Amended in Assembly August 22, 2013

Amended in Assembly June 25, 2013

Amended in Senate May 14, 2013

Amended in Senate May 7, 2013

Senate Bill No. 571

Introduced by Senator Liu

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(Coauthor: Assembly Member Gatto)

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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 amended, Liu. Income taxes: voluntary contributions: Keep Arts in Schools 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 Keep Arts in Schools 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on January 1 of the 5th taxable year following the taxable year the fund first appears on the tax return and repealed on December 1 of that year.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filed in that calendar year will be less than $250,000, or an adjusted amount for subsequent taxable years, and are repealed on December 1 of that calendar year.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:

SECTION 1.  

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

 

Article 19.  Keep Arts in Schools Fund

 

18891.  

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

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

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

(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 designated accounts on
a pro rata basis.

(e) The Franchise Tax Board shall revise the form of the return
to include a space labeled the “Keep Arts in Schools 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 by the Arts Council for the
allocation of grants to individuals or organizations administering
arts programs.

(f) Notwithstanding any other provision, a voluntary contribution
designation for the Keep Arts in Schools 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).

18892.  

There is hereby established in the State Treasury the
Keep Arts in Schools Fund to receive contributions made pursuant
to Section 18891. 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 18891 to be transferred to the
Keep Arts in Schools Fund. The Controller shall transfer from the
Personal Income Tax Fund to the Keep Arts in Schools Fund an
amount not in excess of the sum of the amounts designated by
individuals pursuant to Section 18891 for payment into that fund.

18893.  

All money transferred to the Keep Arts in Schools Fund,
upon appropriation by the Legislature, shall be allocated as follows:

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

(b) (1) To the Arts Council, for allocation of grants to
individuals or organizations administering arts programs for
children in preschool through 12th grade pursuant to subdivision
(o) of Section 8753 of the Government Code.

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

18894.  

(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 Keep Arts in
Schools 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 Keep Arts in Schools 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) 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 Keep Arts in Schools 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 Keep Arts in Schools 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.