Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2514

Introduced by Assembly Member Pan

February 21, 2014

An act begin delete relating to physicians and surgeons end delete begin insert to add and repeal Section 17053.44 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 2514, as amended, Pan. begin delete California Physician Corps Program. end delete begin insert Income taxes: credits: rural health care professionals. end insert

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The Personal Income Tax Law allows various credits against the taxes imposed by that law.

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The bill, for taxable years beginning on or after January 1, 2014, and before January 1, 2019, would allow a credit against the taxes imposed under that law to a qualified taxpayer, as defined, that is a health care professional who resides and practices in a rural health care professional shortage area pursuant to an agreement with the State Department of Health Care Services in a specified amount of the qualified taxpayer’s student loans, as provided.

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This bill would take effect immediately as a tax levy.

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Existing law establishes the California Physician Corps Program within the Health Professions Education Foundation, which provides financial incentives, as specified, to a physician and surgeon for practicing in a medically underserved community.

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This bill would declare the intent of the Legislature to enact legislation that would create a taskforce to accomplish specified goals, including collaborating with the federal government to create a federal fund-matching program to assist with loan repayments for health care providers in medically underserved areas.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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The Legislature finds and declares that, in order
for all geographic areas of California to have the opportunity for
economic development, it is vital that excellent health care be
available throughout the state. The Legislature further finds and
declares that payment of student loans is an incentive used by rural
communities and health care institutions to attract health care
professionals to practice. It is therefore the intent of the Legislature
to provide a tax credit for the purpose of payment of student loans
as an incentive to encourage health care professionals to locate
in medically underserved areas of the State of California.

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begin insert SEC. 2. end insert   

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begin insert Section 17053.44 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 17053.44. end insert   

(a) (1) For taxable years beginning on or after
January 1, 2014, and before January 1, 2019, there shall be
allowed to a qualified taxpayer a credit against the “net tax,” as
defined by Section 17039, in an amount as determined by
paragraph (2), of the qualified taxpayer’s student loans.

(2) The amount of the credit allowed by this section shall be the
lesser of the following:

(A) One-third of the balance due on the qualified taxpayer’s
student loans as of January 1 of the taxable year in which the
credit is allowed.

(B) The total balance due on the qualified taxpayer’s student
loans as of January 1 of the taxable year in which the credit is
allowed minus the total amount of credit allowed in previous
taxable years pursuant to this section.

(3) A credit may be allowed pursuant to this section for five
consecutive taxable years.

(b) For purposes of this section:

(1) “Full-time” means at least 20 hours per week on average
for 180 days for the first taxable year in which a credit is allowed
pursuant to this section, and at least 20 hours per week on average
for at least 10 months in subsequent taxable years.

(2) “Qualified taxpayer” means an individual who meets all of
the following conditions:

(A) Is a dentist, physician, physician assistant, or advanced
practice nurse who is licensed or certified to practice within
California.

(B) Resides and practices full-time in a rural health care
professional shortage area and has committed to residing and
practicing in that area for at least three years and up to five years
pursuant to an agreement between him or her and the State
Department of Health Care Services.

(C) Is a borrower on student loans under a recognized loan
program used by him or her for higher education opportunities
resulting in a degree that enables him or her to be licensed or
certified as a health care professional in this state.

(3) “Rural health care professional shortage area” means any
area of the state that is not a metropolitan statistical area as
described in the publication “State and Metropolitan Area Data
Book,” 2010, published by the United States Census Bureau and
that is located 30 or more miles from the nearest hospital
containing 30 or more licensed beds.

(4) “Student loan” means a student obligation note or other
debt evidencing a loan to any individual for higher education
purposes or for the purpose of consolidating or refinancing a loan
for higher education purposes, which is either a guaranteed student
loan, an educational loan, or a loan eligible for consolidation or
refinancing under Part B of Title IV of the Higher Education Act
of 1965, as amended (20 U.S.C. Sec. 1070 et seq.).

(c) A credit shall be allowed pursuant to this section only for
those taxable years in which:

(1) The qualified taxpayer is not delinquent on his or her student
loan payments.

(2) The qualified taxpayer resides and practices in a rural health
care professional shortage area pursuant to an agreement with
the State Department of Health Care Services.

(3) The qualified taxpayer’s student loan has an outstanding
balance for at least a part of the taxable year.

(d) If the qualified taxpayer does not reside and practice within
a rural health care professional shortage area during the period
in which he or she was committed to reside and practice in that
area or pays his or her student loan in full by means of any other
loan repayment program, any remaining unapplied credit shall
be canceled and any previously applied credit for the taxable year
in which the move occurred, in which the practice ended, or in
which the loan was paid in full shall be recaptured, and the
qualified taxpayer shall be liable for any increase in tax
attributable to the recapture of any credit previously allowed under
this section.

(e) In the case where the credit allowed under this section
exceeds the “tax,” the excess credit may be carried over to reduce
the “tax” in the following taxable year, and succeeding five taxable
years, if necessary, until the credit has been exhausted.

(f) The State Department of Health Care Services and the
Franchise Tax Board shall promulgate rules and regulations as
necessary or appropriate to implement this section.

(g) This section shall remain in effect only until December 1,
2019, and as of that date is repealed.

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begin insert SEC. 3. end insert   

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This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

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SECTION 1.  

(a) The Legislature finds and declares all of the
following:

(1) The gap between California’s medical providers and patients
has been widening for years. The number of medical schools and
residency positions has not kept up with the growing and aging
population of the state.

(2) Furthermore, there is a severe maldistribution of health care
providers and services throughout the state. Most physicians
practice in larger cities and suburbs while rural populations are
underserved. The majority of California’s counties have been
designated by the federal government as health manpower shortage
areas.

(3) The National Health Service Corps and the Steven M.
Thompson Physician Corps Loan Repayment Program help repay
student loans of providers who commit to practice for a period of
time in health manpower shortage areas. However, these modest
funds are inadequate to attract enough providers and to offset their
skyrocketing school debts.

(b) It is, therefore, the intent of the Legislature to enact
legislation that would create a taskforce to accomplish all of the
following:

(1) Encourage funding from private individuals, groups, and
corporations to augment loan repayment programs for physicians.

(2) Stimulate the formation of fund-matching programs from
local groups and government entities for recruitment and retention
of local health care providers.

(3) Collaborate with the federal government to create a federal
fund-matching program to assist with loan repayments for health
care providers in medically underserved areas.

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