Amended in Senate April 29, 2014

Senate Bill No. 1189

Introduced by Senators Liu and DeSaulnier

(Coauthors: Senators Mitchell, Padilla, and Wolk)

(Coauthors: Assembly Members begin delete Bonilla end delete begin insert Bonta end insert and Dickinson)

February 20, 2014

An act to add Section 17052.1 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1189, as amended, Liu. begin delete Income end delete begin insert Personal income end insert tax: credit: earned income.

The Personal Income Tax Law allows various credits against the taxes imposed by that law, including certain credits that are allowed in modified conformity to credits allowed by federal income tax laws.

This bill would, for taxable years beginning on or after January 1, 2015, begin insert and before January 1, 2026, end insert allow a credit based upon earned income that is equal to 15% of the earned income tax credit allowed by federal law. begin insert The bill would require the Franchise Tax Board to report to the Legislature regarding the utilization of the tax credit, as provided. end insert

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 17052.1 is added to the Revenue and
Taxation Code, to read:

17052.1.  

(a) For each taxable year beginning on or after
January 1, 2015, begin insert and before January 1, 2026, end insert there shall be allowed
a credit against the “net tax,” as defined by Section 17039, an
amount computed by multiplying the “federal earned income credit
amount,” as defined in subdivision (b), by 15 percent.

(b) For purposes of this section, “federal earned income credit
amount” means the amount determined under Section 32 of the
Internal Revenue Code, begin delete as that section reads as amended by Public
Law 112-240 end delete begin insert as amended by Section 1002(a) of Public Law 111-5,
as amended by Section 219(a)(2) of Public Law 111-226, as
amended by Section 103(c) of Public Law 111-312 and, as
amended by Section 103(c) of Public Law 112-240 end insert .

begin insert

(c) (1) Notwithstanding Section 10231.5 of the Government
Code, on or before January 1, 2025, the Franchise Tax Board
shall submit a report on the utilization of the credit described in
subdivision (a) to the Legislature. The report shall include
information regarding the effectiveness of the credit, including the
amount of the credit claimed, the number of claims made, and an
estimate of the amount overclaimed and underclaimed.

end insert begin insert

(2) The report submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government
Code.

end insert

SEC. 2.  

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