AB 428, as amended, Nazarian. Income taxes: credit: seismic retrofits.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
Thisbegin delete bill would allow,end deletebegin insert bill,end insert for taxable years beginning on or after January 1, 2017, and before January 1, 2022,begin insert would allowend insert a tax credit under both laws in an amount equal to 30% of the qualified costs paid or incurred by a qualified taxpayer for any seismic retrofit construction on a qualified building, as provided. The bill would require abegin delete taxpayerend deletebegin insert
taxpayer, in order to be eligible for the credit,end insert to obtain 2 certifications from the appropriate jurisdiction with authority for building code enforcement of the area in which the building is located: onebegin insert prior to seismic retrofit constructionend insert that certifies that the building is an at-riskbegin delete propertyend deletebegin insert property,end insert andbegin delete oneend deletebegin insert a second subsequent to constructionend insert that certifies that thebegin insert completed construction isend insert
seismic retrofit construction, as defined,begin delete has been completed.end deletebegin insert and specifies a dollar amount of qualified costs.end insert The bill wouldbegin insert furtherend insert require the taxpayer tobegin insert provide the second certification to andend insert applybegin delete toend deletebegin insert
for allocation of the credit withend insert the Franchise Taxbegin delete Board for allocation of the credit and to provide a specified certification and for the Franchise Tax Boardend deletebegin insert Board, and would require the boardend insert to allocate credits on a first-come-first-served basis. The bill would provide that the credit would have an aggregate cap under both laws of $12,000,000 for each calendar year, as provided.
Existing law requires a bill that would authorize a new credit against the tax imposed by the Personal Income Tax Law or the Corporation Tax Law to contain specific goals, purposes, and objectives that the new credit will achieve and detailed performance indicators and data collection requirements for determining whether the new credit achieves these goals, purposes, and objectives.
end insertbegin insertThis bill would make findings specifying the goals, purposes, and objectives of the above-described tax credits and detailing the performance indicators and data collection requirements for determining whether the credits meet these goals, purposes, and objectives.
end insertThis 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:
Section 17053.50 is added to the Revenue and
2Taxation Code, to read:
(a) For taxable years beginning on or after January
41, 2017, and before January 1, 2022, there shall be allowed to a
5qualified taxpayer a credit against the “net tax,” as defined in
6Section 17039, in an amount equal to 30 percent of the qualified
7taxpayer’s qualified costs.
8(b) For purposes of this section:
9(1) “At-risk property” means a building that is deemed
10hazardous and in danger of collapse in the event of a catastrophic
11earthquake, including, but not limited to, soft story buildings,
12nonductile concrete residential buildings, and pre-1994 concrete
13residential buildings.
P3 1(2) “Qualified building” means a building that has been certified
2as an at-risk property pursuant to subparagraph (A) of paragraph
3(1) of subdivision (c). A qualified building includes a mobilehome
4registered by the Department of Housing and Community
5Development.
6(3) “Qualified costs” means the costs paid or incurred by the
7qualified taxpayer for any completed seismic retrofit construction
8on a qualified building, including any engineering or architectural
9design work necessary to permit or complete the seismic retrofit
10construction less the amount of any grant provided by a public
11entity for the seismic retrofit construction. “Qualified costs” do
12not include any of the following costs paid or incurred by the
13qualified taxpayer:
14(A) Maintenance, including abatement of deferred or inadequate
15maintenance, and correction of violations unrelated to the seismic
16retrofit construction.
17(B) Repair, including repair of earthquake damage.
18(C) Seismic retrofit construction required by local building
19codes as a result of addition, repair, building relocation, change
20of use, or occupancy.
21(D) Other work or improvement required by local building or
22planning codes as a result of the intended seismic retrofit
23construction.
24(E) Rent reductions or other associated compensation,
25compliance actions, or other related coordination involving the
26qualified taxpayer and any other party,
including a tenant, insurer,
27or lender.
28(F) Replacement of existing building components, including
29equipment, except as needed to complete the seismic retrofit
30construction.
31(G) Bracing or securing nonpermanent building contents.
32(H) The offset of costs, reimbursements, or other costs
33transferred from the qualified taxpayers to others.
34(I) Any amount paid by the qualified taxpayer to the jurisdiction
35with authority for building code enforcement for issuing the
36certifications required pursuant to subparagraphs (A) and (B) of
37paragraph (1) of subdivision (c).
38(4) “Qualified taxpayer” means a
taxpayer that is an owner of
39a qualified building located in this state. A taxpayer that owns a
40proportional share of a qualified building in this state may claim
P4 1the credit allowed by this section based on the taxpayer’s share of
2the qualified costs.
3(5) (A) “Seismic retrofit construction” means alteration of a
4qualified building or its components to substantially mitigate
5seismic damage. Seismic retrofit construction shall be for work
6performed, and for which qualified costs were paid or incurred,
7on or after January 1, 2017. Seismic retrofit construction shall
8include, but not be limited to, the following:
9(i) Anchoring the structure to the foundation.
10(ii) Bracing cripple walls.
11(iii) Bracing hot water heaters.
12(iv) Installing automatic gas shutoff valves.
13(v) Repairing or reinforcing the foundation to improve the
14integrity of the foundation against seismic damage.
15(vi) Anchoring fuel storage.
16(vii) Installing an earthquake resistant bracing system for
17mobilehomes that are registered with the Department of Housing
18and Community Development.
19(B) Notwithstanding subparagraph (A), seismic retrofit
20construction does not include construction performed to bring a
21building into compliance with local building codes.
22(c) To be eligible for the credit, the following shall apply:
23(1) The qualified taxpayer shall do all of the following:
24(A) Prior to the seismic retrofit construction, obtain certification
25from the appropriate jurisdiction with local building code
26enforcement authority that the building is an at-risk property.
27(B) Obtain certification from the appropriate jurisdiction with
28authority for building code enforcement, upon a review of the
29building, that the completed construction satisfies the definition
30of seismic retrofit construction. The certification shall identify
31what part of the completed construction, if any, is not seismic
32retrofit construction, and specify a
dollar amount of qualified costs.
33(C) Request and be granted an allocation of the credit from the
34Franchise Tax Board. To request an allocation, the taxpayer shall
35sign and submit to the Franchise Tax Board an application to
36receive a credit for the seismic retrofit construction and provide a
37copy of the certification obtained pursuant to subparagraph (B).
38(D) Retain for his or her records a copy of the certifications
39specified in subparagraphs (A) and (B).
P5 1(2) The jurisdiction with authority for building code enforcement
2in which a qualified building is located has entered into an
3agreement with the state to provide certifications pursuant to this
4section and to not seek reimbursement pursuant to Section 6 of
5Article
XIII B of the California Constitution for any costs incurred
6in providing those certifications.
7(d) (1) The credit amount allowed in subdivision (a) shall be
8claimed by a qualified taxpayer at the rate of one-fifth of the credit
9amount for the taxable year in which the credit isbegin delete allowed,end delete
10begin insert allocated,end insert and one-fifth of the credit amount for each of the
11subsequent four taxable years.
12(2) In the case where the credit allowed under this section
13exceeds the “net tax,” as defined in Section 17039, for a taxable
14year, the excess credit may be carried over to reduce the “net tax”
15in the
following taxable year, and succeeding four taxable years,
16if necessary, until the credit has been exhausted.
17(e) (1) The total amount of credit that may be allocated pursuant
18to this section and Section 23650 shall not exceed the sum of the
19following:
20(A) Twelve million dollars ($12,000,000) for the 2017 calendar
21year and each calendar year thereafter.
22(B) The amount of previously unallocated credits allowed under
23this section.
24(2) Upon receipt of the application and certification described
25in subparagraph (C) of paragraph (1) of subdivision (c), the
26Franchise Tax Board shall notify the taxpayer of the amount, if
27any, of credit allowed
and allocate the credit to a qualified
taxpayer
28on a first-come-first-served basis.
29(3) (A) The taxpayer shall claim the credit on a timely filed
30original return.
31(B) The determination of the Franchise Tax Board with respect
32to the allocation of the credit, and whether a return has been timely
33filed for purposes of this subdivision may not be reviewed in any
34administrative or judicial proceeding.
35(C) Any disallowance of a credit claimed due to a determination
36under this subdivision, including the application of the limitation
37specified in paragraph (1), shall be treated as a mathematical error
38appearing on the return. Any amount of tax resulting from that
39disallowance may be assessed by the Franchise Tax Board in the
40same
manner as provided by Section 19051.
P6 1(f) This credit shall be in lieu of any other credit or deduction
2that the qualified taxpayer may otherwise claim pursuant to this
3part with respect to qualified costs.
4(g) The Franchise Tax Board may prescribe rules, guidelines,
5or procedures necessary or appropriate to carry out the purposes
6of this section, including any guidelines regarding the allocation
7of the credit allowed under this section. Chapter 3.5 (commencing
8with Section 11340) of Part 1 of Division 3 of Title 2 of the
9Government Code does not apply to any rule, guideline, or
10procedure prescribed by the Franchise Tax Board pursuant to this
11section.
12(h) Section 41 shall not apply to the credit allowed pursuant to
13this section.
14(i)
end delete
15begin insert(h)end insert This section shall remain in effect only until December 1,
162022, and as of that date is repealed.
Section 23650 is added to the Revenue and Taxation
18Code, to read:
(a) For taxable years beginning on or after January 1,
202017, and before January 1, 2022, there shall be allowed to a
21qualified taxpayer a credit against the “tax,” as defined in Section
2223036, in an amount equal to 30 percent of the qualified taxpayer’s
23qualified costs.
24(b) For purposes of this section:
25(1) “At-risk property” means a building that is deemed
26hazardous and in danger of collapse in the event of a catastrophic
27earthquake, including, but not limited to, soft story buildings,
28nonductile concrete residential buildings, and pre-1994 concrete
29residential buildings.
30(2) “Qualified building” means a building that has been certified
31as an at-risk property pursuant to subparagraph (A) of paragraph
32(1) of subdivision (c). A qualified building includes a mobilehome
33registered by the Department of Housing and Community
34Development.
35(3) “Qualified costs” means the costs paid or incurred by the
36qualified taxpayer for any completed seismic retrofit construction
37on a qualified building, including any engineering or architectural
38design work necessary to permit or complete the seismic retrofit
39construction less the amount of any grant provided by a public
40entity for the seismic retrofit construction. “Qualified costs” do
P7 1not include any of the following costs paid or incurred by the
2qualified taxpayer:
3(A) Maintenance, including abatement of deferred or inadequate
4maintenance, and correction of violations unrelated to the seismic
5retrofit construction.
6(B) Repair, including repair of earthquake damage.
7(C) Seismic retrofit construction required by local building
8codes as a result of addition, repair, building relocation, change
9of use, or occupancy.
10(D) Other work or improvement required by local building or
11planning codes as a result of the intended seismic retrofit
12construction.
13(E) Rent reductions or other associated compensation,
14compliance actions, or other related coordination involving the
15qualified taxpayer and any other party, including a
tenant, insurer,
16or lender.
17(F) Replacement of existing building components, including
18equipment, except as needed to complete the seismic retrofit
19construction.
20(G) Bracing or securing nonpermanent building contents.
21(H) The offset of costs, reimbursements, or other costs
22transferred from the qualified taxpayers to others.
23(I) Any amount paid by the qualified taxpayer to the jurisdiction
24with authority for building code enforcement for issuing the
25certifications required pursuant to subparagraphs (A) and (B) of
26paragraph (1) of subdivision (c).
27(4) “Qualified taxpayer” means a taxpayer that is
an owner of
28a qualified building located in this state. A taxpayer that owns a
29proportional share of a qualified building in this state may claim
30the credit allowed by this section based on the taxpayer’s share of
31the qualified costs.
32(5) (A) “Seismic retrofit construction” means alteration of a
33qualified building or its components to substantially mitigate
34seismic damage. Seismic retrofit construction shall be for work
35performed, and for which qualified costs were paid or incurred,
36on or after January 1, 2017. Seismic retrofit construction shall
37include, but not be limited to, the following:
38(i) Anchoring the structure to the foundation.
39(ii) Bracing cripple walls.
40(iii) Bracing hot water heaters.
P8 1(iv) Installing automatic gas shutoff valves.
2(v) Repairing or reinforcing the foundation to improve the
3integrity of the foundation against seismic damage.
4(vi) Anchoring fuel storage.
5(vii) Installing an earthquake resistant bracing system for
6mobilehomes that are registered with the Department of Housing
7and Community Development.
8(B) Notwithstanding subparagraph (A), seismic retrofit
9construction does not include construction performed to bring a
10building into compliance with local building codes.
11(c) To be eligible for the credit, the following shall apply:
12(1) The qualified taxpayer shall do all of the following:
13(A) Prior to the seismic retrofit construction, obtain certification
14from the appropriate jurisdiction with local building code
15enforcement authority that the building is an at-risk property.
16(B) Obtain certification from the appropriate jurisdiction with
17authority for building code enforcement, upon a review of the
18building, that the completed construction satisfies the definition
19of seismic retrofit construction. The certification shall identify
20what part of the completed construction, if any, is not seismic
21retrofit construction and specify a dollar
amount of qualified costs.
22(C) Request and be granted an allocation of the credit from the
23Franchise Tax Board. To request an allocation, the taxpayer shall
24sign and submit to the Franchise Tax Board an application to
25receive a credit for the seismic retrofit construction and provide a
26copy of the certification obtained pursuant to subparagraph (B).
27(D) Retain for his or her records a copy of the certifications
28specified inbegin delete subparagraphend deletebegin insert subparagraphsend insert (A) and (B).
29(2) The jurisdiction with authority for building code enforcement
30in which a qualified building
is located has entered into an
31agreement with the state to provide certifications pursuant to this
32section and to not seek reimbursement pursuant to Section 6 of
33Article XIII B of the California Constitution for any costs incurred
34in providing those certifications.
35(d) (1) The credit amount allowed in subdivision (a) shall be
36claimed by a qualified taxpayer at the rate of one-fifth of the credit
37amount for the taxable year in which the credit isbegin delete allowed,end delete
38begin insert allocated,end insert and one-fifth of the credit amount for each of the
39subsequent four taxable years.
P9 1(2) In the case where
the credit allowed under this section
2exceeds the “tax,” as defined in Section 23036, for a taxable year,
3the excess credit may be carried over to reduce the “tax” in the
4following taxable year, and succeeding four taxable years, if
5necessary, until the credit has been exhausted.
6(e) (1) The total amount of credit that may be allocated pursuant
7to this section and Section 17053.50 shall not exceed the sum of
8the following:
9(A) Twelve million dollars ($12,000,000) for the 2017 calendar
10year and each calendar year thereafter.
11(B) The amount of previously unallocated credits allowed under
12this section.
13(2) Upon receipt of the application andbegin delete certificationsend deletebegin insert
certificationend insert
14 described in subparagraph (C) of paragraph (1) of subdivision (c),
15the Franchise Tax Board shall notify the taxpayer of the amount,
16if any, of credit allowed and allocate the credit to a qualified
17
taxpayer on a first-come-first-served basis.
18(3) (A) The taxpayer shall claim the credit on a timely filed
19original return.
20(B) The determination of the Franchise Tax Board with respect
21to the allocation of the credit, and whether a return has been timely
22filed for purposes of this subdivision may not be reviewed in any
23administrative or judicial proceeding.
24(C) Any disallowance of a credit claimed due to a determination
25under this subdivision, including the application of the limitation
26specified in paragraph (1), shall be treated as a mathematical error
27appearing on the return. Any amount of tax resulting from that
28disallowance may be assessed by the Franchise Tax Board in the
29same
manner as provided by Section 19051.
30(f) This credit shall be in lieu of any other credit or deduction
31that the qualified taxpayer may otherwise claim pursuant to this
32part with respect to qualified costs.
33(g) The Franchise Tax Board may prescribe rules, guidelines,
34or procedures necessary or appropriate to carry out the purposes
35of this section, including any guidelines regarding the allocation
36of the credit allowed under this section. Chapter 3.5 (commencing
37with Section 11340) of Part 1 of Division 3 of Title 2 of the
38Government Code does not apply to any rule, guideline, or
39procedure prescribed by the Franchise Tax Board pursuant to this
40section.
P10 1(h) Section 41 shall not apply to the credit allowed pursuant to
2this section.
3(i)
end delete
4begin insert(h)end insert This section shall remain in effect only until December 1,
52022, and as of that date is repealed.
For the purposes of complying with Section 41 of the
7Revenue and Taxation Code, the Legislature finds and declares
8all of the following with respect to Sections 17053.50 and 23650
9of the Revenue and Taxation Code:
10(a) The specific goals, purposes, and objectives that the tax
11credits will achieve are as follows:
12(1) Leveraging sixty million dollars ($60,000,000) in private
13investment.
14(2) Creating thousands of engineering or construction jobs.
end insertbegin insert15(3) Mitigating seismic damage to save lives.
end insertbegin insert
16(b) The detailed performance indicators for the Legislature to
17use when measuring whether the tax credits meet those specific
18goals, purposes, and objectives are as follows:
19(1) The amount of private sector investment enabled by
20allocation of the tax credits.
21(2) The number of engineering or construction jobs created as
22a result of this investment.
23(3) The estimated number of lives saved by the seismic
24retrofitting of buildings facilitated by the tax credits.
25(c) The data collection requirements to enable the Legislature
26to determine whether the tax credits
are meeting, failing to meet,
27or exceeding those specific goals, purposes, and objectives are as
28follows:
29(1) To assist the Legislature in measuring whether the tax credits
30meet the goals, purposes, and objectives specified in subdivision
31(a), the Legislative Analyst shall review the effectiveness of the
32tax credits and may request information from the Franchise Tax
33Board and any state governmental entity with authority relating
34to the seismic retrofit construction of at-risk properties.
35(2) The Franchise Tax Board and any state governmental entity
36with authority relating to the seismic retrofit construction of at-risk
37properties shall provide to the Legislative Analyst any data
38requested by the Legislative Analyst pursuant to this subdivision.
This act provides for a tax levy within the meaning
3of Article IV of the Constitution and shall go into immediate effect.
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