Senate BillNo. 571


Introduced by Senator Price

February 22, 2013


An act to add and repeal Article 19 (commencing with Section 18891) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 571, as introduced, Price. Income taxes: voluntary contributions: Arts for Kids Fund.

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

This bill would authorize taxpayers to designate on their tax returns that a specified amount in excess of their tax liability be transferred to the Arts for Kids Fund, which is created by this bill. This bill would require that all moneys contributed to the fund pursuant to these provisions, upon appropriation by the Legislature, be allocated to the Franchise Tax Board and the Controller for reimbursement and to the Arts Council for grants, as prescribed.

This bill would provide that these voluntary contribution provisions are inoperative on January 1 of the 5th taxable year following the taxable year the fund first appears on the tax return and repealed on December 1 of that taxable year. The bill would further provide that these provisions are inoperative for taxable years beginning on or after January 1 of the calendar year in which the Franchise Tax Board estimates by September 1 that the contributions made on returns filed in that calendar year will be less than $250,000, or an adjusted amount for subsequent taxable years, and are repealed on December 1 of that calendar year.

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

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

P2    1

SECTION 1.  

Article 19 (commencing with Section 18891) is
2added to Chapter 3 of Part 10.2 of Division 2 of the Revenue and
3Taxation Code
, to read:

4 

5Article 19.  Arts for Kids Fund
6

 

7

18891.  

(a) An individual may designate on the tax return that
8a contribution in excess of tax liability, if any, be made to the Arts
9for Kids Fund established by Section 18892.

10(b) A contribution shall be in a full dollar amount and may be
11made individually by each signatory on a joint return.

12(c) A designation made under subdivision (a) shall be made for
13any taxable year on the original return for that taxable year, and
14once made shall be irrevocable. In the event that payments and
15credits reported on the return, together with any other credits
16associated with the taxpayer’s account do not exceed the taxpayer’s
17tax liability, if any, the return shall be treated as though no
18designation had been made. In the event that no designee is
19specified, the contribution shall, after reimbursement of the direct
20actual costs of the Franchise Tax Board for the collection and
21administration of funds under this article, be transferred to the
22General Fund.

23(d) If an individual designates a contribution to more than one
24account or fund listed on the tax return, and the amount available
25is insufficient to satisfy the total amount designated, the
26contribution shall be allocated among the designated accounts on
27a pro rata basis.

28(e) The Franchise Tax Board shall revise the form of the return
29to include a space labeled the “Arts for Kids Fund” to allow for
30the designation permitted under subdivision (a). The form shall
31also include in the instructions information that the contribution
32may be in the amount of one dollar ($1) or more and that the
33contribution shall be used by the Arts Council for the allocation
34of grants to individuals or organizations administering arts
35programs.

36(f) Notwithstanding any other provision, a voluntary contribution
37designation for the Arts for Kids Fund shall not be added on the
P3    1tax return until another voluntary contribution designation is
2removed.

3(g) A deduction shall be allowed under Article 6 (commencing
4with Section 17201) of Chapter 3 of Part 10 for any contribution
5made pursuant to subdivision (a).

6

18892.  

There is hereby established in the State Treasury the
7Arts for Kids Fund to receive contributions made pursuant to
8Section 18891. The Franchise Tax Board shall notify the Controller
9of both the amount of money paid by taxpayers in excess of their
10tax liability and the amount of refund money that taxpayers have
11designated pursuant to Section 18891 to be transferred to the Arts
12for Kids Fund. The Controller shall transfer from the Personal
13Income Tax Fund to the Arts for Kids Fund an amount not in
14excess of the sum of the amounts designated by individuals
15pursuant to Section 18891 for payment into that fund.

16

18893.  

All money transferred to the Arts for Kids Fund, upon
17appropriation by the Legislature, shall be allocated as follows:

18(a) To the Franchise Tax Board and the Controller only for
19reimbursement of all costs incurred by the Franchise Tax Board
20and the Controller in connection with their duties under this article.

21(b) (1) To the Arts Council, for allocation of grants to
22individuals or organizations administering arts programs pursuant
23to subdivision (o) of Section 8753 of the Government Code.

24(2) Funds made available to the Arts Council shall not be used
25for any purpose other than to provide grants as prescribed by this
26subdivision. Funds made available pursuant to this subdivision
27shall not be used by the Arts Council for administrative purposes,
28to reimburse its costs associated with administering grants, to
29further its programs, or for any purpose relating to its own
30operations.

31

18894.  

(a) Except as otherwise provided in subdivision (b),
32this article shall remain in effect only until January 1 of the fifth
33taxable year following the first appearance of the Arts for Kids
34Fund on the personal income tax return, and is repealed as of
35December 1 of that taxable year.

36(b) (1) By September 1 of the second calendar year and each
37subsequent calendar year that the Arts for Kids Fund appears on
38the tax return, the Franchise Tax Board shall do all of the
39following:

P4    1(A) Determine the minimum contribution amount required to
2be received during the next calendar year for the fund to appear
3on the tax return for the taxable year that includes that next calendar
4year.

5(B) Determine whether the amount of contributions estimated
6to be received during the calendar year will equal or exceed the
7minimum contribution amount determined by the Franchise Tax
8Board for the calendar year pursuant to subparagraph (A). The
9Franchise Tax Board shall estimate the amount of contributions
10to be received by using the actual amounts received and an estimate
11of the contributions that will be received by the end of that calendar
12year.

13(2) If the Franchise Tax Board determines that the amount of
14the contributions estimated to be received during a calendar year
15will not at least equal the minimum contribution amount for the
16calendar year, this article is inoperative with respect to taxable
17years beginning on or after January 1 of that calendar year, and
18shall be repealed on December 1 of that calendar year.

19(3) For purposes of this section, the minimum contribution
20amount for a calendar year means two hundred fifty thousand
21dollars ($250,000) for the second calendar year after the first
22appearance of the Arts for Kids Fund on the personal income tax
23return or the adjusted minimum contribution amount adjusted
24pursuant to subdivision (c).

25(c) For each calendar year, beginning with the third calendar
26year after the first appearance of the Arts for Kids Fund on the
27personal income tax return, the Franchise Tax Board shall adjust,
28on or before September 1 of that calendar year, the minimum
29contribution amount specified in subdivision (b) as follows:

30(1) The minimum estimated contribution amount for the calendar
31year shall be an amount equal to the product of the minimum
32estimated contribution amount for the calendar year multiplied by
33the inflation factor adjustment as specified in subparagraph (A) of
34paragraph (2) of subdivision (h) of Section 17041, rounded off to
35the nearest dollar.

36(2) The inflation factor adjustment used for the calendar year
37shall be based on the figures for the percentage change in the
38California Consumer Price Index for all items received on or before
39August 1 of the calendar year pursuant to paragraph (1) of
40subdivision (h) of Section 17041.

P5    1(d) Notwithstanding the repeal of this article, any contribution
2amounts designated pursuant to this article prior to its repeal shall
3continue to be transferred and disbursed in accordance with this
4article as in effect immediately prior to that repeal.



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