BILL NUMBER: AB 340	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Knight

                        FEBRUARY 18, 2009

   An act to add Sections 17053.80 and 23623 to the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 340, as introduced, Knight. Income taxes: credits: hiring
credit.
   The Personal Income Tax Law and the Bank and Corporation Tax Law
authorize various credits against the taxes imposed by those laws.
   This bill would, for taxable years beginning on and after January
1, 2009, authorize a credit to a qualified taxpayer equal to 5% of
the wages of all qualified employees, as defined, employed by the
qualified taxpayer during the taxable year.
   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 17053.80 is added to the Revenue and Taxation
Code, to read:
   17053.80.  (a) For each taxable year beginning on or after January
1, 2009, there shall be allowed a credit against the "net tax," as
defined in Section 17039, equal to 5 percent of the wages of all
qualified employees employed during the taxable year by a qualified
employer.
   (b) For purposes of this section, "qualified employee" means an
employee who is employed by the taxpayer and is a resident of
California.
   (c) In the case where the credit allowed under 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 the credit has been exhausted.
   (d) Any deduction otherwise allowed under this part for qualified
wages shall not be reduced by the amount of the credit allowed under
this section.
   (e) For purposes of this section:
   (1) (A) All employees of all corporations that are members of the
same controlled group of corporations shall be treated as employed by
a single taxpayer.
   (B) For purposes of this paragraph, "controlled group of
corporations" has the same meaning as provided in Section 1563(a) of
the Internal Revenue Code, except that both of the following apply:
   (i) "More than 50 percent" shall be substituted for "at least 80
percent" each place it appears in Section 1563(a)(1) of the Internal
Revenue Code.
   (ii) Sections 1563(a)(4) and 1563(e)(3)(C) of the Internal Revenue
Code shall not apply.
   (2) The Franchise Tax Board may prescribe appropriate regulations
to carry out the purposes of this paragraph, including any
regulations necessary to avoid the application of this paragraph
through split-ups, shell corporations, partnerships, tiered ownership
structures, or otherwise.
  SEC. 2.  Section 23623 is added to the Revenue and Taxation Code,
to read:
   23623.  (a) For each taxable year beginning on or after January 1,
2009, there shall be allowed a credit against the "tax," as defined
in Section 23036, of 5 percent of the wages of a qualified employee
employed during the taxable year by a qualified employer.
   (b) For purposes of this section, "qualified employee" means an
employee who is employed by the taxpayer and is a resident of
California.
   (c) In the case where the credit allowed under 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 the
credit has been exhausted.
   (d) Any deduction otherwise allowed under this part for qualified
wages shall not be reduced by the amount of the credit allowed under
this section.
   (e) For purposes of this section:
   (1) (A) All employees of all corporations that are members of the
same controlled group of corporations shall be treated as employed by
a single taxpayer.
   (B) For purposes of this paragraph, "controlled group of
corporations" has the same meaning as provided in Section 1563(a) of
the Internal Revenue Code, except that both of the following apply:
   (i) "More than 50 percent" shall be substituted for "at least 80
percent" each place it appears in Section 1563(a)(1) of the Internal
Revenue Code.
   (ii) Sections 1563(a)(4) and 1563(e)(3)(C) of the Internal Revenue
Code shall not apply.
   (2) The Franchise Tax Board may prescribe appropriate regulations
to carry out the purposes of this paragraph, including any
regulations necessary to avoid the application of this paragraph
through split-ups, shell corporations, partnerships, tiered ownership
structures, or otherwise.
  SEC. 3.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.