BILL ANALYSIS �
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THIRD READING
Bill No: AB 509
Author: Skinner (D)
Amended: 8/30/11 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 6/29/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Huff, Fuller, La Malfa
SENATE APPROPRIATIONS COMMITTEE : 6-3, 8/25/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
ASSEMBLY FLOOR : 52-24, 6/1/11 - See last page for vote
SUBJECT : Federal earned income tax credit:
notification: state departments and agencies
SOURCE : Author
DIGEST : This bill requires state departments and
agencies that provide services to low-income persons to
annually notify its program recipients that they may
qualify for the earned income tax credit.
ANALYSIS : In 1975, Congress enacted the Earned Income
Tax Credit (EITC) to help alleviate the burden of Social
Security taxes and to encourage work among low- and
moderate-income taxpayers. The EITC is a federal income
tax credit that gives low-income individuals a credit equal
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to a percent of their earned income. The EITC is targeted
to low- to moderate- income households. The federal
government refunds the credit when the EITC exceeds the
amount of taxes owed for those who claim and qualify for
the credit.
This bill requires state departments and agencies that
serve individuals who may be qualified for the EITC, to
annually inform those recipients about the EITC.
This bill defines "state departments and agencies that
serve those who may qualify for the EITC" as departments
and agencies that operate state or federally funded
programs and are engaged in providing services to
low-income individuals and families. This bill requires
the following-- but not exclusive list of -- departments,
agencies, and programs to notify their program recipients
about possible EITC eligibility:
1. The State Department of Education:
The free or reduced-price meal program
The National School Lunch program
2. Employment Development Department:
California Unemployment Insurance
3. State Department of Health Care Services:
The Medi-Cal program
4. The Managed Risk Medical Insurance Board:
The Healthy Families Program
This bill clarifies that state departments' and agencies'
notice language may be different than existing law's
template language, as long as the amended language contains
substantially the same information.
Background
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In 2010, the federal Tax Relief and Job Creation Act
temporarily increased EITC amounts to $464 for a worker
with no qualifying children; $3,094 to a worker with one
qualifying child; $5,112 to a worker with two qualifying
children; and, $5,751 to a worker with three or more
qualifying children. These temporary increases apply only
to 2009, 2010, 2011, and 2012 tax years.
To attract filers, existing federal and state laws require
that employers notify all employees of the EITC in one of
the following ways:
1. On the W-2 tax form.
2. A substitute W-2 form with the same EITC information.
3. The Internal Revenue Service "Notice 797."
4. An employer's written statement as "Notice 797."
Employers can use the notification template in existing law
or derive their own notification language, as long as it
conveys the same information.
California employers must also visibly post a statement
about the EITC in the workplace. In November 2010, the
Internal Revenue Service sent notices to over 46,000
California taxpayers who appeared to be eligible for the
EITC. These notices included instructions, worksheets, and
information on where to get help filling out the forms.
Despite federal and state outreach, free Volunteer Income
Tax Assistance programs, and mailers, eligible filers still
fail to file for EITC. The New American Foundation study,
"Left on the Table," reports that over 800,000 of eligible
Californians fail to claim the EITC because they are
unaware of their eligibility or were unaware of the program
altogether. The author wants state departments and
agencies to notify service recipients about the EITC. By
reaching households that are not traditionally contacted
through the employer-outreach model or any other existing
outreach mechanism, this bill seeks to increase filer
rates. Moreover, by increasing awareness in different
arenas, this bill saturates the potential filer's
environment and presumably, that increased awareness will
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result in increased filer rates. In an economic climate
with slow wage growth, the EITC provides low- to
moderate-income households a much-needed income boost.
Related Legislation
SCR 12 (Liu), 2011-12 Session, encourages state and local
governments and community organization to utilized existing
outreach to improve EITC awareness.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
EITC notices:
-Dept. of Education Minor and absorbable costs
General
-EDD Minor and absorbable costs
Federal
-DHCS $100
$100 General
-MRMIB Minor and absorbable costs
General
SUPPORT : (Verified 8/30/11)
California Catholic Conference, Inc.
Coalition of California Welfare Rights Organization
Community Housing Development Corporation
Congress of California Seniors
Contra Costa County
Contra Costa's Family Economic Security Partnership
Department of Insurance
State Controller John Chiang
OPPOSITION : (Verified 8/30/11)
California Communications Association
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ASSEMBLY FLOOR : 52-24, 6/1/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fong,
Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning,
Pan, Perea, Portantino, Skinner, Solorio, Swanson,
Torres, Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Grove, Hagman, Halderman, Harkey, Jones,
Knight, Logue, Mansoor, Miller, Morrell, Nestande,
Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Garrick, Gorell, Jeffries, V. Manuel
P�rez
AGB:kc 8/31/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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