BILL NUMBER: AB 33 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 14, 2013
INTRODUCED BY Assembly Member Perea
( Coauthor: Assembly Member
Mullin )
( Coauthor: Senator Beall
)
DECEMBER 3, 2012
An act to add and repeal Sections 17053.99 and 23699 of the
Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 33, as amended, 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. The bill would require a qualified
taxpayer to commercialize, as defined, a qualified patent for at
least 5 consecutive years.
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 17053.99 is added to the Revenue and Taxation
Code, to read:
17053.99. (a) For each taxable year beginning on or after January
1, 2013, there shall be allowed to a qualified taxpayer as a credit
against the "net tax," as defined in Section 17039, an amount equal
to 15 percent of the qualified royalties paid by the qualified
taxpayer during the taxable year.
(b) For purposes of this section:
(1) "Commercialize" means the process in which a taxpayer is a
licensee of a qualified patent and uses the patent in connection
with, or incorporates the patent into, intellectual property or
tangible personal property in the manner described, with respect to
which a qualified patent is used directly or indirectly in connection
with the manufacturing, production, growing, or extraction process
with respect to such property, or is incorporated into such property
and such incorporation serves a significant commercial purpose.
(2) "Qualified patent" means a patent owned by the University of
California or the California State University for an
invention where the research and development for that invention was
funded, in whole or in part, by amounts eligible for the credit under
Section 17052.12 or 23609.
(3) "Qualified research" has the same meaning as set forth in
Section 41(d) of the Internal Revenue Code, as modified by Section
17052.12.
(4) "Qualified royalties" means any royalties paid by a qualified
taxpayer for the use of a qualified patent through a license
agreement with the University of California , the California
State University, or another entity.
(5) "Qualified taxpayer" means a taxpayer that paid qualified
royalties during the taxable year and commercializes, for at least
five consecutive years one year within
the state, the licensed patent for which qualified royalties were
paid during the taxable year.
(c) If the qualified taxpayer does not commercialize the qualified
patent for at least five consecutive years, the tax imposed by this
part shall be increased by an amount equal to the credit allowed
under subdivision (a) for all the taxable years the qualified
taxpayer claimed the credit.
(c)
(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 eight
years if necessary, until the credit is exhausted.
(d)
(e) (1) (A) Credit under this section and Section 23699
shall be allowed only for credits claimed on timely filed original
returns received by the Franchise Tax Board on or before the cutoff
date established by the Franchise Tax Board.
(B) For purposes of this paragraph, the cutoff 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 23699 that
cumulatively total one hundred million dollars ($100,000,000) 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 cutoff 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 administrative or judicial proceeding.
(B) Any 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 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 23699 claimed on timely filed original returns
received by the Franchise Tax Board.
(e)
(f) (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
23699.
(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
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this section.
(f)
(g) This section shall remain in effect only until
December 1 of the calendar year after the year of the cutoff date,
and as of that December 1 is repealed.
SEC. 2. Section 23699 is added to the Revenue and Taxation Code,
to read:
23699. (a) For each taxable year beginning on or after January 1,
2013, there shall be allowed to a qualified taxpayer as a credit
against the "tax," as defined in Section 23036, an amount equal to 15
percent of the qualified amount paid by the qualified taxpayer
during the taxable year.
(b) For purposes of this section:
(1) "Commercialize" means the process in which a taxpayer is a
licensee of a qualified patent and uses the patent in connection
with, or incorporates the patent into, intellectual property or
tangible personal property in the manner described, with respect to
which a qualified patent is used directly or indirectly in connection
with the manufacturing, production, growing, or extraction process
with respect to such property, or is incorporated into such property
and such incorporation serves a significant commercial purpose.
(2) "Qualified patent" means a patent owned by the University of
California or the California State University for an
invention where the research and development for that invention was
funded, in whole or in part, by amounts eligible for the credit under
Section 17052.12 or 23609.
(3) "Qualified research" has the same meaning as set forth in
Section 41(d) of the Internal Revenue Code, as modified by Section
23609.
(4) "Qualified royalties" means any royalties paid by a qualified
taxpayer for the use of a qualified patent through a license
agreement with the University of California , the California
State University, or another entity.
(5) "Qualified taxpayer" means a taxpayer that paid qualified
royalties during the taxable year and commercializes, for at least
five consecutive years one year within
the state, the licensed patent for which qualified royalties were
paid during the taxable year.
(c) If the qualified taxpayer does not commercialize the qualified
patent for at least five consecutive years, the tax imposed by this
part shall be increased by an amount equal to the credit allowed
under subdivision (a) for all the taxable years the qualified
taxpayer claimed the credit.
(c)
(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 eight years if
necessary, until the credit is exhausted.
(d)
(e) (1) (A) Credit under this section and Section
17053.99 shall be allowed only for credits claimed on timely filed
original returns received by the Franchise Tax Board on or before the
cutoff date established by the Franchise Tax Board.
(B) For purposes of this paragraph, the cutoff 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 17053.99 that
cumulatively total one hundred million dollars ($100,000,000) 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 cutoff 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 administrative or judicial proceeding.
(B) Any 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 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.
(e)
(f) (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
17053.99.
(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
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this section.
(f)
(g) This section shall remain in effect only until
December 1 of the calendar year after the year of the cutoff date,
and as of that December 1 is repealed.
SEC. 3. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.