 2009, is amended to read:
23623. (a) (1) For each taxable year beginning on or after
January 1, 2009, and before January 1, 2012, there shall be allowed
as a credit against the "tax," as defined in Section 23036, three
thousand dollars ($3,000) for each net increase in qualified
full-time employees, as specified in subdivision (c), hired during
the taxable year by a qualified employer.
(2) For each taxable year beginning on or after January 1, 2012,
there shall be allowed as a credit against the "tax," as defined in
Section 17039 23036 , an amount as
specified in subparagraphs (A), (B), and (C) for each net increase in
qualified full-time employees, or portion thereof, as specified in
subdivision (c), for the taxable year by the
a qualified employer.
(A) For each net increase in qualified full-time employees, or
portion thereof, who are paid qualified wages of less than sixteen
dollars ($16) per hour, or an equivalent amount if the qualified
wages are paid other than on an hourly basis, four thousand five
hundred dollars ($4,500).
(B) For each net increase in qualified full-time employees, or
portion thereof, who are paid qualified wages of sixteen dollars
($16) per hour or more, or an equivalent amount if paid other than on
an hourly basis, nine thousand one hundred dollars ($9,100).
(C) If the net increase in qualified full-time employees for a
taxable year, as determined under subdivision (c), is less than the
sum of the net increase in qualified full-time employees determined
under subparagraphs (A) and (B), the amount of credit allowed shall
equal the net increase in qualified full-time employees determined
under subdivision (c) multiplied by the amount under subparagraph (A)
or (B), depending on which net increase in qualified full-time
employees calculated under that subparagraph is greater than zero.
(D) A credit shall only be allowed if the qualified employer has a
net increase in qualified full-time employees for the taxable year,
as determined under subdivision (c).
(b) For purposes of this section:
(1) "Acquired" includes any a gift,
inheritance, transfer incident to divorce, or any other transfer,
whether or not for consideration.
(2) "Qualified full-time employee" means:
(A) A qualified employee who was paid qualified wages during the
taxable year by the qualified employer for services of not less than
an average of 35 hours per week.
(B) A qualified employee who was a salaried employee and was paid
compensation during the taxable year for full-time employment, within
the meaning of Section 515 of the Labor Code, by the qualified
employer.
(3) A "qualified employee" shall not include any of the following:
(A) An employee certified as a qualified employee in an enterprise
zone designated in accordance with Chapter 12.8 (commencing with
Section 7070) of Division 7 of Title 1 of the Government Code.
(B) An employee certified as a qualified disadvantaged individual
in a manufacturing enhancement area designated in accordance with
Section 7073.8 of the Government Code.
(C) An employee certified as a qualified employee in a targeted
tax area designated in accordance with Section 7097 of the Government
Code.
(D) An employee certified as a qualified disadvantaged individual
or a qualified displaced employee in a local agency military base
recovery area (LAMBRA) designated in accordance with Chapter 12.97
(commencing with Section 7105) of Division 7 of Title 1 of the
Government Code.
(E) An employee whose wages are included in calculating any other
credit allowed under this part.
(4) (A) For taxable years beginning on or after January 1, 2009,
and before January 1, 2012, "qualified employer" means a taxpayer
that, as of the last day of the preceding taxable year, employed a
total of 20 or fewer employees.
(B) For taxable years beginning on or after January 1, 2012,
"qualified employer" means an employer that as of the last day of the
preceding taxable year and the last day of the current taxable year
was any of the following:
(i) A "disabled veteran business enterprise" as defined in
paragraph (7) of subdivision (b) of Section 999 of the Military and
Veterans Code.
(ii) A "disadvantaged business enterprise" as defined in
subdivision (f) of Section 2051 of the Public Contract
Code.
(iii) A "microbusiness" as defined in paragraph (2) of subdivision
(d) of Section 14837 of the Government Code.
(iv) A "small business" as defined in paragraph (1) of subdivision
(d) of Section 14837 of the Government Code.
(5) "Qualified wages" means wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code.
(6) "Annual full-time equivalent" means either of the following:
(A) In the case of a full-time employee paid hourly qualified
wages, "annual full-time equivalent" means the total number of hours
worked for the taxpayer qualified employer
by the employee (not to exceed 1,820 hours per employee)
divided by 1,820.
(B) In the case of a salaried full-time employee, "annual
full-time equivalent" means the total number of weeks worked for the
taxpayer qualified employer by the
employee divided by 52.
(c) The net increase in qualified full-time employees of a
qualified employer shall be determined as provided by this
subdivision:
(1) (A) The net increase in qualified full-time employees shall be
determined on an annual full-time equivalent basis by subtracting
from the amount determined in subparagraph (C) the amount determined
in subparagraph (B).
(B) The total number of qualified full-time employees employed in
the preceding taxable year by the taxpayer
qualified employer and by any a
trade or business acquired by the taxpayer
qualified employer during the current taxable year.
(C) The total number of qualified full-time employees employed in
the current taxable year by the taxpayer
qualified employer and by any a
trade or business acquired during the current taxable year.
(2) For taxpayers who a qualified employer
that first commence commences
doing business in this state during the taxable year, the number of
qualified full-time employees for the immediately preceding prior
taxable year shall be zero.
(d) 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 succeeding seven years if necessary, until the
credit is exhausted.
(e) Any A deduction otherwise
allowed under this part for qualified wages shall not be reduced by
the amount of the credit allowed under this section.
(f) For purposes of this section:
(1) All employees of the trades or businesses that are treated as
related under either Section 267, 318, or 707 of the Internal Revenue
Code shall be treated as employed by a single taxpayer.
(2) In determining whether the taxpayer has first commenced doing
business in this state during the taxable year, the provisions of
subdivision (g) of Section 24416.20, without application of paragraph
(7) of that subdivision, shall apply.
(g) (1) (A) Credit A credit
under this section and Section 17053.80 shall be allowed only
for credits claimed on timely filed original returns received by the
Franchise Tax Board on or before the cut-off date established by the
Franchise Tax Board.
(B) For purposes of this paragraph, the cut-off date shall be the
last day of the calendar quarter within which the Franchise Tax Board
estimates it will have received timely filed original returns
claiming credits under this section and Section 17053.80 that
cumulatively total four hundred million dollars ($400,000,000) for
all taxable years.
(2) The date a return is received shall be determined by the
Franchise Tax Board.
(3) (A) The determinations of the Franchise Tax Board with respect
to the cut-off date, the date a return is received, and whether a
return has been timely filed for purposes of this subdivision may not
be reviewed in any an administrative
or judicial proceeding.
(B) Any A disallowance of a credit
claimed due to a determination under this subdivision, including the
application of the limitation specified in paragraph (1), shall be
treated as a mathematical error appearing on the return. Any
An amount of tax resulting from such
disallowance may be assessed by the Franchise Tax Board in the same
manner as provided by Section 19051.
(4) The Franchise Tax Board shall periodically provide notice on
its Internet Web site with respect to the amount of credit under this
section and Section 17053.80 claimed on timely filed original
returns received by the Franchise Tax Board.
(h) (1) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes of
this section, including any guidelines regarding
the limitation on total credits allowable under this section and
Section 17053.80 and guidelines necessary to avoid the application of
paragraph (2) of subdivision (f) through split-ups, shell
corporations, partnerships, tiered ownership structures, or
otherwise.
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any a standard, criterion, procedure,
determination, rule, notice, or guideline established or issued by
the Franchise Tax Board pursuant to this section.
(i) This section shall remain in effect only until December 1 of
the calendar year after the year of the cut-off date, and as of that
December 1 is repealed.
SEC. 5. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.