Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 515

Introduced by Assembly Member Eggman

February 23, 2015

An act to amend begin delete Section end delete begin insert Sections end insert 17053.88 begin insert and 23688 end insert of the Revenue and Taxation Code, begin insert and to amend Section 18995 of, and to amend the heading of Chapter 14.5 (commencing with Section 18995) of Part 6 of Division 9 of, the Welfare and Institutions Code, end insert relating to begin delete taxation. end delete begin insert food banks. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 515, as amended, Eggman. begin delete Personal income tax credit: end delete begin insert Income taxes: credits: end insert food bank donations.

begin delete

The

end delete

begin insert (1) end insert begin insert   end insert begin insert The end insert Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including begin insert , for taxable years beginning on or after January 1, 2012, and before January 1, 2017, end insert a credit for qualified taxpayers, begin delete as end delete defined begin insert as the person responsible for planting a crop, managing the crop, and harvesting the crop from the land end insert , in an amount equal to begin delete a specified percentage end delete begin insert 10% end insert of the cost that would otherwise be included in begin insert , or required to be included in, end insert inventory costs, as specified begin insert under federal law end insert , with respect to the donation of fresh fruits or fresh vegetables to food banks located in California.

This bill would begin insert , under both laws, expand the credit to apply to the donation of qualified donation items, defined as raw or processed agricultural products. The bill would expand the definition of qualified taxpayer to also include the person responsible for growing or raising a qualified donation item, or harvesting, packing, or processing a qualified donation item. The bill would modify the credit amount to instead equal 20% of the qualified value, as defined, of the qualified donation items. The bill would extend the operation of the credit to taxable years before January 1, 2024. The bill would make various conforming changes and would also end insert make a nonsubstantive change to the personal income tax provision.

begin insert

(2) Existing law requires the State Department of Social Services to establish and administer the State Emergency Food Assistance Program (SEFAP), to provide food and funding for the provision of emergency food to food banks, as provided. Existing law creates the State Emergency Food Assistance Program Account and would, upon appropriation by the Legislature, allocate the moneys in the account to SEFAP and require that those moneys be used for the purchase, storage, and transportation of food grown or produced in California and for the department’s administrative costs.

end insert begin insert

This bill would rename the State Emergency Food Assistance Program (SEFAP) as the CalFood Program and would rename the State Emergency Food Assistance Program Account as the CalFood Account. The bill would make other conforming changes in this regard.

end insert

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

SECTION 1.  

Section 17053.88 of the Revenue and Taxation
Code is amended to read:

17053.88.  

(a) In the case of a qualified taxpayer begin delete who end delete begin insert that end insert
donates begin delete fresh fruits or fresh vegetables end delete to a food bank begin insert any qualified
donation items that are accepted by that food bank end insert located in
California under Chapter 5 (commencing with Section 58501) of
Part 1 of Division 21 of the Food and Agricultural Code, for taxable
years beginning on or after January 1, 2012, and before January
1, begin delete 2017, end delete begin insert 2024, end insert there shall be allowed, without regard to the
taxpayer’s method of accounting, as a credit against the “net tax”
(as defined by Section 17039), an amount equal to begin delete 10 percent of
the cost that would otherwise be included in inventory costs under
Section 263A of the Internal Revenue Code, or that would be
required to be included in inventory costs under Section 263A of
the Internal Revenue Code, but for the exception for farming
businesses contained in Section 263A(d) of the Internal Revenue
Code, with respect to those fresh fruits or fresh vegetables. end delete begin insert 20
percent of the qualified value of the qualified donation items, but
in no event shall this amount be less than the amount that would
otherwise be available under this section as added by Chapter 503
of the Statutes of 2011. end insert

(b) For purposes of this section, begin delete “qualified end delete begin insert the following
definitions shall apply: end insert

begin insert

(1) “Qualified donation item” means fresh fruits or fresh
vegetables and the following raw or processed agricultural
products:

end insert begin insert

(A) All of the following:

end insert begin insert

(i) “Fruits, nuts, or vegetables” as defined in Section 42510 of
the Food and Agricultural Code.

end insert begin insert

(ii) “Meat food product” as defined in Section 18665 of the
Food and Agricultural Code.

end insert begin insert

(iii) “Poultry” as defined in Section 18675 of the Food and
Agricultural Code.

end insert begin insert

(iv) “Eggs” as defined in Section 75027 of the Food and
Agricultural Code.

end insert begin insert

(v) “Fish” as defined in Section 58609 of the Food and
Agricultural Code.

end insert begin insert

(B) All of the following food as defined in Section 109935 of
the Health and Safety Code:

end insert begin insert

(i) Rice.

end insert begin insert

(ii) Beans.

end insert begin insert

(iii) Fruit, nuts, and vegetables in canned, frozen, dried,
dehydrated, and 100 percent juice forms.

end insert begin insert

(iv) Cheese, milk (cow or goat), yogurt, butter, dehydrated milk,
and infant formula from licensed sources.

end insert begin insert

(v) Vegetable oil and olive oil.

end insert begin insert

(vi) Shelf stable ready-to-eat products, limited to soup, pasta
sauce, ketchup, salsa, and salad dressings.

end insert begin insert

(vii) Bread, pasta, or cereal.

end insert begin insert

(viii) Canned meats and canned seafood.

end insert

begin insert (2) end insert begin insert   end insert begin insert “Qualified end insert taxpayer” means the person responsible for
planting a crop, managing the crop, begin delete and end delete harvesting the crop from
land begin insert , growing or raising a qualified donation item, or harvesting,
packing, or processing a qualified donation item end insert .

begin insert

(3) “Qualified value” means either of the following:

end insert begin insert

(A) The qualified value shall be calculated by using the weighted
average wholesale sale price based on the qualified taxpayer’s
total wholesale sales of the donated item sold within the calendar
month of the qualified taxpayer’s donation.

end insert begin insert

(B) If no wholesale sales of the donated item have occurred in
the calendar month of the qualified taxpayer’s donation, the
qualified value shall be equal to the nearest regional wholesale
market price for the calendar month of the donation based upon
the same grade products as published by the United States
Department of Agriculture’s Agricultural Marketing Service, or
its successor. This subparagraph does not apply if the United
States Department of Agriculture’s Agricultural Marketing Service
or its successor requires payment for use of their services.

end insert

(c) If the credit allowed by this section is claimed by the
qualified taxpayer, any deduction otherwise allowed under this
part for that amount of the cost paid or incurred by the qualified
taxpayer that is eligible for the credit shall be reduced by the
amount of the credit provided in subdivision (a).

(d) The donor shall provide to the begin delete nonprofit organization end delete begin insert food
bank end insert the begin delete estimated end delete begin insert qualified end insert value of the begin delete donated fresh fruits or
fresh vegetables end delete begin insert donation items end insert and information regarding the
origin of where the begin delete donated fruits or vegetables were end delete begin insert donation
items were end insert grown, begin delete and upon end delete begin insert processed, or both grown and
processed. Upon end insert receipt begin insert and acceptance end insert of the begin delete donated fresh fruits
or fresh vegetables, the nonprofit organization end delete begin insert donation items, the
food bank end insert shall provide a certificate to the donor. The certificate
shall contain a statement signed and dated by a person authorized
by begin delete that organization that the product is donated end delete begin insert the food bank that
the donation items are accepted end insert under Chapter 5 (commencing
with Section 58501) of Part 1 of Division 21 of the Food and
Agricultural Code. The certificate shall also contain the type begin insert , grade, end insert
and quantity of begin delete product end delete begin insert items end insert donated, the name of begin insert the end insert donor or
donors, the name and address of the begin delete donee nonprofit organization, end delete
begin insert food bank, end insert and, as provided by the donor, begin delete the estimated value of
the donated fresh fruits or fresh vegetables and its origins. end delete begin insert the
origin of the donated items, and the qualified value of the donated
items, as described in subdivision (a). end insert Upon the request of the
Franchise Tax Board, the qualified taxpayer shall provide a copy
of the certification to the Franchise Tax Board.

(e) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and for the six succeeding years if
necessary, until the credit has been exhausted.

(f) Using the information available to the Franchise Tax Board
from the certificates required under subdivision (d) and subdivision
(d) of Section 23688, the Franchise Tax Board shall report to the
Legislature on or before December 1, 2014, and each December
1 thereafter until the inoperative date specified in begin insert paragraph (2)
of end insert subdivision (g), regarding the utilization of the credit authorized
by this section and Section begin delete 23688.The end delete begin insert 23688. The end insert Franchise Tax
Board shall also include in the report the estimated value of the
begin delete fresh fruits and fresh vegetables donated, the county in which the
products originated, end delete begin insert qualified donation items, the origin of the
qualified donation items, end insert and the month the donation was made.

(g) (1) A report required to be submitted pursuant to subdivision
(f) shall be submitted in compliance with Section 9795 of the
Government Code.

(2) The requirement for submitting a report imposed under
subdivision (f) is inoperative on January 1, begin delete 2016, end delete begin insert 2023, end insert pursuant
to Section 10231.5 of the Government Code.

(h) This section shall remain in effect only until December 1,
begin delete 2017, end delete begin insert 2024, end insert and as of that date is repealed.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 23688 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

23688.  

(a) In the case of a qualified taxpayer begin delete who end delete begin insert that end insert donates
begin delete fresh fruits or fresh vegetables end delete to a food bank begin insert any qualified
donation items that are accepted by that food bank end insert located in
California under Chapter 5 (commencing with Section 58501) of
Part 1 of Division 21 of the Food and Agricultural Code, for taxable
years beginning on or after January 1, 2012, and before January
1, begin delete 2017, end delete begin insert 2024, end insert there shall be allowed, without regard to the
taxpayer’s method of accounting, as a credit against the “tax” (as
defined by Section 23036), an amount equal to begin delete 10 percent of the
cost that would otherwise be included in inventory costs under
Section 263A of the Internal Revenue Code, or that would be
required to be included in inventory costs under Section 263A of
the Internal Revenue Code, but for the exception for farming
businesses contained in Section 263A(d) of the Internal Revenue
Code, with respect to those fresh fruits or fresh vegetables. end delete begin insert 20
percent of the qualified value of the qualified donation items, but
in no event shall this amount be less than the amount that would
otherwise be available under this section as added by Chapter 503
of the Statutes of 2011. end insert

(b) For purposes of this section, begin delete “qualified taxpayer” end delete begin insert the
following definitions shall apply: end insert

begin insert

(1) “Qualified donation item” means fresh fruits or fresh
vegetables and the following raw or processed agricultural
products:

end insert begin insert

(A) All of the following:

end insert begin insert

(i) “Fruits, nuts, or vegetables” as defined in Section 42510 of
the Food and Agricultural Code.

end insert begin insert

(ii) “Meat food product” as defined in Section 18665 of the
Food and Agricultural Code.

end insert begin insert

(iii) “Poultry” as defined in Section 18675 of the Food and
Agricultural Code.

end insert begin insert

(iv) “Eggs” as defined in Section 75027 of the Food and
Agricultural Code.

end insert begin insert

(v) “Fish” as defined in Section 58609 of the Food and
Agricultural Code.

end insert begin insert

(B) All of the following food as defined in Section 109935 of
the Health and Safety Code:

end insert begin insert

(i) Rice.

end insert begin insert

(ii) Beans.

end insert begin insert

(iii) Fruit, nuts, and vegetables in canned, frozen, dried,
dehydrated, and 100 percent juice forms.

end insert begin insert

(iv) Cheese, milk (cow or goat), yogurt, butter, dehydrated milk,
and infant formula from licensed sources.

end insert begin insert

(v) Vegetable oil and olive oil.

end insert begin insert

(vi) Shelf stable ready-to-eat products, limited to soup, pasta
sauce, ketchup, salsa, and salad dressings.

end insert begin insert

(vii) Bread, pasta, or cereal.

end insert begin insert

(viii) Canned meats and canned seafood.

end insert

begin insert (2) end insert begin insert   end insert begin insert “Qualified taxpayer” end insert means the person responsible for
planting a crop, managing the crop, begin delete and end delete harvesting the crop from
begin delete land. end delete begin insert land, growing or raising a qualified donation item, or
harvesting, packing, or processing a qualified donation item. end insert

begin insert

(3) “Qualified value” means either of the following:

end insert begin insert

(A) The qualified value shall be calculated by using the weighted
average wholesale sale price based on the qualified taxpayer’s
total wholesale sales of the donated item sold within the calendar
month of the qualified taxpayer’s donation.

end insert begin insert

(B) If no wholesale sales of the donated item have occurred in
the calendar month of the qualified taxpayer’s donation, the
qualified value shall be equal to the nearest regional wholesale
market price for the calendar month of the donation based upon
the same grade products as published by the United States
Department of Agriculture’s Agricultural Marketing Service, or
its successor. This subparagraph does not apply if the United
States Department of Agriculture’s Agricultural Marketing Service
or its successor requires payment for use of their services.

end insert

(c) If the credit allowed by this section is claimed by the
qualified taxpayer, any deduction otherwise allowed under this
part for that amount of the cost paid or incurred by the qualified
taxpayer that is eligible for the credit shall be reduced by the
amount of the credit provided in subdivision (a).

(d) The donor shall provide to the begin delete nonprofit organization end delete begin insert food
bank end insert the begin delete estimated end delete begin insert qualified end insert value of the begin delete donated fresh fruits or
fresh vegetables end delete begin insert donation items end insert and information regarding the
origin of where the begin delete donated fruits or vegetables end delete begin insert donation items end insert
were grown, begin delete and upon end delete begin insert processed, or both grown and processed.
Upon end insert receipt begin insert and acceptance end insert of the begin delete donated fresh fruits or fresh
vegetables, the nonprofit organization end delete begin insert donation items, the food
bank end insert shall provide a certificate to the donor. The certificate shall
contain a statement signed and dated by a person authorized by
begin delete that organization that the product is donated end delete begin insert the food bank that the
donation items are accepted end insert under Chapter 5 (commencing with
Section 58501) of Part 1 of Division 21 of the Food and
Agricultural Code. The certificate shall also contain the type begin insert , grade, end insert
and quantity of begin delete product end delete begin insert items end insert donated, the name of begin insert the end insert donor or
donors, the name and address of the begin delete donee nonprofit organization, end delete
begin insert food bank, end insert and, as provided by the donor, begin delete the estimated value of
the donated fresh fruits or fresh vegetables and its origins. end delete begin insert the
origin of the donated items, and the qualified value of the donated
items, as described in subdivision (a). end insert Upon the request of the
Franchise Tax Board, the qualified taxpayer shall provide a copy
of the certification to the Franchise Tax Board.

(e) In the case where the credit allowed by this section exceeds
the “tax,” the excess may be carried over to reduce the “tax” in
the following year, and for the six succeeding years if necessary,
until the credit has been exhausted.

(f) This section shall remain in effect only until December 1,
begin delete 2017, end delete begin insert 2024, end insert and as of that date is repealed.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert The heading of Chapter 14.5 (commencing with Section
18995) of Part 6 of Division 9 of the end insert begin insert Welfare and Institutions Code end insert
begin insert is amended to read: end insert

 

Chapter  14.5. The begin delete State Emergency Food Assistance end delete
begin insert CalFood end insert  Program

 

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 18995 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

18995.  

(a) On and after January 1, begin delete 2012, the State Department
of Social Services shall establish and administer end delete begin insert 2016, end insert the State
Emergency Food Assistance Program begin delete (SEFAP). end delete begin insert (SEFAP),
administered by the State Department of Social Services, shall be
renamed as the “CalFood Program.” end insert The begin delete SEFAP end delete begin insert CalFood
Program end insert shall provide food and funding for the provision of
emergency food to food banks established pursuant to the federal
Emergency Food Assistance Program (7 C.F.R. Parts 250 and 251)
whose ongoing primary function is to facilitate the distribution of
food to low-income households.

(b) The begin delete State Emergency Food Assistance Program end delete begin insert CalFood end insert
Account is hereby established in the Emergency Food Assistance
Program Fund established pursuant to Section 18852 of the
Revenue and Taxation Code, and may receive federal funds and
voluntary donations or contributions.

(c) Notwithstanding Section 18853 of the Revenue and Taxation
Code, the following shall apply:

(1) All moneys received by the begin delete State Emergency Food
Assistance Program end delete begin insert CalFood end insert Account shall, upon appropriation
by the Legislature, be allocated to the State Department of Social
Services for allocation to the begin delete SEFAP end delete begin insert CalFood Program end insert and, with
the exception of those contributions made pursuant to Section
18851 of the Revenue and Taxation Code and funds received
through Parts 250 and 251 of Title 7 of the Code of Federal
Regulations, shall be used for the purchase, storage, and
transportation of food grown or produced in California. Storage
and transportation expenditures shall not exceed 10 percent of the
begin delete SEFAP end delete begin insert CalFood Program end insert fund’s annual budget.

(2) Notwithstanding paragraph (1), funds received by the begin delete State
Emergency Food Assistance Program end delete begin insert CalFood end insert Account shall,
upon appropriation by the Legislature, be allocated to the State
Department of Social Services for allocation to the begin delete SEFAP end delete
begin insert CalFood Program end insert as described in paragraph (1), and shall, in part,
be used to pay for the department’s administrative costs associated
with the administration of the begin delete SEFAP. end delete begin insert CalFood Program. end insert