AB 33, as introduced, Perea. Income taxes: credit: patent licensing.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill would, under the Personal Income Tax Law and the Corporation Tax Law, for taxable years beginning on or after January 1, 2013, allow a credit against those taxes in an amount equal to 15% of the qualified royalties, as defined, paid by a qualified taxpayer, as defined. The bill would calculate the cut-off date for the above-described credit based upon an estimate by the Franchise Tax Board of claims cumulatively totaling $100,000,000 for all taxable years, as specified.
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 17053.99 is added to the Revenue and
2Taxation Code, to read:
(a) For each taxable year beginning on or after
4January 1, 2013, there shall be allowed to a qualified taxpayer as
P2 1a credit against the “net tax,” as defined in Section 17039, an
2amount equal to 15 percent of the qualified royalties paid by the
3qualified taxpayer during the taxable year.
4(b) For purposes of this section:
5(1) “Commercialize” means the process in which a taxpayer is
6a licensee of a qualified patent and uses the patent in connection
7with, or incorporates the patent into, intellectual property or
8tangible personal property in the manner described, with respect
9to which a qualified patent is used directly or indirectly in
10connection with the manufacturing, production,
growing, or
11extraction process with respect to such property, or is incorporated
12into such property and such incorporation serves a significant
13commercial purpose.
14(2) “Qualified patent” means a patent owned by the University
15of California for an invention where the research and development
16for that invention was funded, in whole or in part, by amounts
17eligible for the credit under Section 17052.12 or 23609.
18(3) “Qualified research” has the same meaning as set forth in
19Section 41(d) of the Internal Revenue Code, as modified by Section
2017052.12.
21(4) “Qualified royalties” means any royalties paid by a qualified
22taxpayer for the use of a qualified patent through a license
23agreement with the University of California or another entity.
24(5) “Qualified
taxpayer” means a taxpayer that paid qualified
25royalties during the taxable year and commercializes, for at least
26five consecutive years within the state, the licensed patent for
27which qualified royalties were paid during the taxable year.
28(c) In the case where the credit allowed by this section exceeds
29the “net tax,” the excess may be carried over to reduce the “net
30tax” in the following year, and succeeding eight years if necessary,
31until the credit is exhausted.
32(d) (1) (A) Credit under this section and Section 23699 shall
33be allowed only for credits claimed on timely filed original returns
34received by the Franchise Tax Board on or before the cut-off date
35established by the Franchise Tax Board.
36(B) For purposes of this paragraph, the cut-off date shall be the
37last day of the calendar quarter within which the Franchise Tax
38Board estimates it will
have received timely filed original returns
39claiming credits under this section and Section 23699 that
P3 1cumulatively total one hundred million dollars ($100,000,000) for
2all taxable years.
3(2) The date a return is received shall be determined by the
4Franchise Tax Board.
5(3) (A) The determinations of the Franchise Tax Board with
6respect to the cut-off date, the date a return is received, and whether
7a return has been timely filed for purposes of this subdivision may
8not be reviewed in any administrative or judicial proceeding.
9(B) Any disallowance of a credit claimed due to a determination
10under this subdivision, including the application of the limitation
11specified in paragraph (1), shall be treated as a mathematical error
12appearing on the return. Any amount of tax resulting from such
13disallowance may be assessed by the Franchise Tax Board in the
14same manner as provided by Section 19051.
15(4) The Franchise Tax Board shall periodically provide notice
16on its Internet Web site with respect to the amount of credit under
17this section and Section 23699 claimed on timely filed original
18returns received by the Franchise Tax Board.
19(e) (1) The Franchise Tax Board may prescribe rules, guidelines,
20or procedures necessary or appropriate to carry out the purposes
21of this section, including any guidelines regarding the limitation
22on total credits allowable under this section and Section 23699.
23(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
24Division 3 of Title 2 of the Government Code does not apply to
25any standard, criterion, procedure, determination, rule, notice, or
26guideline established or issued by the Franchise Tax Board
27pursuant to this section.
28(f) This section shall remain in effect only until December 1 of
29the calendar year after the year of the cutoff date, and as
of that
30December 1 is repealed.
Section 23699 is added to the Revenue and Taxation
32Code, to read:
(a) For each taxable year beginning on or after January
341, 2013, there shall be allowed to a qualified taxpayer as a credit
35against the “tax,” as defined in Section 23036, an amount equal
36to 15 percent of the qualified amount paid by the qualified taxpayer
37during the taxable year.
38(b) For purposes of this section:
39(1) “Commercialize” means the process in which a taxpayer is
40a licensee of a qualified patent and uses the patent in connection
P4 1with, or incorporates the patent into, intellectual property or
2tangible personal property in the manner described, with respect
3to which a qualified patent is used directly or indirectly in
4connection with the manufacturing, production, growing,
or
5extraction process with respect to such property, or is incorporated
6into such property and such incorporation serves a significant
7commercial purpose.
8(2) “Qualified patent” means a patent owned by the University
9of California for an invention where the research and development
10for that invention was funded, in whole or in part, by amounts
11eligible for the credit under Section 17052.12 or 23609.
12(3) “Qualified research” has the same meaning as set forth in
13Section 41(d) of the Internal Revenue Code, as modified by Section
1423609.
15(4) “Qualified royalties” means any royalties paid by a qualified
16taxpayer for the use of a qualified patent through a license
17agreement with the University of California or another entity.
18(5) “Qualified taxpayer” means a
taxpayer that paid qualified
19royalties during the taxable year and commercializes, for at least
20five consecutive years within the state, the licensed patent for
21which qualified royalties were paid during the taxable year.
22(c) In the case where the credit allowed by this section exceeds
23the “tax,” the excess may be carried over to reduce the “tax” in
24the following year, and succeeding eight years if necessary, until
25the credit is exhausted.
26(d) (1) (A) Credit under this section and Section 17053.99 shall
27be allowed only for credits claimed on timely filed original returns
28received by the Franchise Tax Board on or before the cut-off date
29established by the Franchise Tax Board.
30(B) For purposes of this paragraph, the cut-off date shall be the
31last day of the calendar quarter within which the Franchise Tax
32Board estimates it will have received timely
filed original returns
33claiming credits under this section and Section 17053.99 that
34cumulatively total one hundred million dollars ($100,000,000) for
35all taxable years.
36(2) The date a return is received shall be determined by the
37Franchise Tax Board.
38(3) (A) The determinations of the Franchise Tax Board with
39respect to the cut-off date, the date a return is received, and whether
P5 1a return has been timely filed for purposes of this subdivision may
2not be reviewed in any administrative or judicial proceeding.
3(B) Any disallowance of a credit claimed due to a determination
4under this subdivision, including the application of the limitation
5specified in paragraph (1), shall be treated as a mathematical error
6appearing on the return. Any amount of tax resulting from such
7disallowance may be assessed by the Franchise Tax Board in the
8same manner as provided by Section 19051.
9(4) The
Franchise Tax Board shall periodically provide notice
10on its Internet Web site with respect to the amount of credit under
11this section and Section 23623 claimed on timely filed original
12returns received by the Franchise Tax Board.
13(e) (1) The Franchise Tax Board may prescribe rules, guidelines,
14or procedures necessary or appropriate to carry out the purposes
15of this section, including any guidelines regarding the limitation
16on total credits allowable under this section and Section 17053.99.
17(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
18Division 3 of Title 2 of the Government Code does not apply to
19any standard, criterion, procedure, determination, rule, notice, or
20guideline established or issued by the Franchise Tax Board
21pursuant to this section.
22(f) This section shall remain in effect only until December 1 of
23the calendar year after the year of the cutoff date, and as of that
24December 1
is repealed.
This act provides for a tax levy within the meaning of
26Article IV of the Constitution and shall go into immediate effect.
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