Amended in Assembly April 7, 2016

Amended in Assembly March 8, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1847


Introduced by Assembly Member Mark Stone

(Coauthors: Assembly Members Dodd, McCarty, and Mullin)

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 amended, 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.

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.

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

26(e) It is the intent of this act to offer the most cost-effective
27assistance to eligible taxpayers through the following:

28(1) Notices provided by their employers.

29(2) Notices provided by state departments and agencies that
30serve those who may qualify for the EITC.

P3    1(3) By taking steps to ensure that eligible Californians claim
2both the federal and state EITC.

3

SEC. 2.  

Section 19852 of the Revenue and Taxation Code is
4amended to read:

5

19852.  

For purposes of this part, the following terms have the
6following meanings:

7(a) “Employer” means any California employer who is subject
8to, and is required to provide, unemployment insurance to his or
9her employees, under the Unemployment Insurance Code.

10(b) “Employee” means any person who is covered by
11unemployment insurance by his or her employer, pursuant to the
12Unemployment Insurance Code.

13(c) “Federal EITC” means the federal earned income tax credit,
14as defined in Section 32 of the Internal Revenue Code.

15(d) “California EITC” means the California earned income tax
16credit, as defined in Section 17052 of the Revenue and Taxation
17Code.

18(e) “State departments and agencies that serve those who may
19qualify for the federal EITC and the California EITC” means the
20following programs in the specified departments and agencies:

21(1) The State Department of Education: free or reduced-price
22meal program and National School Lunch Program.

23(2) Employment Development Department: California
24Unemployment Insurance.

25(3) State Department of Health Care Services: the Medi-Cal
26program.

27(f) The amendments made to this section by the act adding this
28subdivision shall apply to notices required pursuant to Section
2919853 furnished on or after the effective date of that act.

30

SEC. 3.  

Section 19853 of the Revenue and Taxation Code is
31amended to read:

32

19853.  

(a) An employer shall notify all employees that they
33may be eligible for the federal and the California EITC within one
34week before or after, or at the same time, that the employer
35provides an annual wage summary, including, but not limited to,
36a Form W-2 or a Form 1099, to any employee.

37(b) The state departments and agencies that serve those who
38may qualify for the federal and the California EITC, as defined in
39subdivision (e) of Section 19852, shall notify their program
40recipients that they may be eligible for the federal and the
P4    1California EITC, at least once a year during the months of January
2through April, or alternatively, shall provide this annual notification
3during a regularly scheduled contact with a recipient by telephone,
4mail, or electronic communication, or by an in-person
5communication. State departments or agencies that do not directly
6communicate with persons or households with persons who may
7qualify for the federal and the California EITC may communicate
8indirectly through agencies, districts, or regulated entities that
9serve eligible persons or households with eligible persons.
10Departments, agencies, and programs are encouraged to develop
11the most effective method to provide notice to recipients of federal
12and California EITC eligibility, as long as the notice contains
13substantially the same language as the notice described in Section
1419854.

15(c) The employer shall provide the notification required by
16subdivision (a) by handing directly to the employee or mailing to
17the employee’s last known address either of the following:

18(1) Instructions on how to obtain any notices available from the
19Internal Revenue Service and the Franchise Tax Board for this
20purpose, including, but not limited to, the IRS Notice 797 and
21information on the California EITC at the Web site
22www.ftb.ca.gov.

23(2) Any notice created by the employer, as long as it contains
24substantially the same language as the notice described in
25paragraph (1) or in Section 19854.

26(d) The employer shall not satisfy the notification required by
27subdivision (a) by posting a notice on an employee bulletin board
28or sending it through office mail. However, these methods of
29notification are encouraged to help inform all employees of the
30 federal and the California EITC.

31(e) The amendments made to this section by the act adding this
32subdivision shall apply to notices furnished on or after the effective
33date of that act.

34

SEC. 4.  

Section 19854 of the Revenue and Taxation Code is
35amended to read:

36

19854.  

(a) The notice furnished to employees regarding the
37availability of the federal and the California EITC shall state as
38follows:


39
P5    1BASED ON YOUR ANNUAL EARNINGS, YOU MAY
2BE ELIGIBLE TO RECEIVE THE EARNED INCOME TAX
3CREDIT FROM THE FEDERAL GOVERNMENT
4 (FEDERAL EITC). THE FEDERAL EITC IS A
5REFUNDABLE FEDERAL INCOME TAX CREDIT FOR
6LOW-INCOME WORKING INDIVIDUALS AND
7FAMILIES. THE FEDERAL EITC HAS NO EFFECT ON
8CERTAIN WELFARE BENEFITS. IN MOST CASES,
9 FEDERAL EITC PAYMENTS WILL NOT BE USED TO
10DETERMINE ELIGIBILITY FOR MEDICAID,
11SUPPLEMENTAL SECURITY INCOME, FOOD STAMPS,
12LOW-INCOME HOUSING, OR MOST TEMPORARY
13ASSISTANCE FOR NEEDY FAMILIES PAYMENTS.
14EVEN IF YOU DO NOT OWE FEDERAL TAXES, YOU
15MUST FILE A FEDERAL TAX RETURN TO RECEIVE
16THE FEDERAL EITC. BE SURE TO FILL OUT THE
17 FEDERAL EITC FORM IN THE FEDERAL INCOME TAX
18RETURN BOOKLET. FOR INFORMATION REGARDING
19YOUR ELIGIBILITY TO RECEIVE THE FEDERAL EITC,
20INCLUDING INFORMATION ON HOW TO OBTAIN THE
21IRS NOTICE 797 OR ANY OTHER NECESSARY FORMS
22AND INSTRUCTIONS, CONTACT THE INTERNAL
23REVENUE SERVICE BY CALLING 1-800-829-3676 OR
24THROUGH ITS WEB SITE AT WWW.IRS.GOV.

25YOU ALSO MAY BE ELIGIBLE TO RECEIVE THE
26CALIFORNIA EARNED INCOME TAX CREDIT
27(CALIFORNIA EITC) STARTING WITH THE CALENDAR
28YEAR 2015 TAX YEAR. THE CALIFORNIA EITC IS A
29REFUNDABLE STATE INCOME TAX CREDIT FOR
30LOW-INCOME WORKING INDIVIDUALS AND FAMILIES.
31THE CALIFORNIA EITC IS TREATED IN THE SAME
32MANNER AS THE FEDERAL EITC AND GENERALLY WILL
33NOT BE USED TO DETERMINE ELIGIBILITY FOR
34WELFARE BENEFITS UNDER CALIFORNIA LAW. TO
35CLAIM THE CALIFORNIA EITC, EVEN IF YOU DO NOT
36OWE CALIFORNIA TAXES, YOU MUST FILE A
37CALIFORNIA INCOME TAX RETURN AND COMPLETE
38AND ATTACH THE CALIFORNIA EITC FORM (FTB 3514).
39FOR INFORMATION ON THEbegin delete ELIGIBILITYend deletebegin insert AVAILABILITYend insert
40 OF THE CREDIT, ELIGIBILITY REQUIREMENTS, AND HOW
P6    1TO OBTAIN THE NECESSARY CALIFORNIA FORMS AND
2GET HELP FILING, CONTACT THE FRANCHISE TAX
3BOARD AT 1-800-852-5711 OR THROUGH ITS WEB SITE
4AT WWW.FTB.CA.GOV.

5(b) The amendments made to this section by the act adding this
6subdivision shall apply to notices furnished on or after the effective
7date of that act.

8



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