California Legislature—2015–16 Regular Session

Assembly BillNo. 1847


Introduced by Assembly Member Mark Stone

February 9, 2016


An act to amend Sections 19851, 19852, 19853, and 19854 of the Revenue and Taxation Code, relating to tax administration.

LEGISLATIVE COUNSEL’S DIGEST

AB 1847, as introduced, Mark Stone. Earned Income Tax Credit Information Act: California Earned Income Tax Credit.

The Personal Income Tax Law allows various credits against the taxes imposed by that law, including certain credits that are allowed in modified conformity to credits allowed by federal income tax laws. Federal income tax laws allow a refundable earned income tax credit for certain low-income individuals who have earned income and who meet certain other requirements.

The Personal Income Tax Law, in modified conformity with federal income tax laws, allows an earned income credit against personal income tax, and a payment in excess of that credit amount, to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law as determined by the earned income tax credit adjustment factor as set forth in the annual Budget Act.

Existing law, the Earned Income Tax Credit Information Act, requires an employer, as defined, to notify all employees that they may be eligible for the federal earned income tax credit, as specified.

This bill would require those same employers currently required to notify employees who may be eligible for the federal earned income tax credit to also notify these employees that they may be eligible for the California Earned Income Tax Credit under the same conditions.

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 19851 of the Revenue and Taxation Code
2 is amended to read:

3

19851.  

The Legislature finds and declares as follows:

4(a) Congress created the federal earned income tax credit (EITC)
5in 1975 to offset the adverse effects of the Medicare and social
6security payroll taxes on working poor families and to encourage
7low-income workers to seek employment rather than welfare.

8(b) Due to a relatively low percentage of federal earned income
9tax credit eligible persons who participate in the federal Earned
10Income Tax Credit program, hundreds of millions of federal dollars
11go unclaimed by the working poor in California.

begin insert

12(c) In 2015, the State of California authorized a state EITC to
13amplify the poverty-reducing effects of the federal EITC for the
14poorest working Californians.

end insert
begin delete

15(c)

end delete

16begin insert(d)end insert In order to alleviate the tax burden on working poor persons
17and families, to enhance the wages and income of working poor
18persons and families, to ensure that California receives its share
19of the federal money available in the federal Earned Income Tax
20Credit program,begin insert to ensure that the poorest working Californians
21access the additional state EITC, end insert
and to inject additional federal
22money into the California economy, the state shall facilitate the
23furnishing of information to working poor persons and families
24regarding the availability of the federalbegin insert and stateend insert earned income
25tax credit so that they may claimbegin delete that creditend deletebegin insert those creditsend insert on their
26federalbegin insert and stateend insert income tax returns.

begin delete

27(d)

end delete

28begin insert(e)end insert It is the intent of this act to offer the most cost-effective
29assistance to eligible taxpayers through the following:

30(1) Notices provided by their employers.

31(2) Notices provided by state departments and agencies that
32serve those who may qualify for the EITC.

begin insert

33(3) By taking steps to ensure that eligible Californians claim
34both the federal and state EITC.

end insert
P3    1

SEC. 2.  

Section 19852 of the Revenue and Taxation Code is
2amended to read:

3

19852.  

For purposes of this part, the following terms have the
4following meanings:

5(a) “Employer” means any California employer who is subject
6to, and is required to provide, unemployment insurance to his or
7her employees, under the Unemployment Insurance Code.

8(b) “Employee” means any person who is covered by
9unemployment insurance by his or her employer, pursuant to the
10Unemployment Insurance Code.

11(c) “EITC” means the federal earned income tax credit, as
12defined in Section 32 of the Internal Revenuebegin delete Code.end deletebegin insert Code, and
13the California Earned Income Tax Credit, as defined in Section
1417052.end insert

15(d) “State departments and agencies that serve those who may
16qualify for the EITC” means the following programs in the
17specified departments and agencies:

18(1) The State Department of Education: free or reduced-price
19meal program and National School Lunch Program.

20(2) Employment Development Department: California
21Unemployment Insurance.

22(3) State Department of Health Care Services: the Medi-Cal
23program.

24(4) Managed Risk Medical Insurance Board (MRMIB): the
25Healthy Families Program.

26

SEC. 3.  

Section 19853 of the Revenue and Taxation Code is
27amended to read:

28

19853.  

(a) An employer shall notify all employees that they
29may be eligible for the EITC within one week before or after, or
30at the same time, that the employer provides an annual wage
31summary, including, but not limited to, a Form W-2 or a Form
321099, to any employee.

33(b) The state departments and agencies that serve those who
34may qualify for the EITC, as defined in subdivision (d) of Section
3519852, shall notify their program recipients that they may be
36eligible for the EITC, at least once a year during the months of
37January through April, or alternatively, shall provide this annual
38notification during a regularly scheduled contact with a recipient
39by telephone, mail, or electronic communication, or by an in-person
40communication. State departments or agencies that do not directly
P4    1communicate with persons or households with persons who may
2qualify for the EITC may communicate indirectly through agencies,
3districts, or regulated entities that serve eligible persons or
4households with eligible persons. Departments, agencies, and
5programs are encouraged to develop the most effective method to
6provide notice to recipients of EITC eligibility, as long as the notice
7contains substantially the same language as the notice described
8in Section 19854.

9(c) The employer shall provide the notification required by
10subdivision (a) by handing directly to the employee or mailing to
11the employee’s last known address either of the following:

12(1) Instructions on how to obtain any notices available from the
13Internal Revenue Servicebegin insert or the Franchise Tax Boardend insert for this
14purpose, including, but not limited to, the IRS Notice 797 and
15Form W-5,begin insert California Form 3514,end insert or any successor notice or form.

16(2) Any notice created by the employer, as long as it contains
17substantially the same language as the notice described in
18paragraph (1) or in Section 19854.

19(d) The employer shall not satisfy the notification required by
20subdivision (a) by posting a notice on an employee bulletin board
21or sending it through office mail. However, these methods of
22notification are encouraged to help inform all employees of the
23EITC.

24(e) Every employer shall process, in accordance with federal
25law, Form W-5 for advance payments of the EITC,begin insert and California
26Form 3514,end insert
upon the request of the employee.

27

SEC. 4.  

Section 19854 of the Revenue and Taxation Code is
28amended to read:

29

19854.  

The notice furnished to employees regarding the
30availability of the EITC shall state as follows:


31
32BASED ON YOUR ANNUAL EARNINGS, YOU MAY
33BE ELIGIBLE TO RECEIVE THE EARNED INCOME TAX
34CREDIT FROM THE FEDERALbegin delete GOVERNMENT.end delete
35begin insert GOVERNMENT OR THE STATE OF CALIFORNIA.end insert THE
36EARNED INCOME TAX CREDIT IS A REFUNDABLE
37begin delete FEDERALend delete INCOME TAX CREDIT FOR LOW-INCOME
38WORKING INDIVIDUALS AND FAMILIES. THE
39EARNED INCOME TAX CREDIT HAS NO EFFECT ON
40CERTAIN WELFARE BENEFITS. IN MOST CASES,
P5    1EARNED INCOME TAX CREDIT PAYMENTS WILL NOT
2BE USED TO DETERMINE ELIGIBILITY FOR
3MEDICAID, SUPPLEMENTAL SECURITY INCOME,
4FOOD STAMPS, LOW-INCOME HOUSING OR MOST
5TEMPORARY ASSISTANCE FOR NEEDY FAMILIES
6PAYMENTS. EVEN IF YOU DO NOT OWE FEDERAL
7begin delete TAXES,end deletebegin insert OR STATE TAXES,end insert YOU MUST FILE A TAX
8RETURN TO RECEIVE THE EARNED INCOME TAX
9CREDIT. BE SURE TO FILL OUT THE EARNED INCOME
10TAX CREDIT FORM IN THE FEDERAL INCOME TAX
11RETURNbegin delete BOOKLET.end deletebegin insert BOOKLET AND ANY RELATED
12STATE FORMS.end insert
FOR INFORMATION REGARDING YOUR
13ELIGIBILITY TO RECEIVE THEbegin insert FEDERALend insert EARNED
14INCOME TAX CREDIT, INCLUDING INFORMATION
15ON HOW TO OBTAIN THE IRS NOTICE 797 OR FORM
16W-5, OR ANY OTHER NECESSARYbegin insert FEDERALend insert FORMS
17AND INSTRUCTIONS, CONTACT THE INTERNAL
18REVENUE SERVICE BY CALLING 1-800-829-3676 OR
19THROUGH ITS WEB SITE AT WWW.IRS.GOV.begin insert FOR
20MORE INFORMATION REGARDING YOUR ELIGIBILITY
21FOR THE CALIFORNIA EARNED INCOME TAX CREDIT,
22INCLUDING INFORMATION ON HOW TO OBTAIN
23CALIFORNIA FORM 3514 CONTACT THE FRANCHISE
24TAX BOARD THROUGH ITS INTERNET WEB SITE AT
25WWW.FTB.CA.GOV. end insert

26



O

    99