Amended in Assembly May 15, 2014

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 to add and repeal Section 17053.44 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2514, as amended, Pan. Income taxes: credits: rural health care professionals.

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

The bill, for taxable years beginning on or after January 1, begin delete 2014 end delete begin insert 2015 end insert , and before January 1, begin delete 2019 end delete begin insert 2020 end insert , 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 begin delete rural end delete 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.

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.  

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 begin delete rural end delete
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.

SEC. 2.  

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

17053.44.  

(a) (1) For taxable years beginning on or after
January 1, begin delete 2014 end delete begin insert 2015 end insert , and before January 1, begin delete 2019 end delete begin insert 2020 end insert , 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.

begin delete

(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.

end delete begin insert

(2) The amount of the student loan payments made by the
qualified taxpayer during the taxable year, not to exceed one-third
of the remaining balance of the qualified taxpayer’s student loan
as of January 1 of the taxable year in which the credit is allowed.

end insert

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

(b) For purposes of this section:

(1)  begin delete “Full-time” end delete begin insert “Full time” end insert 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 begin insert graduate or professional end insert degree that enables him or
her to be licensed or certified as a health care professional in this
state.

(3)  begin delete “Rural health end delete begin insert “Health end insert 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 begin insert or is a medically underserved area, as
defined in Section 128552 of the Health and Safety Code end insert .

(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 begin delete rural end delete 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.

begin delete

(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.

end delete begin insert

(d) If the qualified taxpayer ceases to reside and practice in the
health care professional shortage area, or his or her student loan
is paid in full by means of any other loan repayment program, the
tax imposed by this part for the taxable year in which that cessation
occurs shall be increased by an amount equal to the credit allowed
under this section that was applied to reduce tax otherwise payable
under this part by the qualified taxpayer. Additionally, any unused
credit carried over by the qualified taxpayer shall be forfeited.

end insert

(e)  begin insert (1) end insert begin insert   end insert 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.

begin insert

(2) The credit allowed by this section is in lieu of any other
deduction or credit which the qualified taxpayer may otherwise
claim pursuant to this part with respect to the same item of expense.

end insert

(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,
begin delete 2019 end delete begin insert 2020 end insert , and as of that date is repealed.

SEC. 3.  

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