AB 927, as amended, Muratsuchi. Income taxes: credits: hiring.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill would, under both laws, for taxable years beginning on or after January 1, 2014, allow a credit to a qualified employer, as defined, in an amount equal to $3,000 for each net increase in qualified full-time employee hired during the taxable year by a qualified employer, and an additional $1,000 per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a veteran or an additional $2,000 per qualified full-time employee hired during the taxable year by a qualified employer if the qualified full-time employee is a service-connected disabled veteran, as provided. This bill would limit the total amount of credit allowed to a qualified employer to an amount not to exceed $5,000,000 for all taxable years. This bill would cap the total amount of credit which may be allowed under those provisions for any calendar year to $35,000,000.
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:
It is the intent of the Legislature to create a
2competitive tax policy for businesses involved with research,
3development, and manufacturing.
Section 17053.81 is added to the Revenue and Taxation
5Code, to read:
(a) (1) For each taxable year beginning on or after
7January 1, 2014, there shall be allowed to a qualified employer a
8credit against the “net tax,” as defined in Section 17039, in an
9amount described in paragraph (2).
10(2) The amount of credit allowed under this section is as follows:
11(A) (i) Three thousand dollars ($3,000) for each net increase
12in qualified full-time employee hired during the taxable year by a
13qualified employer.
14(ii) An additional one thousand dollars ($1,000) per qualified
15full-time employee hired during the taxable year by a qualified
16employer if the
qualified full-time employee is a veteran or an
17additional two thousand dollars ($2,000) per qualified full-time
18employee hired during the taxable year by a qualified employer if
19the qualified full-time employee is a service-connected disabled
20veteranbegin insert, as measured by the percentage ofend insertbegin insert increase in an annual
21full-time equivalent that the veteran or service-connected disabled
22veteran representsend insert.
23(B) The total amount of credits allowed under this section to a
24qualified employer shall not exceed five million dollars
25($5,000,000) for all taxable years.
26(b) For purposes of this section:
27(1) “Annual full-time equivalent” means either of the following:
28(A) In the case of a full-time employee paid hourly qualified
29wages, “annual full-time equivalent” means the total number of
30hours worked for the taxpayer by the employee (not to exceed
312,000 hours per employee) divided by 2,000.
32(B) In the case of a salaried full-time employee, “annual
33full-time equivalent” means the total number of weeks worked for
34the taxpayer by the employee divided by 52.
P3 1(2) “Qualified full-time employee” means either of the
2following:
3(A) An employee who was paid wages subject to Division 6
4(commencing with Section 13000) of the Unemployment Insurance
5Code by
the qualified employer for services of not less than an
6average of 35 hours per week.
7(B) An employee who was a salaried employee and was paid
8compensation during the taxable year for full-time employment,
9within the meaning of Section 515 of the Labor Code, by the
10qualified employer.
11(3)
end delete
12begin insert(2)end insert “Qualified employer” means a taxpayer who employed
13qualified full-time employees who are located in this state and
14meets any of the following:
15(A) The taxpayer manufactures, assembles,
tests, renovates, or
16converts aircraft and spacecraft.
17(B) The taxpayer manufactures or designs aircraft or spacecraft
18engines and engine parts.
19(C) The taxpayer manufactures or designs aircraft and spacecraft
20auxiliary components, including detection equipment, navigation,
21and guidance systems.
22(D) The taxpayer provides aircraft and spacecraft support
23services, including launching, operating, and retrieving air and
24space vehicles.
25(E) The taxpayerbegin delete is a military contractor that is involved with begin insert
has contracted with the United States military
26aerospace defenseend delete
27or federal government for the purpose of national defense related
28to aerospaceend insert, including the manufacturing of missiles and military
29airplanes.
30(3) “Qualified full-time employee” means either of the
31following:
32(A) An employee who was paid wages subject to Division 6
33(commencing with Section 13000) of the Unemployment Insurance
34Code by the qualified employer for services of not less than an
35average of 35 hours per week.
36(B) An employee who was a salaried employee and was paid
37compensation during the taxable year for full-time employment,
38within the meaning of Section 515 of the Labor Code, by the
39qualified employer.
P4 1(4) “Service-connected disabled veteran” means a veteran who
2is disabled by an injury or illness that was incurred or aggravated
3during active military service.
4(5) “Veteran” means a person honorably discharged from the
5Armed Forces of the United States.
6(c) The net increase in qualified full-time employees of a
7qualified employer shall be determined as provided by this
8subdivision:
9(1) (A) The net increase in qualified
full-time employees shall
10be determined on an annual full-time equivalent basis by
11subtracting from the amount determined in subparagraph (C) the
12amount determined in subparagraph (B).
13(B) The total number of qualified full-time employees employed
14in the preceding taxable year by the taxpayer and by any trade or
15business acquired by the taxpayer during thebegin delete precedingend deletebegin insert
currentend insert
16 taxable year.
17(C) The total number of full-time employees employed in the
18current taxable year by the taxpayer and by any trade or business
19acquired during the current taxable year.
20(2) For taxpayers who first commence doing business in this
21state during the taxable year, the number of full-time employees
22for the immediately preceding prior taxable year shall be zero.
23(d) For purposes of this section:
24(1) All employees of the trades or businesses that are treated as
25related under either Section 267, 318, or 707 of the Internal
26Revenue Code shall be treated as employed by a single taxpayer.
27(2) In determining whether the taxpayer has first commenced
28doing business in this state during the taxable year, the provisions
29of subdivision (f) of Sectionbegin delete 17276end deletebegin insert 17276.20end insert, without application
30of paragraph (7) of that subdivision, shall apply.
31(e) (1) The aggregate amount of credits that may be allowed
32for anybegin delete calendarend deletebegin insert
taxableend insert year under this section and Section
3323623.1 shall not exceed an amount equal to thirty-five million
34dollars ($35,000,000).
35(2) The credits allowed under this section and Section 23623.1
36shall be allowed to a taxpayer on a first-come-first-served basis.
37(3) The taxpayer shall claim the credit on a timely filed original
38return.
39(4) The date a return is received shall be determined by the
40Franchise Tax Board.
P5 1(5) (A) The determinations of the Franchise Tax Board with
2respect to the date a return is received and whether a return has
3been timely filed for purposes of this subdivision may not be
4reviewed in any
administrative or judicial proceeding.
5(B) Any disallowance of a credit claimed due to a determination
6under this subdivision, including the application of the limitation
7specified in paragraph (1), shall be treated as a mathematical error
8appearing on the return. Any amount of tax resulting from such
9disallowance may be assessed by the Franchise Tax Board in the
10same manner as provided by Section 19051.
11(6) The Franchise Tax Board shall periodically provide notice
12on itsbegin insert Internetend insert Web site with respect to the amount of credit under
13this section and Section 23623.1 claimed on timely filed original
14returns received by the
Franchise Tax Board.
15(f) In the case where the credit allowed by this section exceeds
16the “net tax,” the excess may be carried over to reduce the “net
17tax”
in the following year, and succeeding years if necessary, until
18the credit is exhausted.
19(g)
end delete
20begin insert(f)end insert (1) The Franchise Tax Board may prescribe rules, guidelines,
21or procedures necessary or appropriate to carry out the purposes
22of this sectionbegin insert, including any guidelines necessary to avoid the
23application of subparagraph (B) of paragraph (2) of subdivision
24(a) through split-ups, shell corporations, partnerships, tiered
25ownership structures, or otherwiseend insert.
26(2) Chapter 3.5
(commencing with Section 11340) of Part 1 of
27Division 3 of Title 2 of the Government Code does not apply to
28any standard, criterion, procedure, determination, rule, notice, or
29guideline established or issued by the Franchise Tax Board
30pursuant to this section.
Section 23623.1 is added to the Revenue and Taxation
32Code, to read:
(a) (1) For each taxable year beginning on or after
34January 1, 2014, there shall be allowed to a qualified employer a
35credit against the “tax,” as defined in Section 23036, in an amount
36described in paragraph (2).
37(2) The amount of credit allowed under this section is as follows:
38(A) (i) Three thousand dollars ($3,000) for each net increase
39in qualified full-time employee hired during the taxable year by a
40qualified employer.
P6 1(ii) An additional one thousand dollars ($1,000) per qualified
2full-time employee hired during the taxable year by a qualified
3employer if the
qualified full-time employee is a veteran or an
4additional two thousand dollars ($2,000) per qualified full-time
5employee hired during the taxable year by a qualified employer if
6the qualified full-time employee is a service-connected disabled
7veteranbegin insert, as measured by the percentage of increase in an annual
8full-time equivalent that the veteran or service-connected disabled
9veteran representsend insert.
10(B) The total amount of credits allowed under this section to a
11qualified employer shall not exceed five million dollars
12($5,000,000) for all taxable years.
13(b) For purposes of this section:
14(1) “Annual full-time equivalent” means either of the following:
15(A) In the case of a full-time employee paid hourly qualified
16wages, “annual full-time equivalent” means the total number of
17hours worked for the taxpayer by the employee (not to exceed
182,000 hours per employee) divided by 2,000.
19(B) In the case of a salaried full-time employee, “annual
20full-time equivalent” means the total number of weeks worked for
21the taxpayer by the employee divided by 52.
22(2) “Qualified full-time employee” means either of the
23following:
24(A) An employee who was paid wages subject to Division 6
25(commencing with Section 13000) of the Unemployment Insurance
26Code by the
qualified employer for services of not less than an
27average of 35 hours per week.
28(B) An employee who was a salaried employee and was paid
29compensation during the taxable year for full-time employment,
30within the meaning of Section 515 of the Labor Code, by the
31qualified employer.
32(3)
end delete
33begin insert(2)end insert “Qualified employer” means a taxpayer who employed
34qualified full-time employees who are located in this state and
35meets any of the following:
36(A) The taxpayer manufactures, assembles,
tests, renovates, or
37converts aircraft and spacecraft.
38(B) The taxpayer manufactures or designs aircraft or spacecraft
39engines and engine parts.
P7 1(C) The taxpayer manufactures or designs aircraft and spacecraft
2auxiliary components, including detection equipment, navigation,
3and guidance systems.
4(D) The taxpayer provides aircraft and spacecraft support
5services, including launching, operating, and retrieving air and
6space vehicles.
7(E) The taxpayerbegin delete is a military contractor that is involved with begin insert
has contracted with the United States military
8aerospace defenseend delete
9or federal government for the purpose of national defense related
10to aerospaceend insert, including the manufacturing of missiles and military
11airplanes.
12(3) “Qualified full-time employee” means either of the
13following:
14(A) An employee who was paid wages subject to Division 6
15(commencing with Section 13000) of the Unemployment Insurance
16Code by the qualified employer for services of not less than an
17average of 35 hours per week.
18(B) An employee who was a salaried employee and was paid
19compensation during the taxable year for full-time employment,
20within the meaning of Section 515 of the Labor Code, by the
21qualified employer.
22(4) “Service-connected disabled veteran” means a veteran who
23is disabled by an injury or illness that was incurred or aggravated
24during active military service.
25(5) “Veteran” means a person honorably discharged from the
26Armed Forces of the United States.
27(c) The net increase in qualified full-time employees of a
28qualified employer shall be determined as provided by this
29subdivision:
30(1) (A) The net increase in qualified full-time employees shall
31be determined on an annual full-time equivalent basis by
32subtracting from the amount determined in subparagraph (C) the
33amount determined in subparagraph (B).
34(B) The total number of qualified full-time employees employed
35in the preceding taxable year by the taxpayer and by any trade or
36business acquired by the taxpayer during thebegin delete precedingend deletebegin insert currentend insert
37 taxable year.
38(C) The total number of full-time employees employed in the
39current taxable year by the taxpayer and by any trade or business
40acquired during the current taxable year.
P8 1(2) For taxpayers who first commence doing business in this
2state during the taxable year, the number of
full-time employees
3for the immediately preceding prior taxable year shall be zero.
4(d) For purposes of this section:
5(1) All employees of the trades or businesses that are treated as
6related under either Section 267, 318, or 707 of the Internal
7Revenue Code shall be treated as employed by a single taxpayer.
8(2) In determining whether the taxpayer has first commenced
9doing business in this state during the taxable year, the provisions
10of subdivisionbegin delete (f)end deletebegin insert
(g)end insert of Sectionbegin delete 17276end deletebegin insert 24416.20end insert, without
11application of paragraph (7) of that subdivision, shall apply.
12(e) (1) The aggregate amount of credits that may be allowed
13for anybegin delete calendarend deletebegin insert taxableend insert year under this section and Section
1417053.81 shall not exceed an amount equal to thirty-five million
15dollars ($35,000,000).
16(2) The credits allowed under this section and Section
17053.81
17shall be allowed to a taxpayer on a first-come-first-served basis.
18(3) The taxpayer shall claim the credit on a timely filed original
19return.
20(4) The date a return is received shall be determined by the
21Franchise Tax Board.
22(5) (A) The determinations of the Franchise Tax Board with
23respect to the date a return is received and whether a return has
24been timely filed for purposes of this subdivision may not be
25reviewed in any administrative or judicial proceeding.
26(B) Any disallowance of a credit claimed due to a determination
27under this subdivision, including the
application of the limitation
28specified in paragraph (1), shall be treated as a mathematical error
29appearing on the return. Any amount of tax resulting from such
30disallowance may be assessed by the Franchise Tax Board in the
31same manner as provided by Section 19051.
32(6) The Franchise Tax Board shall periodically provide notice
33on its Web site with respect to the amount of credit under this
34section and Section 17053.81 claimed on timely filed original
35returns received by the Franchise Tax Board.
36(f) In the case where the credit allowed by this section exceeds
37the “tax,” the excess may be carried over to reduce the “tax” in
38the
following year, and succeeding years if necessary, until the
39credit is exhausted.
40(g)
end delete
P9 1begin insert(f)end insert (1) The Franchise Tax Board may prescribe rules, guidelines,
2or procedures necessary or appropriate to carry out the purposes
3of this sectionbegin insert, including any guidelines necessary to avoid the
4application of subparagraph (B) of paragraph (2) of subdivision
5(a) through split-ups, shell corporations, partnerships, tiered
6ownership structures, or otherwiseend insert.
7(2) Chapter 3.5 (commencing
with Section 11340) of Part 1 of
8Division 3 of Title 2 of the Government Code does not apply to
9any standard, criterion, procedure, determination, rule, notice, or
10guideline established or issued by the Franchise Tax Board
11pursuant to this section.
This act provides for a tax levy within the meaning
13of Article IV of the Constitution and shall go into immediate effect.
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