Amended in Assembly April 27, 2016

Amended in Assembly March 9, 2016

Amended in Assembly February 3, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1577


Introduced by Assembly Member Eggman

(Coauthors: Assembly Members Baker, Brough, Chávez, Dodd, Gallagher, Cristina Garcia, Eduardo Garcia, Kim, Lackey, Maienschein, Mathis, Olsen, Patterson, Salas, Steinorth, and Wilk)

(Coauthors: Senators Berryhill, Cannella, Galgiani, and Wieckowski)

January 4, 2016


An act to amend Sections 17053.88 and 23688 of the Revenue and Taxation Code, 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, relating to food banks.

LEGISLATIVE COUNSEL’S DIGEST

AB 1577, as amended, Eggman. Income taxes: credits: food bank donations.

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

This bill, under both laws, would expand the credit to apply to the donation of qualified donation items, defined as raw agricultural products or processed foods. The bill would expand the definition ofbegin insert aend insert qualified taxpayer to also includebegin delete theend deletebegin insert aend insert person responsible for growing or raising a qualified donation item, or harvesting, packing, or processing a qualified donation item.begin delete The bill would modify the credit amount to instead equal 15% of the qualified value, as defined, of the qualified donation items, but not less than an amount that would otherwise be calculated and allowed under existing law.end delete The bill would extend the operation of the credit to taxable years before January 1,begin delete 2022,end deletebegin insert 2019,end insert and would require it to be claimed on a timely filedbegin insert originalend insert return. The bill would make various conforming changes and would also make a nonsubstantive change to the personal income tax provision.

(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 Accountbegin delete and would,end deletebegin insert and,end insert upon appropriation by the Legislature, would 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.

This bill would rename the State Emergency Food Assistance Programbegin delete (SEFAP)end delete 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.

begin insert

(3) Existing law requires any bill authorizing a new personal or corporation income tax credit to, among other things, contain specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.

end insert
begin insert

This bill would include that additional information.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P3    1

SECTION 1.  

Section 17053.88 of the Revenue and Taxation
2Code
is amended to read:

3

17053.88.  

(a) In the case of a qualified taxpayer that donates
4to a food bank any qualified donation items that are accepted by
5that food bank located in California under Chapter 5 (commencing
6with Section 58501) of Part 1 of Division 21 of the Food and
7Agricultural Code, for taxable years beginning on or after January
81, 2012, and before January 1,begin delete 2022,end deletebegin insert 2019,end insert there shall be allowed,
9without regard to the taxpayer’s method of accounting, as a credit
10against the “net tax” (as defined by Section 17039), an amount
11equal tobegin delete 15 percent of the qualified value of the qualified donation
12items, but in no event shall this amount be less than the amount
13that otherwise would have been calculated and allowed under this
14section as added by Chapter 503 of the Statutes of 2011.end delete
begin insert 10 percent
15of the cost that would otherwise be included in inventory costs
16under Section 263A of the Internal Revenue Code, relating to
17capitalization and inclusion of inventory costs of certain expenses,
18or that would be required to be included in inventory costs under
19Section 263A of the Internal Revenue Code, but for the exception
20contained in Section 263A(d) of the Internal Revenue Code,
21relating to exception for farming businesses, with respect to those
22qualified donation items.end insert

23(b) For the purposes of this section, the following definitions
24shall apply:

25(1) “Qualified donation item” means fresh fruits or fresh
26vegetables and the following raw agricultural products or processed
27foods:

28(A) All of the following:

29(i) “Fruits, nuts, or vegetables” as defined in Section 42510 of
30the Food and Agricultural Code.

31(ii) “Meat food product” as defined in Section 18665 of the
32Food and Agricultural Code.

33(iii) “Poultry” as defined in Section 18675 of the Food and
34Agricultural Code.

35(iv) “Eggs” as defined in Section 75027 of the Food and
36Agricultural Code.

37(v) “Fish” as defined in Section 58609 of the Food and
38Agricultural Code.

P4    1(B) All of the following food as defined in Section 109935 of
2the Health and Safety Code:

3(i) Rice.

4(ii) Beans.

5(iii) Fruit, nuts, and vegetables in canned, frozen, dried,
6dehydrated, and 100-percent juice forms.

7(iv) Any cheese, milk, yogurt, butter, or dehydrated milk
8meeting the requirements in Division 15 (commencing with Section
932501) of the Food and Agricultural Code.

10(v) Infant formula subject to Section 114094.5 of the Health
11and Safety Code.

12(vi) Vegetable oil and olive oil.

13(vii) Soup, pasta sauce, and salsa.

14(viii) Bread and pasta.

15(ix) Canned meats and canned seafood.

16(2) “Qualified taxpayer” means the person responsible for
17planting a crop, managing the crop, harvesting the crop from land,
18growing or raising a qualified donation item, or harvesting,
19packing, or processing a qualified donation item.

begin delete

20(3) “Qualified value” means either of the following:

21(A) The qualified value shall be calculated by using the weighted
22average wholesale sale price based on the qualified taxpayer’s
23total like grade wholesale sales of the donated item sold within
24the calendar month of the qualified taxpayer’s donation.

25(B) If no wholesale sales of the donated item have occurred in
26the calendar month of the qualified taxpayer’s donation, the
27qualified value shall be equal to the nearest regional wholesale
28market price for the calendar month of the donation based upon
29the same grade products as published by the United States
30Department of Agriculture’s Agricultural Marketing Service, or
31its successor.

end delete

32(c) If the credit allowed by this section is claimed by the
33qualified taxpayer, any deduction otherwise allowed under this
34part for that amount of the cost paid or incurred by the qualified
35taxpayer that is eligible for the credit shall be reduced by the
36amount of the credit provided in subdivision (a).

37(d) The donor shall provide to the food bank thebegin delete qualifiedend delete
38begin insert estimatedend insert value of the donation items and information regarding
39the origin of where the donation items were grown, processed, or
40both grown and processed. Upon receipt and acceptance of the
P5    1donation items, the food bank shall provide a certificate to the
2donor. The certificate shall contain a statement signed and dated
3by a person authorized by the food bank that the donation items
4are accepted under Chapter 5 (commencing with Section 58501)
5of Part 1 of Division 21 of the Food and Agricultural Code. The
6certificate shall also contain the type, grade, and quantity of items
7donated, the name of the donor or donors, the name and address
8of the food bank, and, as provided by the donor, the origin of the
9donated items, and thebegin delete qualifiedend deletebegin insert estimatedend insert value of the donated
10items, as described in subdivision (a). Upon the request of the
11Franchise Tax Board, the qualified taxpayer shall provide a copy
12of the certification to the Franchise Tax Board.

13(e) The credit allowed by this section may be claimed only on
14a timely filedbegin insert originalend insert return.

15(f) In the case where the credit allowed by this section exceeds
16the “net tax,” the excess may be carried over to reduce the “net
17tax” in the following year, and for the six succeeding years if
18necessary, until the credit has been exhausted.

19(g) Using the information available to the Franchise Tax Board
20from the certificates required under subdivision (d) and subdivision
21(d) of Section 23688, the Franchise Tax Board shall report to the
22Legislature on or before December 1, 2014, and each December
231 thereafter until the inoperative date specified in paragraph (2)
24of subdivision (h), regarding the utilization of the credit authorized
25by this section and Section 23688. The Franchise Tax Board shall
26also include in the report the estimated value of the qualified
27donation items, the origin of the qualified donation items, and the
28month the donation was made.

29(h) (1) A report required to be submitted pursuant to subdivision
30(g) shall be submitted in compliance with Section 9795 of the
31Government Code.

32(2) The requirement for submitting a report imposed under
33subdivision (g) is inoperative on January 1,begin delete 2021,end deletebegin insert 2018,end insert pursuant
34to Section 10231.5 of the Government Code.

35(i) This sectionbegin delete shall beend deletebegin insert isend insert repealed on December 1,begin delete 2022.end deletebegin insert 2019.end insert

36

SEC. 2.  

Section 23688 of the Revenue and Taxation Code is
37amended to read:

38

23688.  

(a) In the case of a qualified taxpayer that donates to
39a food bank any qualified donation items that are accepted by that
40food bank located in California under Chapter 5 (commencing
P6    1with Section 58501) of Part 1 of Division 21 of the Food and
2Agricultural Code, for taxable years beginning on or after January
31, 2012, and before January 1,begin delete 2022,end deletebegin insert 2019,end insert there shall be allowed,
4without regard to the taxpayer’s method of accounting, as a credit
5against the “tax” (as defined by Section 23036), an amount equal
6tobegin delete 15 percent of the qualified value of the qualified donation items,
7but in no event shall this amount be less than the amount that
8otherwise would have been calculated and allowed under this
9section as added by Chapter 503 of the Statutes of 2011.end delete
begin insert 10 percent
10of the cost that would otherwise be included in inventory costs
11under Section 263A of the Internal Revenue Code, relating to
12capitalization and inclusion of inventory costs of certain expenses,
13or that would be required to be included in inventory costs under
14Section 263A of the Internal Revenue Code, but for the exception
15contained in Section 263A(d) of the Internal Revenue Code,
16relating to exceptions for farming businesses, with respect to those
17qualified donation items.end insert

18(b) For the purposes of this section, the following definitions
19shall apply:

20(1) “Qualified donation item” means fresh fruits or fresh
21vegetables and the following raw agricultural products or processed
22foods:

23(A) All of the following:

24(i) “Fruits, nuts, or vegetables” as defined in Section 42510 of
25the Food and Agricultural Code.

26(ii) “Meat food product” as defined in Section 18665 of the
27Food and Agricultural Code.

28(iii) “Poultry” as defined in Section 18675 of the Food and
29Agricultural Code.

30(iv) “Eggs” as defined in Section 75027 of the Food and
31Agricultural Code.

32(v) “Fish” as defined in Section 58609 of the Food and
33Agricultural Code.

34(B) All of the following food as defined in Section 109935 of
35the Health and Safety Code:

36(i) Rice.

37(ii) Beans.

38(iii) Fruit, nuts, and vegetables in canned, frozen, dried,
39dehydrated, and 100-percent juice forms.

P7    1(iv) Any cheese, milk, yogurt, butter, or dehydrated milk
2meeting the requirements in Division 15 (commencing with Section
332501) of the Food and Agricultural Code.

4(v) Infant formula subject to Section 114094.5 of the Health
5and Safety Code.

6(vi) Vegetable oil and olive oil.

7(vii) Soup, pasta sauce, and salsa.

8(viii) Bread and pasta.

9(ix) Canned meats and canned seafood.

10(2) “Qualified taxpayer” means the person responsible for
11planting a crop, managing the crop, harvesting the crop from land,
12growing or raising a qualified donation item, or harvesting,
13packing, or processing a qualified donation item.

begin delete

14(3) “Qualified value” means either of the following:

15(A) The qualified value shall be calculated by using the weighted
16average wholesale sale price based on the qualified taxpayer’s
17total like grade wholesale sales of the donated item sold within
18the calendar month of the qualified taxpayer’s donation.

19(B) If no wholesale sales of the donated item have occurred in
20the calendar month of the qualified taxpayer’s donation, the
21qualified value shall be equal to the nearest regional wholesale
22market price for the calendar month of the donation based upon
23the same grade products as published by the United States
24Department of Agriculture’s Agricultural Marketing Service, or
25its successor.

end delete

26(c) If the credit allowed by this section is claimed by the
27qualified taxpayer, any deduction otherwise allowed under this
28part for that amount of the cost paid or incurred by the qualified
29taxpayer that is eligible for the credit shall be reduced by the
30amount of the credit provided in subdivision (a).

31(d) The donor shall provide to the food bank thebegin delete qualifiedend delete
32begin insert estimatedend insert value of the donation items and information regarding
33the origin of where the donation items were grown, processed, or
34both grown and processed. Upon receipt and acceptance of the
35donation items, the food bank shall provide a certificate to the
36donor. The certificate shall contain a statement signed and dated
37by a person authorized by the food bank that the donation items
38are accepted under Chapter 5 (commencing with Section 58501)
39of Part 1 of Division 21 of the Food and Agricultural Code. The
40certificate shall also contain the type, grade, and quantity of items
P8    1donated, the name of the donor or donors, the name and address
2of the food bank, and, as provided by the donor, the origin of the
3donated items, and thebegin delete qualifiedend deletebegin insert estimatedend insert value of the donated
4items, as described in subdivision (a). Upon the request of the
5Franchise Tax Board, the qualified taxpayer shall provide a copy
6of the certification to the Franchise Tax Board.

7(e) The credit allowed by this section may be claimed only on
8a timely filedbegin insert originalend insert return.

9(f) In the case where the credit allowed by this section exceeds
10the “tax,” the excess may be carried over to reduce the “tax” in
11the following year, and for the six succeeding years if necessary,
12until the credit has been exhausted.

13(g) This sectionbegin delete shall beend deletebegin insert isend insert repealed on December 1,begin delete 2022.end deletebegin insert 2019.end insert

14

SEC. 3.  

The heading of Chapter 14.5 (commencing with
15Section 18995) of Part 6 of Division 9 of the Welfare and
16Institutions Code
is amended to read:

17 

18Chapter  14.5. The CalFood Program
19

 

20

SEC. 4.  

Section 18995 of the Welfare and Institutions Code is
21amended to read:

22

18995.  

(a) On and after January 1, 2017, the State Emergency
23Food Assistance Program (SEFAP), administered by the State
24Department of Social Services, shall be renamed as the “CalFood
25Program.” The CalFood Program shall provide food and funding
26for the provision of emergency food to food banks established
27pursuant to the federal Emergency Food Assistance Program (7
28C.F.R. Parts 250 and 251) whose ongoing primary function is to
29facilitate the distribution of food to low-income households.

30(b) The CalFood Account is hereby established in the
31Emergency Food Assistance Program Fund established pursuant
32to Section 18852 of the Revenue and Taxation Code, and may
33 receive federal funds and voluntary donations or contributions.

34(c) Notwithstanding Section 18853 of the Revenue and Taxation
35Code, the following shall apply:

36(1) All moneys received by the CalFood Account shall, upon
37appropriation by the Legislature, be allocated to the State
38Department of Social Services for allocation to the CalFood
39Program and, with the exception of those contributions made
40pursuant to Section 18851 of the Revenue and Taxation Code and
P9    1funds received through Parts 250 and 251 of Title 7 of the Code
2of Federal Regulations, shall be used for the purchase, storage,
3and transportation of food grown or produced in California. Storage
4and transportation expenditures shall not exceed 10 percent of the
5CalFood Program fund’s annual budget.

6(2) Notwithstanding paragraph (1), funds received by the
7CalFood Account shall, upon appropriation by the Legislature, be
8allocated to the State Department of Social Services for allocation
9to the CalFood Program as described in paragraph (1), and shall,
10in part, be used to pay for the department’s administrative costs
11associated with the administration of the CalFood Program.

12begin insert

begin insertSEC. 5.end insert  

end insert
begin insert

For the purposes of complying with Section 41 of the
13Revenue and Taxation Code, with respect to Sections 17053.88
14and 23688 of the Revenue and Taxation Code, the Legislature
15finds and declares as follows:

end insert
begin insert

16
(a) Specific goal, purpose, and objective: increase the variety
17of donated raw agricultural products or processed foods.

end insert
begin insert

18
(b) Performance indicator: types of qualified items donated.

end insert
begin insert

19
(c) Data collection requirements and baseline measurements:

end insert
begin insert

20
(1) The baseline measurements include the current types of
21donated raw agricultural products or processed foods.

end insert
begin insert

22
(2) Data to collect includes the types of raw agricultural
23products or processed foods donated after the tax credit is put in
24place.

end insert


O

    96