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. 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. 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.
P3 1(c) For purposes of this section, “startup expenses” include, but
2are not limited to, feasibility studies, site preparation, and
3construction, renovation, or acquisition of facilities for purposes
4of establishing or expanding onsite or nearsite centers by one or
5more employers or one or more building owners
leasing space to
6employers.
7(d) If two or more taxpayers share in the costs eligible for the
8credit provided by this section, each taxpayer shall be eligible to
9receive a tax credit with respect to his, her, or its respective share
10of the costs paid or incurred.
11(e) (1) In the case where the credit allowed and limited under
12subdivision (b) for the taxable year exceeds the “net tax,” the
13excess may be carried over to reduce the “net tax” in the following
14year, and the succeeding seven years if necessary, until the credit
15has been exhausted. However, the excess from any one year shall
16not exceed fifty thousand dollars ($50,000).
17(2) If the credit carryovers from preceding taxable years allowed
18under
paragraph (1) plus the credit allowed for the taxable year
19under subdivision (b) would exceed an aggregate total of fifty
20thousand dollars ($50,000), then the credit allowed to reduce the
21“net tax” under this section for the taxable year shall be limited to
22fifty thousand dollars ($50,000) and the amount in excess of the
23fifty-thousand-dollar ($50,000) limit may be carried over and
24applied against the “net tax” in the following year, and succeeding
25years if necessary, in an amount which, when added to the credit
26allowed under subdivision (b) for that succeeding taxable year,
27does not exceed fifty thousand dollars ($50,000).
28(f) A deduction shall not be allowed as otherwise provided in
29this part for that portion of expenses paid or incurred for the taxable
30year which is equal to the amount of the credit allowed under this
31section attributable
to those expenses.
32(g) In lieu of claiming the tax credit provided by this section,
33the taxpayer may elect to take depreciation pursuant to Section
3417250. In addition, the taxpayer may take depreciation pursuant
35to that section for the cost of a facility in excess of the amount of
36the tax credit claimed under this section.
37(h) The basis for any child care facility for which a credit is
38allowed shall be reduced by the amount of the credit attributable
39to the facility. The basis adjustment shall be made for the taxable
40year for which the credit is allowed.
P4 1(i) A credit shall not be allowed under subparagraph (B) of
2paragraph (1) of subdivision (b) in the case of any taxpayer that
3is required by any local ordinance or
regulation to provide a child
4care facility.
5(j) (1) In order to be eligible for the credit allowed under
6subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
7taxpayer shall submit to the Franchise Tax Board upon request a
8statement certifying that the costs for which the credit is claimed
9are incurred with respect to the startup expenses of establishing a
10child care program or constructing a child care facility in California
11to be used primarily by the children of the taxpayer’s employees
12or the children of the employees of tenants leasing commercial or
13office space in a building owned by the taxpayer and which will
14be in operation for at least 60 consecutive months after completion.
15(2) If the child care center for which a credit is claimed pursuant
16to
this section is disposed of or ceases to operate within 60 months
17after completion, that portion of the credit claimed which represents
18the remaining portion of the 60-month period shall be added to
19the taxpayer’s tax liability in the taxable year of that disposition
20or nonuse.
21(k) In order to be allowed the credit under subparagraph (A) or
22(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
23
in the form and manner prescribed by the Franchise Tax Board,
24the number of children that the child care program or facility will
25be able to legally accommodate.
26(l) (1) On or before January 1, 2018, the Franchise Tax Board
27shall submit to the Legislature a report on the following:
28(A) The dollar amount of credits claimed annually.
29(B) The number of child care facilities established or constructed
30by taxpayers claiming the credit.
31(C) The number of children served by these facilities.
32(2) The report to be submitted by paragraph (1) shall be
33submitted in compliance with
Section 9795 of the Government
34Code.
35(3) Section 41 does not apply to the credit allowed by this
36section.
37(m) This section shall remain in effect only until December 1,
382021, and as of that date is repealed.
Section 17052.18 is added to the Revenue and Taxation
40Code, to read:
(a) For each taxable year beginning on or after
2January 1, 2016, and before January 1, 2021, there shall be allowed
3as a credit against the “net tax,” as defined by Section 17039, an
4amount equal to the amount determined in subdivision (b).
5(b) (1) The amount of the credit allowed by this section shall
6be 30 percent of the cost paid or incurred by the taxpayer for
7contributions to a qualified care plan made on behalf of any
8qualified dependent of the taxpayer’s qualified employee.
9(2) The amount of the credit allowed by this section in any
10taxable year shall not exceed three hundred sixty
dollars ($360)
11for each qualified dependent.
12(c) For purposes of this section:
13(1) “Qualified care plan” means a plan providing qualified care.
14(2) “Qualified care” includes, but is not limited to, onsite service,
15center-based service, in-home care or home-provider care, and a
16dependent care center as defined by Section 21(b)(2)(D) of the
17Internal Revenue Code that is a specialized center with respect to
18short-term illnesses of an employee’s dependents. “Qualified care”
19must be provided in this state under the authority of a license when
20required by California law.
21(3) “Specialized center” means a facility that provides care to
22mildly ill children and that may
do all of the following:
23(A) Be staffed by pediatric nurses and day care workers.
24(B) Admit children suffering from common childhood ailments
25(including colds, flu, and chickenpox).
26(C) Make special arrangements for well children with minor
27problems associated with diabetes, asthma, breaks or sprains, and
28recuperation from surgery.
29(D) Separate children according to their illness and symptoms
30in order to protect them from cross-infection.
31(4) “Contributions” include direct payments to child care
32programs or providers. “Contributions” do not include amounts
33contributed to a qualified care plan pursuant
to a salary reduction
34agreement to provide benefits under a dependent care assistance
35program within the meaning of Section 129 of the Internal Revenue
36Code, as applicable, for purposes of Part 11 (commencing with
37Section 23001) and this part.
38(5) “Qualified employee” means any employee of the taxpayer
39who is performing services for the taxpayer in this state, within
P6 1the meaning of Section 25133, during the period in which the
2qualified care is performed.
3(6) “Employee” includes an individual who is an employee
4within the meaning of Section 401(c)(1) of the Internal Revenue
5Code, relating to self-employed individual treated as employee.
6(7) “Qualified dependent” means any dependent of a qualified
7employee who is
under 12 years of age.
8(d) If an employer makes contributions to a qualified care plan
9and also collects fees from parents to support a child care facility
10owned and operated by the employer, a credit shall not be allowed
11under this section for contributions in the amount, if any, by which
12the sum of the contributions and fees exceed the total cost of
13providing care. The Franchise Tax Board may require information
14about fees collected from parents of children served in the facility
15from taxpayers claiming credits under this section.
16(e) If the duration of the child care received is less than 42
17weeks, the employer shall claim a prorated portion of the allowable
18credit. The employer shall prorate the credit using the ratio of the
19number of weeks of care received divided by 42 weeks.
20(f) If the credit allowed by this section exceeds the “net tax,”
21the excess may be carried over to reduce the “net tax” in the
22following year, and the succeeding seven years if necessary, until
23the credit has been exhausted.
24(g) The credit shall not be available to an employer if the care
25provided on behalf of an employee is provided by an individual
26who:
27(1) Qualifies as a dependent of that employee or that employee’s
28spouse under subdivision (d) of Section 17054.
29(2) Is, within the meaning of Section 17056, a son, stepson,
30daughter, or stepdaughter of that employee and is under 19 years
31of age at the close of that taxable year.
32(h) The contributions to a qualified care plan shall not
33discriminate in favor of employees who are officers, owners, or
34highly compensated, or their dependents.
35(i) A deduction shall not be allowed as otherwise provided in
36this part for that portion of expenses paid or incurred for the taxable
37year that is equal to the amount of the credit allowed under this
38section.
39(j) If the credit is taken by an employer for contributions to a
40qualified care plan that is used at a facility owned by the employer,
P7 1the basis of that facility shall be reduced by the amount of the
2credit. The basis adjustment shall be made for the taxable year for
3which the credit is allowed.
4(k) In order to be allowed the credit authorized under this
5section, the taxpayer shall indicate, in the form and manner
6prescribed by the Franchise Tax Board, the number of children of
7employees served by the qualified child care plan.
8(l) (1) On or before January 1, 2018, the Franchise Tax Board
9shall submit to the Legislature a report on the following:
10(A) The dollar amount of credits claimed annually.
11(B) The number of children of employees served by the qualified
12child care plan for which the taxpayer claimed a credit.
13(2) The report to be submitted by paragraph (1) shall be
14submitted in compliance with Section 9795 of the Government
15Code.
16(3) Section 41 does not apply to the credit allowed by this
17section.
18(m) This section shall remain in effect only until December 1,
192021, and as of that date is repealed.
Section 23617 is added to the Revenue and Taxation
21Code, to read:
(a) For each taxable year beginning on or after January
231, 2016, and before January 1, 2021, there shall be allowed as a
24credit against the “tax,” as defined by Section 23036, an amount
25equal to the amount determined in subdivision (b).
26(b) (1) The amount of the credit allowed by this section shall
27be 30 percent of any of the following:
28(A) The cost paid or incurred by the taxpayer on or after January
291, 2016, for the startup expenses of establishing a child care
30program or constructing a child care facility in California, to be
31used primarily by the children of the taxpayer’s employees.
32(B) For each taxable year beginning on or after January 1, 2016,
33the cost paid or incurred by the taxpayer for startup expenses of
34establishing a child care program or constructing a child care
35facility in California to be used primarily by the children of
36employees of tenants leasing commercial or office space in a
37building owned by the taxpayer.
38(C) (i) The cost paid or incurred by the taxpayer on or after
39January 1, 2016, for contributions to California child care
40information and referral services, including, but not limited to,
P8 1those that identify local child care services, offer information
2describing these resources to the taxpayer’s employees, and make
3referrals of the taxpayer’s employees to child care services where
4there are vacancies.
5(ii) In the case of a child care facility established by two or more
6taxpayers, the credit shall be allowed to each taxpayer if the facility
7is to be used primarily by the children of the employees of each
8of the taxpayers or the children of the employees of the tenants of
9each of the taxpayers.
10(2) The amount of the credit allowed by this section shall not
11exceed fifty thousand dollars ($50,000) for a taxable year.
12(c) For purposes of this section, “startup expenses” include, but
13are not limited to, feasibility studies, site preparation, and
14construction, renovation, or acquisition of facilities for purposes
15of establishing or expanding onsite or nearsite centers by one or
16more employers or one or more building owners leasing
space to
17employers.
18(d) If two or more taxpayers share in the costs eligible for the
19credit provided by this section, each taxpayer shall be eligible to
20receive a tax credit with respect to its respective share of the costs
21paid or incurred.
22(e) (1) In the case where the credit allowed and limited under
23subdivision (b) for the taxable year exceeds the “tax,” the excess
24may be carried over to reduce the “tax” in the following year, and
25the succeeding seven years if necessary, until the credit has been
26exhausted. However, the excess from any one year shall not exceed
27fifty thousand dollars ($50,000).
28(2) If the credit carryovers from preceding taxable years allowed
29under paragraph (1) plus the
credit allowed for the taxable year
30under subdivision (b) would exceed an aggregate total of fifty
31thousand dollars ($50,000), then the credit allowed to reduce the
32“tax” under this section for the taxable year shall be limited to fifty
33thousand dollars ($50,000) and the amount in excess of the
34fifty-thousand-dollar ($50,000) limit may be carried over and
35applied against the “tax” in the following year, and succeeding
36years if necessary, in an amount which, when added to the credit
37allowed under subdivision (b) for that succeeding taxable year,
38does not exceed fifty thousand dollars ($50,000).
39(f) A deduction shall not be allowed as otherwise provided in
40this 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 allowed by this section exceeds the “tax,” the
26excess may be carried over to reduce the “tax” in the following
27year, and the succeeding seven 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
13employees 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
94