Amended in Assembly April 21, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 151


Introduced by Assembly Member Rodriguez

January 15, 2015


An act to add and repeal Section 3073.7 of the Labor Code, and to add and repeal Sectionsbegin delete 17053.10,end deletebegin insert 17053.11,end insert 19560.3, and 23667 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 151, as amended, Rodriguez. Income taxes: credits: apprenticeships.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing law provides for the establishment of apprenticeship programs in various trades, to be approved by the Chief of the Division of Apprenticeship Standards in any trade in the state or in a city or trade area whenever the apprentice training needs justify the establishment.

This bill, for taxable years beginning on or after January 1,begin delete 2017,end deletebegin insert 2016,end insert and before January 1,begin delete 2021,end deletebegin insert 2020,end insert would allow a credit against the taxes imposed under those tax laws in an amount equal tobegin insert $1 for each hour a registered apprentice worked in the taxable year, up toend insert $2,000 for each registered apprentice, as defined, trained by the taxpayer in the taxable year. This bill would require the Division of Apprenticeship Standards in the Department of Industrial Relations, among other things, to establish a procedure for taxpayers, in the form and manner jointly prescribed by the Division of Apprenticeship Standards and the Franchise Tax Board, to apply and receive a certificate for purposes of the credit. This bill would also require the Division of Apprenticeship Standards to prepare reports for each of the 5 calendar years beginning on January 1,begin delete 2018,end deletebegin insert 2017,end insert and before January 1,begin delete 2023,end deletebegin insert 2022,end insert containing specified information relating to the credits, to be submitted to the Assembly and Senate Appropriations Committees, the Assembly Revenue and Taxation Committee, and the Senate Governance and Finance Committee on or before March 1 of the following calendar year, commencing March 1,begin delete 2019end deletebegin insert 2018end insert.

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:

P2    1

SECTION 1.  

Section 3073.7 is added to the Labor Code, to
2read:

3

3073.7.  

(a) The Division of Apprenticeship Standards shall
4prepare reports on the apprenticeship income tax credits allowed
5under Sectionsbegin delete 17053.10end deletebegin insert 17053.11end insert and 23667 of the Revenue and
6Taxation Code. The reports shall be for each of the five calendar
7years beginning on January 1,begin delete 2018,end deletebegin insert 2017,end insert and before January 1,
8begin delete 2023,end deletebegin insert 2022,end insert and shall include, but not be limited to, the following
9information:

10(1) The number of companies or businesses taking advantage
11of the apprenticeship income tax credit.

12(2) The number of apprentices participating in the apprenticeship
13programs and the number of apprentices who completed an
14apprenticeship program which was the basis of the apprenticeship
15income tax credits allowed under Sectionsbegin delete 17053.10end deletebegin insert 17053.11end insert and
1623667 of the Revenue and Taxation Code.

17(3) The number ofbegin delete apprentices that wereend deletebegin insert apprentice program
18graduatesend insert
hired by the taxpayer after the apprenticeship training
19was completed for which the taxpayer was allowed a credit under
20Sectionsbegin delete 17053.10end deletebegin insert 17053.11end insert and 23667 of the Revenue and
21Taxation Code for training that apprentice.

22(4) Information on the employment status of individuals who
23have completed an apprenticeship to the extent the information is
24available.

25(5) The fiscal impact of the apprenticeship income tax credits.

P3    1(b) This report shall be submitted to the Assembly and Senate
2Appropriations Committees, the Assembly Revenue and Taxation
3Committee, and the Senate Governance and Finance Committee
4on or before March 1 of the following calendar year, commencing
5 March 1,begin delete 2019.end deletebegin insert 2018.end insert

6(c) This section shall be repealed on January 1,begin delete 2024.end deletebegin insert 2023.end insert

7

SEC. 2.  

Sectionbegin delete 17053.10end deletebegin insert 17053.11end insert is added to the Revenue
8and Taxation Code
, to read:

9

begin delete17053.10.end delete
10begin insert17053.11.end insert  

(a) For each taxable year beginning on or after
11January 1,begin delete 2017,end deletebegin insert 2016,end insert and before January 1,begin delete 2021,end deletebegin insert 2020,end insert there
12shall be allowed begin deleteasend delete a credit against the “net tax,” as defined in
13Section 17039, in an amount equal tobegin insert one dollar ($1) for each hour
14a registered apprentice worked during the taxable year, up toend insert
two
15thousand dollars ($2,000)begin insert,end insert for each registered apprentice trained
16by the taxpayer in the taxable year.

17(b) For purposes of this section, “registered apprentice” means
18an individual who meets all of the following requirements:

19(1) Is 16 years of age or older at the time of application into the
20program.

21(2) Meets one of the following requirements:

22(A) Has not obtained a high school diploma and is enrolled in
23high school or a General Education Development test preparation
24program.

25(B) Has obtained a high school diploma or General Education
26Development credential while participating in the apprenticeship.

27(3) Is trained by the taxpayer through an apprenticeship program
28that meets all of the following requirements:

29(A) The apprenticeship program is approved by the Chief of
30the Division of Apprenticeship Standards pursuant to Chapter 4
31(commencing with Section 3070) of Division 3 of the Labor Code
32and is also registered with the Office of Apprenticeship at the
33United States Department of Labor.

34(B) The program is provided pursuant to an apprenticeship
35agreement as described in Section 3077 of the Labor Code.

36(C) The minimum term in hours for the program isbegin delete 4,000end deletebegin insert 2,000end insert
37 hours.

38(c) (1) (A) A credit shall only be allowed under this section
39for the taxable year if the taxpayer has received the certificate
40described in subparagraph (B) from the Division of Apprenticeship
P4    1Standards in the Department of Industrial Relations. A certificate
2is required for each taxable year. The taxpayer shall provide a copy
3of the certificate to the Franchise Tax Board upon request.

4(B) The Division of Apprenticeship Standards shall do all of
5the following:

6(i) Establish a procedure for taxpayers, in the form and manner
7jointly prescribed by the Division of Apprenticeship Standards
8and the Franchise Tax Board, to apply and receive a certificate for
9purposes of this section.

10(ii) Verify that the taxpayer is training during the taxable year
11an individual that meets the requirements to be a registered
12apprentice as described in subdivision (b).

13(iii) Provide the taxpayer with a certificate for the registered
14apprentice. The certificate shall contain the name of the taxpayer
15and the name of the apprentice, a brief description of the
16apprenticeship, the primary location of the apprenticeship, and any
17other information the Division of Apprenticeship Standards or the
18Franchise Tax Board deems relevant.

19(iv) Annually provide the Franchise Tax Board with a list of
20the names of the taxpayers that received certificates and the names
21of the registered apprentices of the taxpayer. The list may also
22contain any other information from the certificates.

23(v) Inform the Franchise Tax Board if the Division of
24Apprenticeship Standards has knowledge that the training of a
25registered apprentice is terminated prior to the completion of the
26apprenticeship program after the taxpayer has received a certificate.

27(2)  The Division of Apprenticeship Standards may adopt rules
28and regulations as reasonably necessary to effectuate this
29subdivision, but shall consult with the Franchise Tax Board.

30(d) In the case where the credit allowed by this section exceeds
31the “net tax,” the excess may be carried over to reduce the “net
32tax” in the following year, and succeeding four years, if necessary,
33until the credit is exhausted.

34(e) The Franchise Tax Board may prescribe rules, guidelines,
35 or procedures necessary or appropriate to carry out the purposes
36of this section, except as otherwise specified in subdivision (c).

37(f) (1) Except as provided in paragraph (2), if the training of a
38registered apprentice is terminated prior to the completion of the
39apprenticeship program, any unused carryover of the credit shall
40be canceled and any previously claimed credit that reduced net tax
P5    1shall be recaptured by increasing the tax imposed by this part for
2the taxable year in which the training is terminated.

3(2) Paragraph (1) shall not apply if the training of a registered
4apprentice was terminated due to any of the following:

5(A) The registered apprentice voluntarily leaves the
6apprenticeship program.

7(B) The registered apprentice, before the end of the completion
8of the apprenticeship program described in paragraph (3) of
9subdivision (b), becomes disabled and unable to perform the
10services of that program, unless that disability is removed before
11the close of the period of that program and the taxpayer fails to
12offer reinstatement to the program for that apprentice.

13(C) The training of a registered apprentice was terminated due
14to the misconduct, as defined in Sections 1256-30 to 1256-43,
15inclusive, of Title 22 of the California Code of Regulations, of that
16apprentice.

17(D) The training of a registered apprentice was terminated due
18to a substantial reduction in the trade or business operations of the
19taxpayer.

20(g) A deduction otherwise allowed under this part for any
21amount paid or incurred by the qualified taxpayer in training a
22 registered apprentice as a trade or business expense shall be
23reduced by the amount of the credit allowed by this section.

24(h) This section shall remain in effect only until December 1,
25begin delete 2021,end deletebegin insert 2020,end insert and as of that date is repealed.

26

SEC. 3.  

Section 19560.3 is added to the Revenue and Taxation
27Code
, to read:

28

19560.3.  

(a) The Franchise Tax Board shall provide the
29Division of Apprenticeship Standards in the Department of
30Industrial Relations with any information necessary to prepare the
31report required pursuant to Section 3073.7 of the Labor Code.

32(b) This section shall be repealed on January 1,begin delete 2024. end deletebegin insert 2023end insertbegin insert.end insert

33

SEC. 4.  

Section 23667 is added to the Revenue and Taxation
34Code
, to read:

35

23667.  

(a) For each taxable year beginning on or after January
361,begin delete 2017,end deletebegin insert 2016,end insert and before January 1,begin delete 2021,end deletebegin insert 2020,end insert there shall be
37allowedbegin delete asend delete a credit against the “tax,” as defined in Section 23036,
38in an amount equal tobegin insert one dollar ($1) for each hour a registered
39apprentice worked during the taxable year, up toend insert
two thousand
P6    1dollars ($2,000) for each registered apprentice trained by the
2taxpayer in the taxable year.

3(b) For purposes of this section, “registered apprentice” means
4an individual who meets all of the following requirements:

5(1) Is 16 years of age or older at the time of application into the
6program.

7(2) Meets one of the following requirements:

8(A) Has not obtained a high school diploma and is enrolled in
9high school or a General Education Development test preparation
10program.

11(B) Has obtained a high school diploma or General Education
12Development credential while participating in the apprenticeship.

13(3) Is trained by the taxpayer through an apprenticeship program
14that meets all of the following requirements:

15(A) The apprenticeship program is approved by the Chief of
16the Division of Apprenticeship Standards pursuant to Chapter 4
17(commencing with Section 3070) of Division 3 of the Labor Code
18and is also registered with the Office of Apprenticeship at the
19United States Department of Labor.

20(B) The program is provided pursuant to an apprenticeship
21agreement as described in Section 3077 of the Labor Code.

22(C) The minimum term in hours for the program isbegin delete 4,000end deletebegin insert 2,000end insert
23 hours.

24(c) (1) (A) A credit shall only be allowed under this section
25for the taxable year if the taxpayer has received the certificate
26described in subparagraph (B) from the Division of Apprenticeship
27Standards in the Department of Industrial Relations. A certificate
28is required for each taxable year. The taxpayer shall provide a copy
29of the certificate to the Franchise Tax Board upon request.

30(B) The Division of Apprenticeship Standards shall do all of
31the following:

32(i) Establish a procedure for taxpayers, in the form and manner
33jointly prescribed by the Division of Apprenticeship Standards
34and the Franchise Tax Board, to apply and receive a certificate for
35 purposes of this section.

36(ii) Verify that the taxpayer is training during the taxable year
37an individual that meets the requirements to be a registered
38apprentice as described in subdivision (b).

39(iii) Provide the taxpayer with a certificate for the registered
40apprentice. The certificate shall contain the name of the taxpayer
P7    1and the name of the apprentice, a brief description of the
2apprenticeship, the primary location of the apprenticeship, and any
3other information the Division of Apprenticeship Standards or the
4Franchise Tax Board deems relevant.

5(iv) Annually provide the Franchise Tax Board with a list of
6the names of the taxpayers that received certificates and the names
7of the registered apprentices of the taxpayer. The list may also
8contain any other information from the certificates.

9(v) Inform the Franchise Tax Board if the Division of
10Apprenticeship Standards has knowledge that the training of a
11registered apprentice is terminated prior to the completion of the
12apprenticeship program after the taxpayer has received a certificate.

13(2)  The Division of Apprenticeship Standards may adopt rules
14and regulations as reasonably necessary to effectuate this
15subdivision, but shall consult with the Franchise Tax Board.

16(d) In the case where the credit allowed by this section exceeds
17the “tax,” the excess may be carried over to reduce the “net tax”
18in the following year, and succeeding four years, if necessary, until
19the credit is exhausted.

20(e) The Franchise Tax Board may prescribe rules, guidelines,
21or procedures necessary or appropriate to carry out the purposes
22of this section, except as otherwise specified in subdivision (c).

23(f) (1) Except as provided in paragraph (2), if the training of a
24registered apprentice is terminated prior to the completion of the
25apprenticeship program, any unused carryover of the credit shall
26be canceled and any previously claimed credit that reduced tax
27shall be recaptured by increasing the tax imposed by this part for
28the taxable year in which the training is terminated.

29(2) Paragraph (1) shall not apply if the training of a registered
30apprentice was terminated due to any of the following:

31(A) The registered apprentice voluntarily leaves the
32apprenticeship program.

33(B) The registered apprentice, before the end of the completion
34of the apprenticeship program described in paragraph (3) of
35subdivision (b), becomes disabled and unable to perform the
36services of that program, unless that disability is removed before
37the close of the period of that program and the taxpayer fails to
38offer reinstatement to the program for that apprentice.

39(C) The training of a registered apprentice was terminated due
40to the misconduct, as defined in Sections 1256-30 to 1256-43,
P8    1inclusive, of Title 22 of the California Code of Regulations, of that
2apprentice.

3(D) The training of a registered apprentice was terminated due
4to a substantial reduction in the trade or business operations of the
5taxpayer.

6(g) A deduction otherwise allowed under this part for any
7amount paid or incurred by the qualified taxpayer in training a
8registered apprentice as a trade or business expense shall be
9reduced by the amount of the credit allowed by this section.

10(h) This section shall remain in effect only until December 1,
11begin delete 2021,end deletebegin insert 2020,end insert and as of that date is repealed.

12

SEC. 5.  

This act provides for a tax levy within the meaning
13of Article IV of the Constitution and shall go into immediate effect.



O

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