BILL ANALYSIS                                                                                                                                                                                                    Ó






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                                   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  








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            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  







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          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







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          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







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          NO VOTE RECORDED:  Harper

          Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
          8/15/16 20:17:22


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