Amended in Assembly May 20, 2015

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 Sections 17053.11, 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, 2016, and before January 1, 2020, would allow a credit against the taxes imposed under those tax laws in an amount equal to $1 for each hour a registered apprentice worked in the taxable year, up to $2,000begin delete forend delete eachbegin delete registered apprenticeend deletebegin insert for up to 10 registered apprenticesend insert, as defined, trained by the taxpayer in the taxable year.begin insert This bill would provide that the credit would have an aggregate cap of $10,000,000 for each calendar year.end insert 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, 2017, and before January 1, 2022, 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, 2018.

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 Sections 17053.11 and 23667 of the Revenue and Taxation
6Code. The reports shall be for each of the five calendar years
7beginning on January 1, 2017, and before January 1, 2022, and
8shall include, but not be limited to, the following information:

9(1) The number of companies or businesses taking advantage
10of the apprenticeship income tax credit.

11(2) The number of apprentices participating in the apprenticeship
12programs and the number of apprentices who completed an
13apprenticeship program which was the basis of the apprenticeship
14income tax credits allowed under Sections 17053.11 and 23667
15of the Revenue and Taxation Code.

16(3) The number of apprentice program graduates hired by the
17taxpayer after the apprenticeship training was completed for which
18the taxpayer was allowed a credit under Sections 17053.11 and
1923667 of the Revenue and Taxation Code for training that
20 apprentice.

P3    1(4) Information on the employment status of individuals who
2have completed an apprenticeship to the extent the information is
3available.

4(5) The fiscal impact of the apprenticeship income tax credits.

5(b) This report shall be submitted to the Assembly and Senate
6Appropriations Committees, the Assembly Revenue and Taxation
7Committee, and the Senate Governance and Finance Committee
8on or before March 1 of the following calendar year, commencing
9 March 1, 2018.

10(c) This section shall be repealed on January 1, 2023.

11

SEC. 2.  

Section 17053.11 is added to the Revenue and Taxation
12Code
, to read:

13

17053.11.  

(a) For each taxable year beginning on or after
14January 1, 2016, and before January 1, 2020, there shall be allowed
15a credit against the “net tax,” as defined in Section 17039, in an
16amount equal to one dollar ($1) for each hour a registered
17apprentice worked during the taxable year, up to two thousand
18dollars ($2,000), for each registered apprentice trained by the
19taxpayer in the taxablebegin delete year.end deletebegin insert year, not to exceed 10 registered
20apprentices per taxable year.end insert

21(b) For purposes of this section, “registered apprentice” means
22an individual who meets all of the following requirements:

23(1) Is 16 years of age or older at the time of application into the
24program.

25(2) Meets one of the following requirements:

26(A) Has not obtained a high school diploma and is enrolled in
27high school or a General Education Development test preparation
28program.

29(B) Has obtained a high school diploma or General Education
30Development credential while participating in the apprenticeship.

31(3) Is trained by the taxpayer through an apprenticeship program
32that meets all of the following requirements:

33(A) The apprenticeship program is approved by the Chief of
34the Division of Apprenticeship Standards pursuant to Chapter 4
35(commencing with Section 3070) of Division 3 of the Labor Code
36and is also registered with the Office of Apprenticeship at the
37United States Department of Labor.

38(B) The program is provided pursuant to an apprenticeship
39agreement as described in Section 3077 of the Labor Code.

40(C) The minimum term in hours for the program is 2,000 hours.

P4    1(c) (1) (A) A credit shall only be allowed under this section
2for the taxable year if the taxpayer has received the certificate
3described in subparagraph (B) from the Division of Apprenticeship
4Standards in the Department of Industrial Relations. A certificate
5is required for each taxable year. The taxpayer shall provide a copy
6of the certificate to the Franchise Tax Board upon request.

7(B) The Division of Apprenticeship Standards shall do all of
8the following:

9(i) Establish a procedure for taxpayers, in the form and manner
10jointly prescribed by the Division of Apprenticeship Standards
11and the Franchise Tax Board, to apply and receive a certificate for
12purposes of this section.

13(ii) Verify that the taxpayer is training during the taxable year
14an individual that meets the requirements to be a registered
15apprentice as described in subdivision (b).

16(iii) Provide the taxpayer with a certificate for the registered
17apprentice. The certificate shall contain the name of the taxpayer
18and the name of the apprentice, a brief description of the
19apprenticeship, the primary location of the apprenticeship, and any
20other information the Division of Apprenticeship Standards or the
21Franchise Tax Board deems relevant.

22(iv) Annually provide the Franchise Tax Board with a list of
23the names of the taxpayers that received certificates and the names
24of the registered apprentices of the taxpayer. The list may also
25contain any other information from the certificates.

26(v) Inform the Franchise Tax Board if the Division of
27Apprenticeship Standards has knowledge that the training of a
28registered apprentice is terminated prior to the completion of the
29apprenticeship program after the taxpayer has received a certificate.

30(2)  The Division of Apprenticeship Standards may adopt rules
31and regulations as reasonably necessary to effectuate this
32subdivision, but shall consult with the Franchise Tax Board.

33(d) In the case where the credit allowed by this section exceeds
34the “net tax,” the excess may be carried over to reduce the “net
35tax” in the following year, and succeeding four years, if necessary,
36until the credit is exhausted.

37(e) The Franchise Tax Board may prescribe rules, guidelines,
38 or procedures necessary or appropriate to carry out the purposes
39of this section, except as otherwise specified in subdivision (c).

P5    1(f) (1) Except as provided in paragraph (2), if the training of a
2registered apprentice is terminated prior to the completion of the
3apprenticeship program, any unused carryover of the credit shall
4be canceled and any previously claimed credit that reduced net tax
5shall be recaptured by increasing the tax imposed by this part for
6the taxable year in which the training is terminated.

7(2) Paragraph (1) shall not apply if the training of a registered
8apprentice was terminated due to any of the following:

9(A) The registered apprentice voluntarily leaves the
10apprenticeship program.

11(B) The registered apprentice, before the end of the completion
12of the apprenticeship program described in paragraph (3) of
13subdivision (b), becomes disabled and unable to perform the
14services of that program, unless that disability is removed before
15the close of the period of that program and the taxpayer fails to
16offer reinstatement to the program for that apprentice.

17(C) The training of a registered apprentice was terminated due
18to the misconduct, as defined in Sections 1256-30 to 1256-43,
19inclusive, of Title 22 of the California Code of Regulations, of that
20apprentice.

21(D) The training of a registered apprentice was terminated due
22to a substantial reduction in the trade or business operations of the
23taxpayer.

24(g) A deduction otherwise allowed under this part for any
25amount paid or incurred by the qualified taxpayer in training a
26 registered apprentice as a trade or business expense shall be
27reduced by the amount of the credit allowed by this section.

begin insert

28(h) The aggregate amount of credits allowed under this section
29and Section 23667 shall not exceed ten million dollars
30($10,000,000) for each calendar year.

end insert
begin delete

31(h)

end delete

32begin insert(i)end insert This section shall remain in effect only until December 1,
332020, and as of that date is repealed.

34

SEC. 3.  

Section 19560.3 is added to the Revenue and Taxation
35Code
, to read:

36

19560.3.  

(a) The Franchise Tax Board shall provide the
37Division of Apprenticeship Standards in the Department of
38Industrial Relations with any information necessary to prepare the
39report required pursuant to Section 3073.7 of the Labor Code.

40(b) This section shall be repealed on January 1, 2023.

P6    1

SEC. 4.  

Section 23667 is added to the Revenue and Taxation
2Code
, to read:

3

23667.  

(a) For each taxable year beginning on or after January
41, 2016, and before January 1, 2020, there shall be allowed a credit
5against the “tax,” as defined in Section 23036, in an amount equal
6to one dollar ($1) for each hour a registered apprentice worked
7during the taxable year, up to two thousand dollars ($2,000) for
8each registered apprentice trained by the taxpayer in the taxable
9begin delete year.end deletebegin insert year, not to exceed 10 registered apprentices per taxable
10year.end insert

11(b) For purposes of this section, “registered apprentice” means
12an individual who meets all of the following requirements:

13(1) Is 16 years of age or older at the time of application into the
14program.

15(2) Meets one of the following requirements:

16(A) Has not obtained a high school diploma and is enrolled in
17high school or a General Education Development test preparation
18program.

19(B) Has obtained a high school diploma or General Education
20Development credential while participating in the apprenticeship.

21(3) Is trained by the taxpayer through an apprenticeship program
22that meets all of the following requirements:

23(A) The apprenticeship program is approved by the Chief of
24 the Division of Apprenticeship Standards pursuant to Chapter 4
25(commencing with Section 3070) of Division 3 of the Labor Code
26and is also registered with the Office of Apprenticeship at the
27United States Department of Labor.

28(B) The program is provided pursuant to an apprenticeship
29agreement as described in Section 3077 of the Labor Code.

30(C) The minimum term in hours for the program is 2,000 hours.

31(c) (1) (A) A credit shall only be allowed under this section
32for the taxable year if the taxpayer has received the certificate
33described in subparagraph (B) from the Division of Apprenticeship
34Standards in the Department of Industrial Relations. A certificate
35is required for each taxable year. The taxpayer shall provide a copy
36of the certificate to the Franchise Tax Board upon request.

37(B) The Division of Apprenticeship Standards shall do all of
38the following:

39(i) Establish a procedure for taxpayers, in the form and manner
40jointly prescribed by the Division of Apprenticeship Standards
P7    1and the Franchise Tax Board, to apply and receive a certificate for
2 purposes of this section.

3(ii) Verify that the taxpayer is training during the taxable year
4an individual that meets the requirements to be a registered
5apprentice as described in subdivision (b).

6(iii) Provide the taxpayer with a certificate for the registered
7apprentice. The certificate shall contain the name of the taxpayer
8and the name of the apprentice, a brief description of the
9apprenticeship, the primary location of the apprenticeship, and any
10other information the Division of Apprenticeship Standards or the
11Franchise Tax Board deems relevant.

12(iv) Annually provide the Franchise Tax Board with a list of
13the names of the taxpayers that received certificates and the names
14of the registered apprentices of the taxpayer. The list may also
15contain any other information from the certificates.

16(v) Inform the Franchise Tax Board if the Division of
17Apprenticeship Standards has knowledge that the training of a
18registered apprentice is terminated prior to the completion of the
19apprenticeship program after the taxpayer has received a certificate.

20(2)  The Division of Apprenticeship Standards may adopt rules
21and regulations as reasonably necessary to effectuate this
22subdivision, but shall consult with the Franchise Tax Board.

23(d) In the case where the credit allowed by this section exceeds
24the “tax,” the excess may be carried over to reduce the “net tax”
25in the following year, and succeeding four years, if necessary, until
26the credit is exhausted.

27(e) The Franchise Tax Board may prescribe rules, guidelines,
28or procedures necessary or appropriate to carry out the purposes
29of this section, except as otherwise specified in subdivision (c).

30(f) (1) Except as provided in paragraph (2), if the training of a
31registered apprentice is terminated prior to the completion of the
32apprenticeship program, any unused carryover of the credit shall
33be canceled and any previously claimed credit that reduced tax
34shall be recaptured by increasing the tax imposed by this part for
35the taxable year in which the training is terminated.

36(2) Paragraph (1) shall not apply if the training of a registered
37apprentice was terminated due to any of the following:

38(A) The registered apprentice voluntarily leaves the
39apprenticeship program.

P8    1(B) The registered apprentice, before the end of the completion
2of the apprenticeship program described in paragraph (3) of
3subdivision (b), becomes disabled and unable to perform the
4services of that program, unless that disability is removed before
5the close of the period of that program and the taxpayer fails to
6offer reinstatement to the program for that apprentice.

7(C) The training of a registered apprentice was terminated due
8to the misconduct, as defined in Sections 1256-30 to 1256-43,
9inclusive, of Title 22 of the California Code of Regulations, of that
10apprentice.

11(D) The training of a registered apprentice was terminated due
12to a substantial reduction in the trade or business operations of the
13taxpayer.

14(g) A deduction otherwise allowed under this part for any
15amount paid or incurred by the qualified taxpayer in training a
16registered apprentice as a trade or business expense shall be
17reduced by the amount of the credit allowed by this section.

begin insert

18(h) The aggregate amount of credits allowed under this section
19and Section 17053.11 shall not exceed ten million dollars
20($10,000,000) for each calendar year.

end insert
begin delete

21(h)

end delete

22begin insert(i)end insert This section shall remain in effect only until December 1,
232020, and as of that date is repealed.

24

SEC. 5.  

This act provides for a tax levy within the meaning
25of Article IV of the Constitution and shall go into immediate effect.



O

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