Amended in Assembly May 12, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2582

Introduced by Assembly Member Maienschein

February 19, 2016

An act to add begin insert and repeal end insert Sections 17053.75 and 23675 begin delete to end delete begin insert of end insert the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2582, as amended, Maienschein. Income taxes: credit: employees with disabilities.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill, for taxable years beginning on and after January 1, 2017, begin insert and before January 1, 2022, end insert would allow a credit under those laws to an employer who pays a qualified employee a wage equal to or exceeding the state minimum wage during the taxable year, as provided. The bill would define a qualified employee as an individual with a disability who may be paid a special minimum wage under existing state or federal law. The credit would be allowed in an amount equal to the difference between the special minimum wage and the state minimum wage, multiplied by the hours worked by the qualified employee. begin insert The bill would require the Franchise Tax Board to submit a report containing specified data relating to these credits to the Legislature by June 1, 2022. end insert

This bill would take effect immediately as a tax levy.

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

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

SECTION 1.  

Section 17053.75 is added to the Revenue and
Taxation Code, to read:

17053.75.  

(a) For taxable years beginning on or after January
1, 2017, begin insert and before January 1, 2022, end insert there shall be allowed a credit
against the “net tax,” as defined by Section 17039, to a qualified
employer who pays a qualified employee a wage that equals or
exceeds the state minimum wage during the taxable year.

(b) The credit shall be in an amount that is equal to the
difference between the special minimum wage that may be paid
to the qualified employee and the state minimum wage, multiplied
by the number of hours worked by the qualified employee for the
qualified employer during the taxable year.

(c) For purposes of this section, the following definitions shall
apply:

(1) “Minimum wage” means the wage established by the
Industrial Welfare Commission as provided for in Chapter 1
(commencing with Section 1171) of Part 4 of Division 2 of the
Labor Code.

(2) “Qualified employee” means an individual who may be paid
a special minimum wage pursuant to Section 214(c) of Title 29 of
the United States Code or Section 1191 or 1191.5 of the Labor

begin delete Code. end delete begin insert Code that is subject to withholding pursuant to Division 6
(commencing with Section 13000) of the Unemployment Insurance
Code. end insert

(3) (A) “Qualified employer” means a taxpayer that employs
a qualified employee in this state.

(B) In the case of any pass-thru entity, the determination of
whether a taxpayer is a qualified employer under this section shall
be made at the entity level, and any credit under this section or
Section 23675 shall be allowed to the pass-thru entity and passed
through to the partners or shareholders in accordance with
applicable provisions of this part or Part 11 (commencing with
Section 23001). For purposes of this section, the term “pass-thru
entity” means any partnership or “S” Corporation.

(d) A qualified employer shall do both of the following:

(1) Obtain from the Industrial Welfare Commission a
certification that a qualified employee meets the eligibility
requirements of paragraph (2) of subdivision (c). The certification
shall include the dollar amount of special minimum wage
applicable to each qualified employee.

(2) Retain the certification and provide a copy of it upon request
to the Franchise Tax Board.

(e) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes
of this section. Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code does not
apply to any standard, criterion, procedure, determination, rule,
notice, or guideline established or issued by the Franchise Tax
Board pursuant to this section.

begin insert

(f) In the case where any credit allowed by this section exceeds
the net “tax,” the excess may be carried over to reduce the “net
tax” in the following year, and succeeding years if necessary, until
this section is repealed.

end insert begin insert

(g) On or before June 1, 2022, the Franchise Tax Board shall
submit a report to the Legislature in compliance with Section 9795
of the Government Code that contains the following:

end insert begin insert

(1) The number of Californians with developmental disabilities
employed during each year of the operative period of this section
and Section 23675.

end insert begin insert

(2) The number of employers who used and applied for a credit
authorized by this section and Section 23675 each year.

end insert begin insert

(3) The number of employees for whom a credit authorized by
this section and Section 23675 was claimed.

end insert begin insert

(h) This section shall remain in effect only until December 1,
2022, and as of that date is repealed.

end insert

SEC. 2.  

Section 23675 is added to the Revenue and Taxation
Code, to read:

23675.  

(a) For taxable years beginning on or after January 1,
2017, begin insert and before January 1, 2022, end insert there shall be allowed a credit
against the “tax,” as defined by Section 23036, to a qualified
employer who pays a qualified employee a wage that equals or
exceeds the state minimum wage during the taxable year.

(b) The credit shall be in an amount that is equal to the
difference between the special minimum wage that may be paid
to the qualified employee and the state minimum wage, multiplied
by the number of hours worked by the qualified employee for the
qualified employer during the taxable year.

(c) For purposes of this section, the following definitions shall
apply:

(1) “Minimum wage” means the wage established by the
Industrial Welfare Commission as provided for in Chapter 1
(commencing with Section 1171) of Part 4 of Division 2 of the
Labor Code.

(2) “Qualified employee” means an individual who may be paid
a special minimum wage pursuant to Section 214(c) of Title 29 of
the United States Code or Section 1191 or 1191.5 of the Labor

begin delete Code. end delete begin insert Code that is subject to withholding pursuant to Division 6
(commencing with Section 13000) of the Unemployment Insurance
Code. end insert

(3) (A) “Qualified employer” means a taxpayer that employs
a qualified employee in this state.

(B) In the case of any pass-thru entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level, and any credit under this section or
Section 17053.75 shall be allowed to the pass-thru entity and
passed through to the partners in accordance with applicable
provisions of this part or Part 10 (commencing with Section
17001). For purposes of this subparagraph, the term “pass-thru
entity” means any partnership.

(d) A qualified employer shall do both of the following:

(1) Obtain from the Industrial Welfare Commission a
certification that a qualified employee meets the eligibility
requirements of paragraph (2) of subdivision (c). The certification
shall include the dollar amount of special minimum wage
applicable to each qualified employee.

(2) Retain the certification and provide a copy of it upon request
to the Franchise Tax Board.

(e) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes
of this section. Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code does not
apply to any standard, criterion, procedure, determination, rule,
notice, or guideline established or issued by the Franchise Tax
Board pursuant to this section.

begin insert

(f) In the case where any credit allowed by this section exceeds
the “tax,” the excess may be carried over to reduce the “tax” in
the following year, and succeeding years if necessary, until this
section is repealed.

end insert begin insert

(g) On or before June 1, 2022, the Franchise Tax Board shall
submit a report to the Legislature in compliance with Section 9795
of the Government Code that contains the following:

end insert begin insert

(1) The number of Californians with developmental disabilities
employed during each year of the operative period of this section
and Section 17053.75.

end insert begin insert

(2) The number of employers who used and applied for a credit
authorized by this section and Section 17053.75 each year.

end insert begin insert

(3) The number of employees for whom a credit authorized by
this section and Section 17053.75 was claimed.

end insert begin insert

(h) This section shall remain in effect only until December 1,
2022, and as of that date is repealed.

end insert

SEC. 3.  

It is the intent of the Legislature to enact legislation
to comply with the requirements of Section begin delete 41. end delete begin insert 41 of the Revenue
and Taxation Code. end insert

SEC. 4.  

This act provides for a tax levy within the meaning of
Article IV of the begin insert California end insert Constitution and shall go into
immediate effect.