BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1847|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1847
Author: Mark Stone (D), et al.
Amended: 4/7/16 in Assembly
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 5-0, 6/22/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Pavley
NO VOTE RECORDED: Lara, Moorlach
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
ASSEMBLY FLOOR: 79-0, 5/31/16 - See last page for vote
SUBJECT: Earned Income Tax Credit Information Act:
California Earned Income Tax Credit
SOURCE: Author
DIGEST: This bill expands the current employee notification
requirement relating to the federal Earned Income Tax Credit
(EITC) to include a reference to the California EITC.
ANALYSIS:
Existing law:
1)Allows a federal and state refundable EITC to certain eligible
AB 1847
Page 2
individuals. A refundable credit allows for the excess of the
credit over the taxpayer's tax liability to be refunded to the
taxpayer. The EITC amount is based on a percentage of the
taxpayer's earned income and is phased out as income
increases. The percentage varies depending on whether the
taxpayer has qualifying children.
2)Requires California employers, state departments, and certain
state agencies to provide formal notification of possible
eligibility for the federal EITC.
This bill:
1)Expands the current employee notification requirement relating
to the federal EITC to include a reference to the California
EITC.
2)Provides that the amended EITC notification provisions will
apply to notices furnished on or after January 1, 2017.
Background
Both federal and state laws require employers to notify all
employees that they may be eligible for the federal EITC. Under
federal law, an employer must provide an employee with Form W-2,
a substitute of W-2, Notice 797, or a written statement with the
same wording as Notice 797. Under California's law - the Earned
Income Tax Credit Information Act (EITC Act) - an employer must
also notify employees about the federal EITC within one week
before or after the employer provides the employees with their
annual wage summary (e.g., a Form W-2 or a Form 1099).
Employers must either hand the notice directly to each employee
or mail it to the employee's last known address. Furthermore,
all California employers must post a statement about the EITC in
the workplace. In addition, state law requires certain
specified state departments, agencies and programs serving
individuals who may qualify for the federal EITC to notify these
individuals of the availability of this credit and the ways to
AB 1847
Page 3
claim it. The law encourages departments, agencies, and
programs to develop the least costly, as well as the most
effective, methods to provide notice.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
This bill will result in an annual General Fund revenue loss
of unknown magnitude, likely in excess of $50,000.
The Franchise Tax Board would incur minor and absorbable costs
to update guidance related to notifying employees of the
California EITC.
SUPPORT: (Verified8/12/16)
Abrazar, Inc.
California Asset Building Association
California Association of Public Authorities
California Catholic Conference
California Family Resource Association
California Tax Reform Association
California Welfare Directors Association
Children's Defense Fund
Common Sense Kids Action
County Welfare Directors Association of California
First 5 Association of California
Good Hands Foundation
Inland Empire United Way
National Association of Social Workers, California Chapter
AB 1847
Page 4
Small Business California
United Ways of California
United Ways of the Bay Area, Fresno and Madera Counties,
Monterey County, Orange County, San Diego County, and
Stanislaus County
OPPOSITION: (Verified8/12/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "AB 1847
builds upon the 2015 creation of the statewide California Earned
Income Tax Credit (EITC), which provides a new tax credit to the
state's poorest working families. The creation of the
California EITC represents a necessary step to reduce the
poverty rate of working families and improve the economic
outlook on the state's impoverished communities. However, the
only way that families can benefit from these credits is by
filing for taxes, even though most families for the state EITC
are not required to file. This simple measure requires
employers to notify their employees of possible eligibility for
the State EITC in order to increase the number of families who
file taxes and receive benefits, just as employers are already
required to notify their employees about possible eligibility
for the federal EITC."
ASSEMBLY FLOOR: 79-0, 5/31/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
AB 1847
Page 5
NO VOTE RECORDED: Harper
Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
8/15/16 20:17:22
**** END ****