BILL NUMBER: SB 493 CHAPTERED 09/15/99 CHAPTER 398 FILED WITH SECRETARY OF STATE SEPTEMBER 15, 1999 APPROVED BY GOVERNOR SEPTEMBER 15, 1999 PASSED THE SENATE AUGUST 30, 1999 PASSED THE ASSEMBLY AUGUST 19, 1999 AMENDED IN ASSEMBLY AUGUST 16, 1999 AMENDED IN ASSEMBLY JUNE 30, 1999 AMENDED IN SENATE MAY 13, 1999 AMENDED IN SENATE APRIL 29, 1999 INTRODUCED BY Senator Figueroa (Coauthors: Senators Escutia and Perata) (Coauthors: Assembly Members Cardoza, Cunneen, Davis, Honda, Knox, Leach, Romero, Thomson, Washington, Wayne, and Zettel) FEBRUARY 18, 1999 An act to add and repeal Article 15 (commencing with Section 18861) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST SB 493, Figueroa. Taxpayer contributions: Birth Defects Research Fund. Provisions relating to the administration of personal income taxes allow individual taxpayers to contribute amounts in excess of their tax liability for the support of specified funds. This bill would additionally allow taxpayers to designate on their tax returns that a specified amount in excess of their tax liability be transferred to the Birth Defects Research Fund, which would be created by this bill. However, the bill would provide that a voluntary contribution designation for this fund shall not be added on the tax return until another voluntary contribution designation is removed, or until taxable years beginning on or after January 1, 2002, whichever occurs first. This bill would provide that all money contributed to the fund pursuant to these provisions would be subject to appropriation by the Legislature, as specified. This bill would also provide that these voluntary contribution provisions are repealed on January 1 of the fifth taxable year following the taxable year the fund first appears on the tax return. The provisions are repealed for taxable years beginning on or after January 1 of the calendar year in which the Franchise Tax Board estimates by September 1 that the contributions made on returns filed in that calendar year will be less than $250,000, and an adjusted amount for subsequent taxable years. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Article 15 (commencing with Section 18861) is added to Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, to read: Article 15. Birth Defects Research Fund 18861. (a) An individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the Birth Defects Research Fund, which is established by Section 18862. That designation is to be used as a voluntary contribution on the tax return. (b) The contributions shall be in full dollar amounts and may be made individually by each signatory on a joint return. (c) A designation shall be made for any taxable year on the initial return for that taxable year and once made is irrevocable. If payments and credits reported on the return, together with any other credits associated with the taxpayer's account do not exceed the taxpayer's liability, the return shall be treated as though no designation has been made. If no designee is specified, the contribution shall be transferred to the General Fund after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and administration of funds under this article. (d) If an individual designates a contribution to more than one account or fund listed on the tax return, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the form of the return to include a space labeled the "Birth Defects Research Fund" to allow for the designation permitted. The form shall also include in the instructions information that the contribution may be in the amount of one dollar ($1) or more and that the contribution shall be used for the California Birth Defects Monitoring Program. (f) Notwithstanding any other provision, a voluntary contribution designation for the Birth Defects Research Fund shall not be added on the tax return until another voluntary contribution designation is removed, or until taxable years beginning on or after January 1, 2002, whichever occurs first. (g) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18862. There is in the State Treasury the Birth Defects Research Fund to receive contributions made pursuant to Section 18861. The Franchise Tax Board shall notify the Controller of both the amount of money paid by taxpayers in excess of their tax liability and the amount of refund money that taxpayers have designated pursuant to Section 18861 to be transferred to the Birth Defects Research Fund. The Controller shall transfer from the Personal Income Tax Fund to the Birth Defects Research Fund an amount not in excess of the sum of the amounts designated by individuals pursuant to Section 18861 for payment into that fund. 18863. All money transferred to the Birth Defects Research Fund, upon appropriation by the Legislature, shall be allocated as follows: (a) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (b) To the State Department of Health Services for allocation to the birth defects monitoring program. Funds shall be allocated to the contract for the birth defects monitoring program authorized by Section 103855 of the Health and Safety Code and may not be used for the department's administrative costs. 18864. It is the intent of the Legislature that this article create an additional funding source for the contract for the birth defects monitoring program and shall be used to supplement, not supplant, other funding sources for this program. 18865. (a) This article shall remain in effect only until January 1 of the fifth taxable year following the first appearance of the Birth Defects Research Fund on the tax return or January 1, 2007, whichever occurs first, and as of that date is repealed, unless a later enacted statute, that is enacted before the applicable date, deletes or extends that date. (b) If, in any calendar year after the first taxable year the Birth Defects Research Fund appears on the tax return, the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c) for subsequent taxable years, as may be applicable, then this article is repealed with respect to taxable years beginning on or after January 1 of that calendar year. The Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contribution. (c) For each calendar year, beginning with the second calendar year the Birth Defects Research Fund appears on the tax return, or 2004, whichever occurs first, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal.