SB 670, as amended, Jackson. Income taxes: credit: child care.
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, 2016, and before January 1, 2021, would allow a credit in the amount of 30% of the costs of startup expenses for child care programs, constructing a child care facility, providing child care information and referral services, and contributing to a qualified care plan, as defined.begin insert The bill would authorize, in the case where the credit allowed for the taxable year exceeds the “net tax” or “tax” the excess to be carried over to reduce the “net tax” or “tax” in the following year, and the succeeding 7 years if necessary, as specified.end insert The bill would also require the Franchise Tax Board to report to the Legislature on the effectiveness of these credits, as specified.
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 17052.17 is added to the Revenue and
2Taxation Code, to read:
(a) For each taxable year beginning on or after
4January 1, 2016, and before January 1, 2021, there shall be allowed
5as a credit against the “net tax,” as defined by Section 17039, an
6amount equal to the amount determined in subdivision (b).
7(b) (1) The amount of the credit allowed by this section shall
8be 30 percent of any of the following:
9(A) The cost paid or incurred by the taxpayer on or after January
101, 2016, for the startup expenses of establishing a child care
11program or constructing a child care facility in California, to be
12used primarily by the children of the taxpayer’s
employees.
13(B) For each taxable year beginning on or after January 1, 2016,
14the cost paid or incurred by the taxpayer for startup expenses of
15establishing a child care program or constructing a child care
16facility in California, to be used primarily by the children of
17employees of tenants leasing commercial or office space in a
18building owned by the taxpayer.
19(C) (i) The cost paid or incurred by the taxpayer on or after
20January 1, 2016, for contributions to California child care
21information and referral services, including, but not limited to,
22those that identify local child care services, offer information
23describing these resources to the taxpayer’s employees, and make
24referrals of the taxpayer’s employees to child care services where
25there are
vacancies.
26(ii) In the case of a child care facility established by two or more
27taxpayers, the credit shall be allowed to each taxpayer if the facility
28is to be used primarily by the children of the employees of each
29of the taxpayers or the children of the employees of the tenants of
30each of the taxpayers.
31(2) The amount of the credit allowed by this section shall not
32exceed fifty thousand dollars ($50,000) for a taxable year.
33(c) For purposes of this section, “startup expenses” include, but
34are not limited to, feasibility studies, site preparation, and
35construction, renovation, or acquisition of facilities for purposes
P3 1of establishing or expanding onsite or nearsite centers by one or
2more employers or one or more building
owners leasing space to
3employers.
4(d) If two or more taxpayers share in the costs eligible for the
5credit provided by this section, each taxpayer shall be eligible to
6receive a tax credit with respect to his, her, or its respective share
7of the costs paid or incurred.
8(e) (1) In the case where the credit allowed and limited under
9subdivision (b) for the taxable year exceeds the “net tax,” the
10excess may be carried over to reduce the “net tax” in the following
11year, andbegin insert theend insert
succeedingbegin insert sevenend insert years if necessary, until the credit
12has been exhausted. However, the excess from any one year shall
13not exceed fifty thousand dollars ($50,000).
14(2) If the credit carryovers from preceding taxable years allowed
15under paragraph (1) plus the credit allowed for the taxable year
16under subdivision (b) would exceed an aggregate total of fifty
17thousand dollars ($50,000), then the credit allowed to reduce the
18“net tax” under this section for the taxable year shall be limited to
19fifty thousand dollars ($50,000) and the amount in excess of the
20fifty-thousand-dollar ($50,000) limit may be carried over and
21applied against the “net tax” in the following year, and succeeding
22years if necessary, in an amount which, when added to
the credit
23allowed under subdivision (b) for that succeeding taxable year,
24does not exceed fifty thousand dollars ($50,000).
25(f) A deduction shall not be allowed as otherwise provided in
26this part for that portion of expenses paid or incurred for the taxable
27year which is equal to the amount of the credit allowed under this
28section attributable to those expenses.
29(g) In lieu of claiming the tax credit provided by this section,
30the taxpayer may elect to take depreciation pursuant to Section
3117250. In addition, the taxpayer may take depreciation pursuant
32to that section for the cost of a facility in excess of the amount of
33the tax credit claimed under this section.
34(h) The basis for any child care facility for which a credit
is
35allowed shall be reduced by the amount of the credit attributable
36to the facility. The basis adjustment shall be made for the taxable
37year for which the credit is allowed.
38(i) A credit shall not be allowed under subparagraph (B) of
39paragraph (1) of subdivision (b) in the case of any taxpayer that
P4 1is required by any local ordinance or regulation to provide a child
2care facility.
3(j) (1) In order to be eligible for the credit allowed under
4subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
5taxpayer shall submit to the Franchise Tax Board upon request a
6statement certifying that the costs for which the credit is claimed
7are incurred with respect to the startup expenses of establishing a
8child care program or constructing a child care facility
in California
9to be used primarily by the children of the taxpayer’s employees
10or the children of the employees of tenants leasing commercial or
11office space in a building owned by the taxpayer and which will
12be in operation for at least 60 consecutive months after completion.
13(2) If the child care center for which a credit is claimed pursuant
14to this section is disposed of or ceases to operate within 60 months
15after completion, that portion of the credit claimed which represents
16the remaining portion of the 60-month period shall be added to
17the taxpayer’s tax liability in the taxable year of that disposition
18or nonuse.
19(k) In order to be allowed the credit under subparagraph (A) or
20(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
21
in the form and manner prescribed by the Franchise Tax Board,
22the number of children that the child care program or facility will
23be able to legally accommodate.
24(l) (1) On or before January 1, 2018, the Franchise Tax Board
25shall submit to the Legislature a report on the following:
26(A) The dollar amount of credits claimed annually.
27(B) The number of child care facilities established or constructed
28by taxpayers claiming the credit.
29(C) The number of children served by these facilities.
30(2) The report to be submitted by paragraph (1) shall be
31submitted in compliance with
Section 9795 of the Government
32Code.
33(3) Section 41 does not apply to the credit allowed by this
34section.
35(m) This section shall remain in effect only until December 1,
362021, and as of that date is repealed.
Section 17052.18 is added to the Revenue and Taxation
38Code, to read:
(a) For each taxable year beginning on or after
40January 1, 2016, and before January 1, 2021, there shall be allowed
P5 1as a credit against the “net tax,” as defined by Section 17039, an
2amount equal to the amount determined in subdivision (b).
3(b) (1) The amount of the credit allowed by this section shall
4be 30 percent of the cost paid or incurred by the taxpayer for
5contributions to a qualified care plan made on behalf of any
6qualified dependent of the taxpayer’s qualified employee.
7(2) The amount of the credit allowed by this section in any
8taxable year shall not exceed three hundred sixty
dollars ($360)
9for each qualified dependent.
10(c) For purposes of this section:
11(1) “Qualified care plan” means a plan providing qualified care.
12(2) “Qualified care” includes, but is not limited to, onsite service,
13center-based service, in-home care or home-provider care, and a
14dependent care center as defined by Section 21(b)(2)(D) of the
15Internal Revenue Code that is a specialized center with respect to
16short-term illnesses of an employee’s dependents. “Qualified care”
17must be provided in this state under the authority of a license when
18required by California law.
19(3) “Specialized center” means a facility that provides care to
20mildly ill children and that
may do all of the following:
21(A) Be staffed by pediatric nurses and day care workers.
22(B) Admit children suffering from common childhood ailments
23(including colds, flu, and chickenpox).
24(C) Make special arrangements for well children with minor
25problems associated with diabetes, asthma, breaks or sprains, and
26recuperation from surgery.
27(D) Separate children according to their illness and symptoms
28in order to protect them from cross-infection.
29(4) “Contributions” include direct payments to child care
30programs or providers. “Contributions” do not include amounts
31contributed to a qualified care plan
pursuant to a salary reduction
32agreement to provide benefits under a dependent care assistance
33program within the meaning of Section 129 of the Internal Revenue
34Code, as applicable, for purposes of Part 11 (commencing with
35Section 23001) and this part.
36(5) “Qualified employee” means any employee of the taxpayer
37who is performing services for the taxpayer in this state, within
38the meaning of Section 25133, during the period in which the
39qualified care is performed.
P6 1(6) “Employee” includes an individual who is an employee
2within the meaning of Section 401(c)(1) of the Internal Revenue
3Code, relating to self-employed individual treated as employee.
4(7) “Qualified dependent” means any dependent of a qualified
5employee
who is under 12 years of age.
6(d) If an employer makes contributions to a qualified care plan
7and also collects fees from parents to support a child care facility
8owned and operated by the employer, a credit shall not be allowed
9under this section for contributions in the amount, if any, by which
10the sum of the contributions and fees exceed the total cost of
11providing care. The Franchise Tax Board may require information
12about fees collected from parents of children served in the facility
13from taxpayers claiming credits under this section.
14(e) If the duration of the child care received is less than 42
15weeks, the employer shall claim a prorated portion of the allowable
16credit. The employer shall prorate the credit using the ratio of the
17number of weeks of care received divided by 42
weeks.
18(f) If the credit allowed by this section exceeds the “net tax,”
19the excess may be carried over to reduce the “net tax” in the
20following year, andbegin insert theend insert succeedingbegin insert sevenend insert years if necessary, until
21the credit has been exhausted.
22(g) The credit shall not be available to an employer if the care
23provided on behalf of an employee is provided by an individual
24who:
25(1) Qualifies as a dependent of that employee or that employee’s
26spouse under subdivision (d) of Section 17054.
27(2) Is, within the meaning of Section 17056, a son, stepson,
28daughter, or stepdaughter of that employee and is under 19 years
29of age at the close of that taxable year.
30(h) The contributions to a qualified care plan shall not
31discriminate in favor of employees who are officers, owners, or
32highly compensated, or their dependents.
33(i) A deduction shall not be allowed as otherwise provided in
34this part for that portion of expenses paid or incurred for the taxable
35year that is equal to the amount of the credit allowed under this
36section.
37(j) If the credit is taken by an employer for contributions to a
38qualified care plan that is used at a facility owned by the employer,
39the basis of that facility shall be reduced by the
amount of the
P7 1credit. The basis adjustment shall be made for the taxable year for
2which the credit is allowed.
3(k) In order to be allowed the credit authorized under this
4section, the taxpayer shall indicate, in the form and manner
5prescribed by the Franchise Tax Board, the number of children of
6begin delete employersend deletebegin insert employeesend insert served by the qualified child care plan.
7(l) (1) On or before January 1, 2018, the Franchise Tax Board
8shall submit to the Legislature a report on the following:
9(A) The dollar amount of credits claimed annually.
10(B) The number of children of employees served by the qualified
11child care plan for which the taxpayer claimed a credit.
12(2) The report to be submitted by paragraph (1) shall be
13submitted in compliance with Section 9795 of the Government
14Code.
15(3) Section 41 does not apply to the credit allowed by this
16section.
17(m) This section shall remain in effect only until December 1,
182021, and as of that date is repealed.
Section 23617 is added to the Revenue and Taxation
20Code, to read:
(a) For each taxable year beginning on or after January
221, 2016, and before January 1, 2021, there shall be allowed as a
23credit against the “tax,” as defined by Section 23036, an amount
24equal to the amount determined in subdivision (b).
25(b) (1) The amount of the credit allowed by this section shall
26be 30 percent of any of the following:
27(A) The cost paid or incurred by the taxpayer on or after January
281, 2016, for the startup expenses of establishing a child care
29program or constructing a child care facility in California, to be
30used primarily by the children of the taxpayer’s
employees.
31(B) For each taxable year beginning on or after January 1, 2016,
32the cost paid or incurred by the taxpayer for startup expenses of
33establishing a child care program or constructing a child care
34facility in California to be used primarily by the children of
35employees of tenants leasing commercial or office space in a
36building owned by the taxpayer.
37(C) (i) The cost paid or incurred by the taxpayer on or after
38January 1, 2016, for contributions to California child care
39information and referral services, including, but not limited to,
40those that identify local child care services, offer information
P8 1describing these resources to the taxpayer’s employees, and make
2referrals of the taxpayer’s employees to child care services where
3there are vacancies.
4(ii) In the case of a child care facility established by two or more
5taxpayers, the credit shall be allowed to each taxpayer if the facility
6is to be used primarily by the children of the employees of each
7of the taxpayers or the children of the employees of the tenants of
8each of the taxpayers.
9(2) The amount of the credit allowed by this section shall not
10exceed fifty thousand dollars ($50,000) for a taxable year.
11(c) For purposes of this section, “startup expenses” include, but
12are not limited to, feasibility studies, site preparation, and
13construction, renovation, or acquisition of facilities for purposes
14of establishing or expanding onsite or nearsite centers by one or
15more employers or one or more building owners
leasing space to
16employers.
17(d) If two or more taxpayers share in the costs eligible for the
18credit provided by this section, each taxpayer shall be eligible to
19receive a tax credit with respect to its respective share of the costs
20paid or incurred.
21(e) (1) In the case where the credit allowed and limited under
22subdivision (b) for the taxable year exceeds the “tax,” the excess
23may be carried over to reduce the “tax” in the following year, and
24begin insert theend insert succeedingbegin insert
sevenend insert years if necessary, until the credit has been
25exhausted. However, the excess from any one year shall not exceed
26fifty thousand dollars ($50,000).
27(2) If the credit carryovers from preceding taxable years allowed
28under paragraph (1) plus the credit allowed for the taxable year
29under subdivision (b) would exceed an aggregate total of fifty
30thousand dollars ($50,000), then the credit allowed to reduce the
31“tax” under this section for the taxable year shall be limited to fifty
32thousand dollars ($50,000) and the amount in excess of the
33fifty-thousand-dollar ($50,000) limit may be carried over and
34applied against the “tax” in the following year, and succeeding
35years if necessary, in an amount which, when added to the credit
36allowed under subdivision (b) for that succeeding taxable year,
37does not
exceed fifty thousand dollars ($50,000).
38(f) A deduction shall not be allowed as otherwise provided in
39this part for that portion of expenses paid or incurred for the taxable
P9 1year which is equal to the amount of the credit allowed under this
2section attributable to those expenses.
3(g) The basis for any child care facility for which a credit is
4
allowed shall be reduced by the amount of the credit attributable
5to the facility. The basis adjustment shall be made for the taxable
6year for which the credit is allowed.
7(h) A credit shall not be allowed under subparagraph (B) of
8paragraph (1) of subdivision (b) in the case of any taxpayer that
9is required by any local ordinance or regulation to provide a child
10care facility.
11(i) (1) In order to be eligible for the credit allowed under
12subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
13taxpayer shall submit to the Franchise Tax Board upon request a
14statement certifying that the costs for which the credit is claimed
15are incurred with respect to the startup expenses of establishing a
16
child care program or constructing a child care facility in California
17to be used primarily by the children of the taxpayer’s employees
18or the children of the employees of tenants leasing commercial or
19office space in a building owned by the taxpayer and which will
20be in operation for at least 60 consecutive months after completion.
21(2) If the child care center for which a credit is claimed pursuant
22to this section is disposed of or ceases to operate within 60 months
23after completion, that portion of the credit claimed which represents
24the remaining portion of the 60-month period shall be added to
25the taxpayer’s tax liability in the taxable year of that disposition
26or nonuse.
27(j) In order to be allowed the credit under subparagraph (A) or
28(B) of paragraph (1) of
subdivision (b), the taxpayer shall indicate,
29in the form and manner prescribed by the Franchise Tax Board,
30the number of children that the child care program or facility will
31be able to legally accommodate.
32(k) (1) On or before January 1, 2018, the Franchise Tax Board
33shall submit to the Legislature a report on the following:
34(A) The dollar amount of credits claimed annually.
35(B) The number of child care facilities established or constructed
36by taxpayers claiming the credit.
37(C) The number of children served by these facilities.
38(2) The report to be submitted by paragraph (1) shall be
39submitted
in compliance with Section 9795 of the Government
40Code.
P10 1(3) Section 41 does not apply to the credit allowed by this
2section.
3(l) This section shall remain in effect only until December 1,
42021, and as of that date is repealed.
Section 23618 is added to the Revenue and Taxation
6Code, to read:
(a) For each taxable year beginning on or after January
81, 2016, and before January 1, 2021, there shall be allowed as a
9credit against the “tax,” as defined by Section 23036, an amount
10equal to the amount determined in subdivision (b).
11(b) (1) The amount of the credit allowed by this section shall
12be 30 percent of the cost paid or incurred by the taxpayer for
13contributions to a qualified care plan made on behalf of any
14qualified dependent of the taxpayer’s qualified employee.
15(2) The amount of the credit allowed by this section in any
16taxable year shall not exceed three hundred sixty dollars
($360)
17
for each qualified dependent.
18(c) For purposes of this section:
19(1) “Qualified care plan” means a plan providing qualified care.
20(2) “Qualified care” includes, but is not limited to, onsite service,
21center-based service, in-home care or home-provider care, and a
22dependent care center as defined by Section 21(b)(2)(D) of the
23Internal Revenue Code that is a specialized center with respect to
24short-term illnesses of an employee’s dependents. “Qualified care”
25must be provided in this state under the authority of a license when
26required by California law.
27(3) “Specialized center” means a facility that provides care to
28mildly ill children and that may
do all of the following:
29(A) Be staffed by pediatric nurses and day care workers.
30(B) Admit children suffering from common childhood ailments
31(including colds, flu, and chickenpox).
32(C) Make special arrangements for well children with minor
33problems associated with diabetes, asthma, breaks or sprains, and
34recuperation from surgery.
35(D) Separate children according to their illness and symptoms
36in order to protect them from cross-infection.
37(4) “Contributions” include direct payments to child care
38programs or providers. “Contributions” do not include amounts
39contributed to a qualified care plan pursuant to a
salary reduction
40agreement to provide benefits under a dependent care assistance
P11 1program within the meaning of Section 129 of the Internal Revenue
2Code, as applicable, for purposes of Part 10 (commencing with
3Section 17001) and this part.
4(5) “Qualified employee” means any employee of the taxpayer
5who is performing services for the taxpayer in this state, within
6the meaning of Section 25133, during the period in which the
7qualified care is performed.
8(6) “Employee” includes an individual who is an employee
9within the meaning of Section 401(c)(1) of the Internal Revenue
10Code, relating to self-employed individual treated as employee.
11(7) “Qualified dependent” means any dependent of a qualified
12employee who is under
12 years of age.
13(d) If an employer makes contributions to a qualified care plan
14and also collects fees from parents to support a child care facility
15owned and operated by the employer, a credit shall not be allowed
16under this section for contributions in the amount, if any, by which
17the sum of the contributions and fees exceed the total cost of
18providing care. The Franchise Tax Board may require information
19about fees collected from parents of children served in the facility
20from taxpayers claiming credits under this section.
21(e) If the duration of the child care received is less than 42
22weeks, the employer shall claim a prorated portion of the allowable
23credit. The employer shall prorate the credit using the ratio of the
24number of weeks of care received divided by 42 weeks.
25(f) If the credit allowedbegin delete underend deletebegin insert byend insert this section exceeds the “tax,”
26the excess may be carried over to reduce the “tax” in the following
27year, andbegin insert theend insert succeedingbegin insert sevenend insert years if necessary, until the credit
28has been exhausted.
29(g) The credit shall not be available to an employer if the care
30provided on behalf of an employee is provided by an individual
31who:
32(1) Qualifies as a dependent of that employee or that employee’s
33spouse under subdivision (d) of Section 17054.
34(2) Is, within the meaning of Section 17056, a son, stepson,
35daughter, or stepdaughter of that employee and is under 19 years
36of age at the close of that taxable year.
37(h) The contributions to a qualified care plan shall not
38discriminate in favor of employees who are officers, owners, or
39highly compensated, or their dependents.
P12 1(i) A deduction shall not be allowed as otherwise provided in
2this part for that portion of expenses paid or incurred for the taxable
3year that is equal to the amount of the credit allowed under this
4section.
5(j) If the credit is taken by an employer for contributions to a
6qualified care plan that is used at a facility owned by the employer,
7the basis of that facility shall be reduced by the amount of the
8credit. The basis adjustment shall be made for the taxable year for
9which the credit is allowed.
10(k) In order to be allowed the credit authorized under this
11section, the taxpayer shall indicate, in the form and manner
12prescribed by the Franchise Tax Board, the number of children of
13begin delete employersend deletebegin insert employeesend insert served by the qualified child care plan.
14(l) (1) On or before January 1, 2018, the
Franchise Tax Board
15shall submit to the Legislature a report on the following:
16(A) The dollar amount of credits claimed annually.
17(B) The number of children of employees served by the qualified
18child care plan for which the taxpayer claimed a credit.
19(2) The report to be submitted by paragraph (1) shall be
20submitted in compliance with Section 9795 of the Government
21Code.
22(3) Section 41 does not apply to the credit allowed by this
23section.
24(m) This section shall remain in effect only until December 1,
252021, and as of that date is repealed.
This act provides for a tax levy within the meaning of
27Article IV of the Constitution and shall go into immediate effect.
O
95