Amended in Assembly May 6, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2326

Introduced by Assembly Member Dickinson

February 21, 2014

An act to amend Section begin delete 17072 end delete begin insert 17076 end insert of, begin insert and end insert to add and repeal Section 17239 of, begin delete and to add and repeal Article 18 (commencing with Section 18887) of Chapter 3 of Part 10.2 of Division 2 of, end delete the Revenue and Taxation Code, relating to taxation begin insert , to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 2326, as amended, Dickinson. Personal income tax: deductions: pet adoption begin delete costs: voluntary contributions. end delete begin insert costs. end insert

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(1) The Personal Income Tax Law authorizes various deductions in computing income that is subject to tax under that law.

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The Personal Income Tax Law, in modified conformity with federal income tax laws, allows various deductions in computing the income that is subject to the taxes imposed by that law, including miscellaneous itemized deductions that are allowed only to the extent that the aggregate amount of those deductions exceed 2% of adjusted gross income.

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This bill, for taxable years beginning on or after January 1, 2015, and before January 1, 2020, would allow a begin delete deduction from gross income, end delete begin insert deduction, end insert not to exceed $100, under that law for the qualified costs paid or incurred by a taxpayer for the adoption of a pet from a qualified animal rescue organization.

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(2) The Personal Income Tax Law authorizes taxpayers to contribute amounts in excess of their tax liability for the support of specified funds.

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This bill would authorize taxpayers to designate on their tax return that a specified amount in excess of their tax liability be transferred to the Pet Adoption Cost Deduction Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the Pet Adoption Cost Deduction Fund from being added on the tax return until another voluntary contribution designation is removed.

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The bill would require moneys in the Pet Adoption Cost Deduction Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board, to the Controller for reimbursement of costs in connection with providing personal income tax deductions for pet adoptions, as provided, and the balance to the Department of Food and Agriculture for the distribution of grants to eligible municipal shelters, as defined, for the purpose of providing food and shelter to abandoned and impounded animals, as specified.

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The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the Pet Adoption Cost Deduction Fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not equal or exceed the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

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This bill would take effect immediately as a tax levy.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 17072 of the Revenue and Taxation Code
is amended to read:

17072.  

(a) Section 62 of the Internal Revenue Code, relating
to adjusted gross income defined, shall apply, except as otherwise
provided.

(b) Section 62(a)(2)(D) of the Internal Revenue Code, relating
to certain expenses of elementary and secondary school teachers,
shall not apply.

(c) Section 62(a)(21) of the Internal Revenue Code, relating to
attorneys fees relating to awards to whistleblowers, shall not apply.

(d) For taxable years beginning on or after January 1, 2015, and
before January 1, 2020, the deduction allowed by Section 17239,
relating to qualified costs for the adoption of a pet from a qualified
animal rescue organization, shall apply.

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begin delete SEC. 2. end delete
begin insert SECTION 1. end insert   

Section 17239 is added to the Revenue and
Taxation Code, to read:

17239.  

(a) For each taxable year beginning on or after January
1, 2015, and before January 1, 2020, there shall be allowed as a
deduction an amount equal to the qualified costs paid or incurred
during the taxable year by a taxpayer for the adoption of a pet from
a qualified animal rescue organization.

(b) For the purposes of this section, the following definitions
shall apply:

(1) “Pet” means an animal adopted from a qualified animal
rescue organization that is not used by the taxpayer in a trade or
business or for the production of income.

(2) “Qualified animal rescue organization” means a public
animal control agency or shelter, humane society shelter, or rescue
group.

(3) “Qualified costs” means amounts paid or incurred to a
qualified animal rescue organization to adopt a pet, not to exceed
one hundred dollars ($100).

(4) “Rescue group” means an organization exempt from federal
income taxation as, an organization described in Section 501(c)(3)
of the Internal Revenue Code, whose primary purpose is the
placement of dogs, cats, or other animals that have been removed
from a public animal control agency or shelter, society for the
prevention of cruelty to animals shelter, or humane society, or that
have been surrendered or relinquished to the rescue group by the
previous owner.

(c) The deduction allowed under this section for a taxable year
shall not exceed one hundred dollars ($100).

(d) This section shall remain in effect only until December 1,
2020, and as of that date is repealed.

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begin insert SEC. 2. end insert   

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This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

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SEC. 3.  

Article 18 (commencing with Section 18887) is added
to Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation
Code, to read:

 

Article 18.  Pet Adoption Cost Deduction Fund

 

18887.  

(a) An individual may designate on the tax return that
a contribution in excess of the tax liability, if any, be made to the
Pet Adoption Cost Deduction Fund established by Section 18888.
That designation is to be used as a voluntary contribution on the
tax return.

(b) The contributions shall be in full dollar amounts and may
be made individually by each signatory on a joint return.

(c) A designation under subdivision (a) shall be made for a
taxable year on the original return for that taxable year, and once
made shall be irrevocable. If payments and credits reported on the
return, together with any other credits associated with the
individual’s account, do not exceed the individual’s liability, the
return shall be treated as though no designation has been made. If
a designee is not specified, the contribution shall be transferred to
the General Fund after reimbursement of the direct actual costs of
the Franchise Tax Board for the collection and administration of
funds under this article.

(d) If an individual designates a contribution to more than one
account or fund listed on the tax return, and the amount available
is insufficient to satisfy the total amount designated, the
contribution shall be allocated among the designees on a pro rata
basis.

(e) The Franchise Tax Board shall revise the form of the return
to include a space labeled “Pet Adoption Cost Deduction Fund”
to allow for the designation permitted under subdivision (a). The
form shall also include in the instructions information that the
contribution may be in the amount of one dollar ($1) or more and
that the contribution shall be used to reimburse the California State
General Fund for the reduction in receipts attributable to the Pet
Adoption Fee Deduction allowed pursuant to Section 17239, with
any contributions in excess of the reduction in receipts used to
provide grants to eligible municipal shelters for the purpose of
providing food and shelter to abandoned and impounded animals.

(f) Notwithstanding any other law, a voluntary contribution
designation for the Pet Adoption Cost Deduction Fund shall not
be added on the tax return until another voluntary contribution
designation is removed.

(g) A deduction shall be allowed under Article 6 (commencing
with Section 17201) of Chapter 3 of Part 10 for any contribution
made pursuant to subdivision (a).

18888.  

There is hereby established in the State Treasury the
Pet Adoption Cost Deduction Fund to receive contributions made
pursuant to Section 18887. The Franchise Tax Board shall notify
the Controller of both the amount of money paid by taxpayers in
excess of their tax liability and the amount of refund money that
taxpayers have designated pursuant to Section 18887 to be
transferred to the Pet Adoption Cost Deduction Fund. The
Controller shall transfer from the Personal Income Tax Fund to
the Pet Adoption Cost Deduction Fund an amount not in excess
of the sum of the amounts designated by individuals pursuant to
Section 18887 for payment into that fund.

18889.  

All moneys transferred to the Pet Adoption Cost
Deduction Fund, upon appropriation by the Legislature, shall be
allocated as follows:

(a) To the Franchise Tax Board and the Controller for
reimbursement of all costs incurred by the Franchise Tax Board
and the Controller in connection with their duties under this article.

(b) To the Controller for reimbursement of all losses incurred
by the General Fund in connection with providing tax deductions
for pet adoptions pursuant to Section 17239.

(c) (1) To the Department of Food and Agriculture for
distribution of grants to eligible municipal shelters for the purpose
of providing food and shelter to abandoned and impounded
animals. The department may use up to 5 percent of the money
allocated to municipal shelters for administrative costs incurred
in connection with the Pet Adoption Fee Deduction Fund.

(2) For the purposes of this article, “eligible municipal shelter”
means a city or county animal control agency or shelter that is
current on its reporting requirements to the State Department of
Public Health, Veterinary Public Health Section. The State
Department of Public Health shall, upon the written request of the
Department of Food and Agriculture, make available information
regarding whether a city or county animal control agency or shelter
is current on its reporting requirements pursuant to this paragraph.

(3) The Department of Food and Agriculture shall do all of the
following with respect to the distribution of grants:

(A) Accept applications for grants from eligible municipal
shelters.

(B) Process and approve, or reject all applications on a
first-come-first-served basis, in the following manner:

(i) Eligible municipal shelters processing fewer than 5,000 dogs
and cats each year shall receive up to seven thousand five hundred
dollars ($7,500), if funds are available.

(ii) Eligible municipal shelters processing between 5,000 and
25,000 dogs and cats each year shall receive up to fifteen thousand
dollars ($15,000), if funds are available.

(iii) Eligible municipal shelters processing more than 25,000
dogs and cats shall receive up to twenty-two thousand five hundred
dollars ($22,500), if funds are available.

(C) Make applications available to eligible municipal shelters
on the first day of the second calendar year after the Pet Adoption
Fee Deduction Fund first appears on the tax return.

(d) In order to be eligible for grants authorized by this article,
eligible municipal shelters shall file an application with the
Department of Food and Agriculture, in the form and manner as
specified by the Department of Food and Agriculture.

(e) Any grants distributed under this article create an additional
funding source for food and shelter services and programs for
eligible municipal shelters and shall be used to supplement, not
supplant, other funding sources for these services and programs.

18890.  

(a) Except as otherwise provided in subdivision (b),
this article shall remain in effect only until January 1 of the fifth
taxable year following the first appearance of the Pet Adoption
Cost Deduction Fund on the personal income tax return, and is
repealed as of December 1 of that year.

(b) (1) By September 1 of the second calendar year and each
subsequent calendar year that the Pet Adoption Cost Deduction
Fund appears on the tax return, the Franchise Tax Board shall do
all of the following:

(A) Determine the minimum contribution amount required to
be received during the next calendar year for the fund to appear
on the tax return for the taxable year that includes that next calendar
year.

(B) Provide written notification to the Department of Food and
Agriculture of the amount determined in subparagraph (A).

(C) Determine whether the amount of contributions estimated
to be received during the calendar year will equal or exceed the
minimum contribution amount determined by the Franchise Tax
Board for the calendar year pursuant to subparagraph (A). The
Franchise Tax Board shall estimate the amount of contributions
to be received by using the actual amounts received and an estimate
of the contributions that will be received by the end of that calendar
year.

(2) If the Franchise Tax Board determines that the amount of
the contributions estimated to be received during a calendar year
will not at least equal the minimum contribution amount for the
calendar year, this article shall be inoperative with respect to
taxable years beginning on or after January 1 of that calendar year
and shall be repealed on December 1 of that year.

(3) For purposes of this section, the minimum contribution
amount for a calendar year means two hundred fifty thousand
dollars ($250,000) for the second calendar year after the first
appearance of the Pet Adoption Cost Deduction Fund on the
personal income tax return or the minimum contribution amount
as adjusted pursuant to subdivision (c).

(c) For each calendar year, beginning with the third calendar
year after the first appearance of the Pet Adoption Cost Deduction
Fund on the personal income tax return, the Franchise Tax Board
shall adjust, on or before September 1 of that calendar year, the
minimum contribution amount specified in subdivision (b) as
follows:

(1) The minimum contribution amount for the calendar year
shall be an amount equal to the product of the minimum
contribution amount for the prior calendar year multiplied by the
inflation factor adjustment as specified in subparagraph (A) of
paragraph (2) of subdivision (h) of Section 17041, rounded off to
the nearest dollar.

(2) The inflation factor adjustment used for the calendar year
shall be based on the figures for the percentage change in the
California Consumer Price Index for all items received on or before
August 1 of the calendar year pursuant to paragraph (1) of
subdivision (h) of Section 17041.

(d) Notwithstanding the repeal of this article, any contribution
amounts designated pursuant to this article prior to its repeal shall
continue to be transferred and disbursed in accordance with this
article as in effect immediately prior to that repeal.

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