BILL NUMBER: AB 2045 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 9, 2012
INTRODUCED BY Assembly Member Perea
FEBRUARY 23, 2012
An act to add Section 40609 to the Health and Safety
Code, relating to nonvehicular air pollution. Chapter
4.5 (commencing with Section 13996) to Part 4.7 of Division 3 of
Title 2 of the Government Code, relating to economic development.
LEGISLATIVE COUNSEL'S DIGEST
AB 2045, as amended, Perea. San Joaquin Valley Unified
Air Pollution Control District: expedited permits.
Emerging technology and biotechnology company: income taxes: net
operating losses: transfers.
The Personal Income Tax Law and Corporation Tax Law impose taxes
measured by income, and allow individual and corporate taxpayers to
utilize net operating losses as carryovers and carrybacks of those
losses for purposes of offsetting their individual and corporate tax
liabilities.
This bill would require the Department of ____, in cooperation
with the Franchise Tax Board, to establish a corporation business tax
benefit certificate transfer program to allow a new or expanding
emerging technology and biotechnology company in this state with
unused net operating losses to surrender those net operating losses
for use by a taxpayer subject to the Corporation Tax Law in this
state in exchange for private financial assistance to be provided by
that taxpayer to assist in the funding of costs incurred by the new
or expanding emerging technology and biotechnology company, as
provided.
This bill would provide that any net operating losses that are
transferred pursuant to a corporation business tax benefit transfer
certificate issued to a taxpayer is allowed beginning on or after the
first day of the 4th taxable year after the date of issue of that
certificate.
(1) Existing law establishes the San Joaquin Valley Unified Air
Pollution Control District formed by the Counties of Fresno, Kern,
Kings, Madera, Merced, San Joaquin, Stanislaus, and Tulare, and
consisting of the Counties of Fresno, Kings, Madera, Merced, San
Joaquin, Stanislaus, and Tulare, and that portion of the County of
Kern that is within the San Joaquin Valley Air Basin, as a single
integrated agency with all staff under one centralized management
structure that is able to implement programs on a basinwide basis.
Existing law designates air pollution control and air quality
management districts as having primary responsibility for control of
air pollution from all sources other than vehicular sources.
This bill would require the district to process and make a
determination regarding any expedited permit, or any fees related to
overtime or other expenses paid to expedite a permit, within 60
calendar days upon initial receipt by the district. The bill also
would require the district, if it does make a determination on an
expedited permit within 60 calendar days, to issue a full refund of
any fees paid for the expedited permit within 75 calendar days upon
initial receipt by the district. By adding to the duties of the San
Joaquin Valley Unified Air Pollution Control District, this bill
would impose a state-mandated local program.
(2) This bill would make legislative findings and declarations as
to the necessity of a special statute for the unique needs of
industries in the San Joaquin Valley.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 4.5 (commencing with Section
13996) is added to Part 4.7 of Division 3 of Title 2 of the
Government Code , to read:
CHAPTER 4.5. EMERGING TECHNOLOGY AND BIOTECHNOLOGY COMPANIES
TAX LOSS TRANSFER PROGRAM
13996. (a) The Department of ____, in cooperation with the
Franchise Tax Board, shall establish a corporation business tax
benefit certificate transfer program to allow new or expanding
emerging technology and biotechnology companies in this state with
unused net operating losses, as described in Section 17276.20 or
Section 24416.20 of the Revenue and Taxation Code, to surrender those
net operating losses for use by other taxpayers in this state.
(b) The tax benefits of those net operating losses may be used on
a tax return required to be filed pursuant to Part 10.2 (commencing
with Section 18401) of Division 2 of the Revenue and Taxation Code by
a taxpayer subject to the Corporation Tax Law (Part 11 (commencing
with Section 23001) of Division 2 of the Revenue and Taxation Code)
in exchange for private financial assistance to be provided by the
taxpayer that is the recipient of the corporation business tax
benefit certificate to assist in the funding of costs incurred by the
new or expanding emerging technology and biotechnology company.
(c) (1) The department, in cooperation with the Franchise Tax
Board, shall review and approve applications by new or expanding
emerging technology and biotechnology companies in this state with
unused but otherwise allowable net operating losses to surrender
those net operating losses in exchange for private financial
assistance to be made by the taxpayer that is the recipient of the
corporation business tax benefit certificate in an amount equal to at
least 80 percent of the amount of the surrendered tax net operating
losses.
(2) For purposes of this section, "amount of surrendered net
operating losses" means the amount of the net operating loss
multiplied by the new or expanding emerging technology or
biotechnology company's anticipated apportionment factor, as
determined pursuant to Section 25128 or Section 25128.5 of the
Revenue and Taxation Code, for the taxable year in which the net
operating loss is transferred and subsequently multiplied by the rate
of tax imposed by Section 23151 or Section 23501 of the Revenue and
Taxation Code.
(d) The department shall not approve the transfer of more than
sixty million dollars ($60,000,000) of transferable net operating
losses in a fiscal year. If the total amount of transferable net
operating losses requested to be surrendered by approved applicants
exceeds sixty million dollars ($60,000,000) in a fiscal year, the
department, in cooperation with the Franchise Tax Board, shall
allocate the transfer of surrendered net operating losses as follows:
(1) An eligible applicant with two hundred fifty thousand dollars
($250,000) or less of transferable net operating losses shall be
authorized to surrender the entire amount of its transferable net
operating losses.
(2) An eligible applicant with more than two hundred fifty
thousand dollars ($250,000) of transferable net operating losses
shall be authorized to surrender a minimum of two hundred fifty
thousand dollars ($250,000) of its transferable net operating losses.
(3) An eligible applicant with more than two hundred fifty
thousand dollars ($250,000) of transferable net operating losses
shall be authorized to surrender additional transferable net
operating losses determined by multiplying the applicant's
transferable net operating losses less the minimum transferable net
operating losses that company is authorized to surrender under
paragraph (2) by a fraction, the numerator of which is the total
amount of transferable net operating losses that the department is
authorized to approve less the total amount of transferable tax
benefit approved under paragraphs (1) and (2), and the denominator of
which is the total amount of transferable net operating losses
requested to be surrendered by all eligible applicants less the total
amount of transferable net operating losses approved under
paragraphs (1) and (2).
(e) If the total amount of transferable net operating losses that
would be authorized using the method in subdivision (d) exceeds sixty
million dollars ($60,000,000) in a fiscal year, then the department,
in cooperation with the Franchise Tax Board, shall limit the total
amount of net operating losses authorized to be transferred to sixty
million dollars ($60,000,000) by applying the method in subdivision
(d) on an apportioned basis.
(f) For purposes of this section, "transferable tax benefits"
include an eligible applicant's unused but otherwise allowable net
operating losses multiplied by the applicant's anticipated
apportionment factor as determined pursuant to Section 25128 or
Section 25128.5 of the Revenue and Taxation Code for the taxable year
in which the net operating loss is transferred and subsequently
multiplied by the tax imposed by Section 23151 or Section 23501 of
the Revenue and Taxation Code. An eligible applicant's transferable
net operating losses shall be limited to net operating losses that
the applicant requests to surrender in its application to the
department and shall not, in total, exceed the maximum amount of net
operating losses that the applicant is eligible to surrender.
13996.1. No application for a corporation business tax benefit
transfer certificate shall be approved for a new or expanding
emerging technology or biotechnology company that meets either of the
following:
(a) Has demonstrated positive net operating income in any of the
two previous full years of ongoing operations as determined on its
financial statements issued according to generally accepted
accounting standards endorsed by the Financial Accounting Standards
Board.
(b) Is directly or indirectly at least 50 percent owned or
controlled by another corporation that has demonstrated positive net
operating income in any of the two previous full years of ongoing
operations as determined on its financial statements issued according
to generally accepted accounting standards endorsed by the Financial
Accounting Standards Board or is part of a consolidated group of
affiliated corporations, as filed for federal income tax purposes,
that in the aggregate has demonstrated positive net operating income
in any of the two previous full years of ongoing operations as
determined on its combined financial statements issued according to
generally accepted accounting standards endorsed by the Financial
Accounting Standards Board.
13996.2. (a) The maximum lifetime value of surrendered net
operating losses that a corporation shall be permitted to surrender
pursuant to this chapter is fifteen million dollars ($15,000,000).
(b) Applications must be received on or before June 30 of each
fiscal year.
13996.3. The department, in consultation with the Franchise Tax
Board, shall establish rules for the recapture of all, or a portion
of, the amount of a grant of a corporation business tax benefit
certificate from the new or expanding emerging technology and
biotechnology company having surrendered tax benefits pursuant to
this chapter in the event the company fails to use the private
financial assistance received for the surrender of tax benefits as
required by this chapter or fails to maintain a headquarters or a
base of operation in this state during the five years following
receipt of the private financial assistance; except if the failure to
maintain a headquarters or a base of operation in this state is due
to the liquidation of the new or expanding emerging technology and
biotechnology company.
13996.4. (a) The department, in cooperation with the Franchise
Tax Board, shall review and approve applications by taxpayers subject
to the Corporation Tax Law (Part 11 (commencing with Section 23001)
of Division 2 of the Revenue and Taxation Code) to acquire
surrendered tax net operating losses approved pursuant to this
chapter, which shall be issued in the form of corporation business
tax benefit transfer certificates, in exchange for private financial
assistance to be made by the taxpayer in an amount equal to at least
80 percent of the amount of the surrendered net operating loss of an
emerging technology or biotechnology company in the state.
(b) A corporation business tax benefit transfer certificate shall
not be issued unless the applicant certifies that as of the date of
the exchange of the corporation business tax benefit certificate it
is operating as a new or expanding emerging technology or
biotechnology company and has no current intention to cease operating
as a new or expanding emerging technology or biotechnology company.
(c) The private financial assistance shall assist in funding
expenses incurred in connection with the operation of the new or
expanding emerging technology or biotechnology company in the state,
including, but not limited to, the expenses of fixed assets, such as
the construction and acquisition and development of real estate,
materials, start up, tenant fitout, working capital, salaries,
research and development expenditures, and any other similar
expenses.
(d) The department shall require a taxpayer that acquires a
corporation business tax benefit certificate to enter into a written
agreement with the new or expanding emerging technology or
biotechnology company concerning the terms and conditions of the
private financial assistance made in exchange for the certificate.
The written agreement may contain terms concerning the maintenance by
the new or expanding emerging technology or biotechnology company of
a headquarters or a base of operation in this state.
13996.5. Any net operating losses that are transferred pursuant
to a corporation business tax benefit transfer certificate issued to
a taxpayer under this chapter shall only be allowed beginning on or
after the first day of the fourth taxable year after the date of
issue of that certificate.
13996.6. For purposes of this chapter:
(a) "Biotechnology" means the continually expanding body of
fundamental knowledge about the functioning of biological systems
from the macro level to the molecular and subatomic levels, as well
as novel products, services, technologies, and subtechnologies
developed as a result of insights gained from research advances that
add to that body of fundamental knowledge.
(b) "Biotechnology company" means an emerging corporation that has
its headquarters or base of operations in this state; that owns, has
filed for, or has a valid license to use protected, proprietary
intellectual property; and that is engaged in the research,
development, production, or provision of biotechnology for the
purpose of developing or providing products or processes for specific
commercial or public purposes, including, but not limited to,
medical, pharmaceutical, nutritional, and other health-related
purposes, agricultural purposes, and environmental purposes, or a
person whose headquarters or base of operations is located in this
state, engaged in providing services or products necessary for such
research, development, production, or provision.
(c) "Full-time employee" means a person employed by a new or
expanding emerging technology or biotechnology company for
consideration for at least 35 hours a week, or who renders any other
standard of service generally accepted by custom or practice as
full-time employment and whose wages are subject to withholding as
required by Division 6 (commencing with Section 13000) of the
Unemployment Insurance Code, or who is a partner of a new or
expanding emerging technology or biotechnology company who works for
the partnership other than as an employee for at least 35 hours a
week, or who renders any other standard of service generally accepted
by custom or practice as full-time employment, and whose
distributive share of income, gain, loss, or deduction, or whose
guaranteed payments, or any combination thereof, is subject to the
payment of estimated taxes, as required under the Revenue and
Taxation Code. To qualify as a "full-time employee," an employee
shall also receive from the new or expanding emerging technology or
biotechnology company health benefits under a group health plan, a
health benefits plan, or a policy or contract of health insurance
covering more than one person issued pursuant to the Insurance Code.
"Full-time employee" shall not include any person who works as an
independent contractor or on a consulting basis for the new or
expanding emerging technology or biotechnology company.
(d) "Group health plan" means an employee welfare benefit plan, as
defined in Title 1 of section 3 of the Employee Retirement Income
Security Act of 1974 (Public Law 93-406; 29 U.S.C. Sec.1002(1)), to
the extent that the plan provides medical care and including items
and services paid for as medical care to employees or their
dependents, as defined under the terms of the plan, directly or
through insurance, reimbursement or otherwise.
(e) "New or expanding" means a technology or biotechnology company
that at the end of the calendar year prior to the year in which the
company files an application for surrender of unused but otherwise
allowable tax benefits, on the date on which the application is
submitted, and on the date on which the company receives the
corporation business tax benefit certificate, has fewer than 225
employees in the United States, that has at least one full-time
employee working in this state if the company has been incorporated
for less than three years, that has at least five full-time employees
working in this state if the company has been incorporated for more
than three years but less than five years, and that has at least 10
full-time employees working in this state if the company has been
incorporated for more than five years.
(f) "Technology company" means an emerging corporation that has
its headquarters or base of operations in this state; that owns, has
filed for, or has a valid license to use protected, proprietary
intellectual property; and that employs some combination of the
following: highly educated or trained managers and workers, or both,
employed in this state who use sophisticated scientific research
service or production equipment, processes or knowledge to discover,
develop, test, transfer, or manufacture a product or service.
SECTION 1. Section 40609 is added to the Health
and Safety Code, to read:
40609. (a) The district shall process and make a determination
regarding any expedited permit, or any fees related to overtime or
other expenses paid to expedite a permit, within 60 calendar days
upon initial receipt by the district.
(b) If the district does not comply with subdivision (a), the
district shall issue a full refund of any fees paid for the expedited
permit within 75 calendar days upon initial receipt by the district.
SEC. 2. The Legislature finds and declares that
a special law is necessary and that a general law cannot be made
applicable within the meaning of Section 16 of Article IV of the
California Constitution because of the unique needs of industries in
the San Joaquin Valley.
SEC. 3. If the Commission on State Mandates
determines that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code.