Amended in Senate May 27, 2014

Amended in Senate April 28, 2014

Amended in Senate April 2, 2014

Senate Bill No. 1207

Introduced by Senator Wolk

(Coauthors: Senators Knight and Liu)

February 20, 2014

An act to add and repeal Article 1 (commencing with Section 18701) of Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 1207, as amended, Wolk. California Voluntary Contribution Program.

Under the existing Personal Income Tax Law, taxpayers are allowed to contribute amounts in excess of their tax liability for the support of specified funds. Existing law provides for various voluntary contribution check-off funds to be listed on the income tax return.

This bill would modify the existing voluntary check-off system by establishing the California Voluntary Contribution Program to be administered by the office of California Volunteers to expand the contribution options for a taxpayer. The bill would provide that the purpose of the program is to promote charitable giving and collect through the personal income tax return individual taxpayers’ voluntary contributions begin delete to end delete begin insert either to specified charities in a pool of up to 200 end insert qualified applicants, defined to include any charitable organization meeting certain requirements or a state or local agency begin insert or to make a general charitable gift end insert . Not later than January 1, 2017, the bill would require the office to, among other things, develop the application to participate in the program and establish application and renewal fees. The bill would authorize the office to adopt specified policies and guidelines to regulate the number of qualified applicants participating in the program. The bill would authorize the office to adopt regulations necessary to carry out these provisions and would make these regulations subject to the Administrative Procedure Act. The bill would require the Franchise Tax Board to revise the personal income tax form in a manner necessary to inform an individual about how to make begin delete a designation to any qualified applicant end delete begin insert designations to qualified applicants or to the Charitable Giving Fund end insert .

Commencing on January 1, 2017, this bill would allow an individual begin insert taxpayer end insert to designate a contribution to begin delete any qualified applicant end delete begin insert up to 5 qualified applicants or to the Charitable Giving Fund end insert . The bill would require an applicant wishing to receive contributions to submit an application to the program, including an application fee. The bill would require the office to approve an application if specified requirements, and other reasonable requirements, are met, thereby making a qualified applicant eligible to receive voluntary contributions. The bill would require these contributions to be transferred from the Personal Income Tax Fund to the California Voluntary Contribution begin delete Fund, end delete begin insert Fund or to the Charitable Giving Fund, both of which are end insert created by this bill. The bill would require moneys in the California Voluntary Contribution begin insert Fund and the Charitable Giving end insert Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, and the balance begin insert from the California Voluntary Contribution Fund end insert to the office of California Volunteers for distribution to each qualified applicant designated by an individual begin insert and the balance from the Charitable Giving Fund to the office for distribution as grants for charitable purposes, in accordance with policies and procedures established by the office end insert . The bill would establish a specified minimum contribution amount for each qualified applicant. The bill would prohibit a qualified applicant from receiving voluntary contributions if, among other things, the average amount of contributions received during certain calendar years did not equal the minimum contribution amount.

This bill would annually require the office to provide the Legislature with a report containing specified information on the program. The bill would also require this report to be made available to the public. begin insert The bill would also require the office to work in consultation with the Department of Finance to develop a strategy to propose to the Legislature for a continuous appropriation to distribute taxpayers’ contributions to the designated qualified applicants. end insert

This bill would repeal these provisions on January 1, begin delete 2030, unless a later enacted statute deletes or extends that date end delete begin insert 2023 end insert .

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.  

(a) The Legislature finds and declares that the
state has a role in informing the public of the value and need for
community service, volunteerism, and charitable giving as a form
of civic engagement in order to support important social and
community programs. The Legislature further finds and declares
that there are many worthy charitable causes in California that
may benefit from taxpayers’ voluntary charitable contributions on
the tax form, but are not able to do so under the existing tax
check-off process. Therefore, it is the intent of the Legislature to
promote civic engagement by establishing a program where
taxpayers have the opportunity to give to a wide range of charitable
causes on their tax return.

(b) It is the intent of the Legislature to retain all existing funds
currently on the tax return form until their repeal dates, and, in
legislation to be enacted at a later date, transition the remaining
funds to the California Voluntary Contributions Program by 2020.
It is further the intent of the Legislature that the dates of repeal for
the California Fund for Senior Citizens, the California Firefighters’
Memorial Fund, and the California Peace Officer Memorial
Foundation Fund be extended in legislation to be enacted at a later
date.

SEC. 2.  

Article 1 (commencing with Section 18701) is added
to Chapter 3 of Part 10.2 of Division 2 of the Revenue and Taxation
Code, to read:

 

Article 1.  California Voluntary Contribution Program

 

18701.  

For the purposes of this article, the following definitions
shall apply:

(a) “Charitable organization” means an organization exempt
from income tax as an organization described in Section 23701d.

(b) “Local agency” and “state agency” have the same meanings
as defined in Section 6252 of the Government Code.

(c) “Office” means the office of California Volunteers, as
established by Executive Order S-24-06, or its successor.

(d) “Program” means the California Voluntary Contribution
Program begin insert established by this article end insert .

(e) “Qualified applicant” means either of the following:

(1) A charitable organization that meets all of the following
requirements:

(A) Has registered in this state with the Attorney General’s
Registry of Charitable Trusts for each of the three years prior to
the date of application and has met each of the requirements that
apply to the applicant, under statute and as established by the
Attorney General for the Registry of Charitable Trusts.

(B) Has submitted annual returns or statements with the
Franchise Tax Board, pursuant to Section 23771, 23772, or 23774
for each of the three years prior to the date of application.

(C) Has average annual total revenues in excess of the minimum
contribution begin delete level end delete begin insert amount end insert described in Section 18705, as calculated
from each of the three years prior to the date of application, not
including those contributions made by a designation in excess of
the tax liability on an individual’s tax return.

(2) Is a local agency or state agency.

18702.  

(a) There is hereby established in state government the
California Voluntary Contribution begin delete Program . end delete begin insert Program. end insert

(b) The purpose of the program is to promote charitable giving
and provide individual taxpayers’ voluntary contributions to
qualified applicants. The office begin delete or a successor agency, end delete shall be
responsible for administering the program.

begin insert

(c) The number of qualified applicants that may participate in
the program each taxable year shall be no more than 200, less the
number of funds established pursuant to Chapter 3 (commencing
with Section 18711) of Part 10.2 of Division 3.

end insert

18703.  

(a) A qualified applicant that wishes to receive
voluntary contributions through the program shall submit an
application to the office by a date established by the office. The
application shall include all of the following:

(1) Evidence satisfactory to the office that the applicant is a
qualified applicant. All documents submitted to the office shall be
made public.

(2) An application fee, as established by the office pursuant to
Section 18710 in an amount sufficient to cover the reasonable costs
of administering the application process.

(b) The office shall approve an application if the requirements
of subdivision (a) and other reasonable requirements consistent
with this article are met, thereby making a qualified applicant
eligible to receive voluntary contributions.

(c) This section shall become operative on January 1, 2017.

18704.  

A qualified applicant whose application is approved
by the office may continue to receive voluntary contributions if
the following requirements are met:

(a) Contributions received by the qualified applicant through
the program in the prior year meet or exceed the minimum
contribution begin delete level end delete begin insert amount end insert established for the program, as described
in Section 18705.

(b) The qualified applicant continues to meet the requirements
established for qualified applicants in subdivision (e) of Section
18701.

(c) The qualified applicant submits an application for renewal
and pays a renewal fee, as determined by the office pursuant to
Section 18710.

(d) This section shall become operative on January 1, 2017.

18705.  

(a) The minimum contribution amount for each
approved qualified applicant is one hundred thousand dollars
($100,000).

(b) Notwithstanding subdivision (a), the office begin delete shall end delete begin insert may end insert adopt
regulations to adjust the minimum contribution begin delete requirement every
five calendar years, end delete begin insert amount end insert beginning begin delete with the third calendar year
after the first appearance of the “California Voluntary Contributions
Fund” on the personal income tax return end delete begin insert on January 1, 2020 end insert .

(c) This section shall become operative on January 1, 2017.

18706.  

(a) A qualified applicant may no longer receive
voluntary contributions if either of the following apply:

(1) The average amount of contributions received during three
calendar years did not equal the minimum contribution
begin delete requirement, end delete begin insert amount, end insert as described in Section 18705.

(2) The designee no longer meets the definition of a “qualified
applicant” pursuant to subdivision (e) of Section 18701.

(b) When a qualified applicant is no longer eligible to receive
voluntary charitable contributions pursuant to this article, the office
shall revoke the eligibility of the qualified applicant from the
program and notify the Franchise Tax Board of the revocation begin insert by
a date specified by that board end insert .

begin insert

(c) A qualified applicant whose eligibility is revoked may
participate in the program for the subsequent calendar year if the
Franchise Tax Board is unable to revise the tax form and related
materials for that year.

end insert begin delete

(c)

end delete

begin insert (d) end insert  A qualified applicant whose eligibility is revoked from
participation in the program may reapply to the program no sooner
than begin delete five end delete begin insert three end insert years after the eligibility was revoked.

begin delete

(d)

end delete

begin insert (e) end insert  This section shall become operative on January 1, 2017.

18707.  

(a) An individual may designate on the personal income
tax return that a contribution in excess of the tax liability, if any,
be made begin delete to a specific end delete begin insert as follows: end insert

begin insert (1) end insert begin insert   end insert begin insert To up to five specific end insert qualified begin delete applicant end delete begin insert applicants end insert whose
begin delete application has end delete begin insert applications have end insert been approved pursuant to
Section 18703. begin delete The contribution shall be deposited in the California
Voluntary Contribution Fund established by Section 18708. That
designation is to be used as a voluntary contribution on the tax
return. end delete

begin insert

(2) To the Charitable Giving Fund pursuant to Section 18708.

end insert

(b) The contributions shall be in full dollar amounts and may
be made individually by each signatory on a joint return.

(c) A designation under subdivision (a) shall be made for any
taxable year on the original return for that taxable year, and once
made shall be irrevocable. If payments and credits reported on the
return, together with any other credits associated with the
individual’s account, do not exceed the individual’s liability, the
return shall be treated as though no designation has been made.

(d) The Franchise Tax Board, in consultation with the office,
shall revise the tax form of the return to allow for the designation
permitted under subdivision (a). The form shall also include in the
instructions information that the contribution may be in the amount
of one dollar ($1) or more and that the contribution shall be used
to support begin delete the end delete begin insert a designated end insert qualified applicant begin insert or applicants or
the Charitable Giving Fund, as end insert specified by the taxpayer.

(e) A deduction shall be allowed under Article 6 (commencing
with Section 17201) of Chapter 3 of Part 10 for any contribution
made pursuant to subdivision (a).

(f) This section shall become operative on January 1, 2017.

18708.  

(a)  begin insert (1) end insert begin insert   end insert There is hereby established in the State Treasury
the California Voluntary Contribution Fund to receive contributions
begin insert to qualified applicants end insert made pursuant to Section 18707.

begin insert

(2) (A) There is hereby established in the State Treasury the
Charitable Giving Fund to receive contributions made pursuant
to Section 18707.

end insert begin insert

(B) The office shall administer the Charitable Giving Fund and
develop policies and procedures, including, but not limited to, a
competitive grant process, to distribute the funds to charitable
organizations.

end insert

(b) The Franchise Tax Board shall notify the Controller of both
the amount of money paid by individuals in excess of their tax
liability and the amount of refund money begin delete which end delete begin insert that end insert individuals
have designated pursuant to Section 18707 to be transferred to the
California Voluntary Contribution Fund begin insert and the Charitable Giving
Fund end insert . The Controller shall transfer from the Personal Income Tax
Fund to the California Voluntary Contribution Fund an amount
not in excess of the sum of the amounts designated by individuals
begin insert to qualified applicants end insert pursuant to Section 18707 for payment into
that fund begin insert and shall transfer to the Charitable Giving Fund an
amount not in excess of the sum of the amounts designated by
individuals for that fund end insert .

(c) This section shall become operative on January 1, 2017.

18709.  

(a) All money transferred to the California Voluntary
Contribution begin insert Fund and the Charitable Giving end insert Fund, upon
appropriation by the Legislature, shall be allocated as follows:

(1) To the Franchise Tax Board, the Controller, and the office
for reimbursement of all costs incurred in connection with their
duties under this article.

(2)  begin delete To end delete begin insert From the California Voluntary Contribution Fund, to end insert
the office for distribution to each qualified applicant designated
by a taxpayer.

begin insert

(3) From the Charitable Giving Fund, to the office for
distribution according to the regulations established for
distributions from the fund.

end insert

(b) On and after January 1, 2020, no more than 5 percent of
money from the begin delete fund, end delete begin insert funds, end insert exclusive of fee revenues, shall be
used for administrative purposes.

(c) All moneys may be carried over from the year in which they
were received and encumbered in any following year.

(d) In the event that no designee is specified or the specified
designee is not a qualified applicant, the contribution shall, after
reimbursement of the direct actual costs of the Franchise Tax Board
for the collection and administration of funds under this article,
be transferred to the office to further the purposes of this article.

(e) In the event an individual designates a contribution to a
qualified applicant whose eligibility for receiving voluntary
contributions has been revoked, but that was eligible to receive a
voluntary contribution for the taxable year in which the designation
was made, the contribution shall be distributed to the qualified
applicant.

(f) In the event an individual designates a contribution to more
than one qualified applicant listed on the tax return, and the amount
available is insufficient to satisfy the total amount designated, the
contribution shall be allocated among the designees on a pro rata
basis.

(g) This section shall become operative on January 1, 2017.

18710.  

(a) The office shall, not later than January 1, 2017, do
all of the following:

(1) Develop the application and related materials to be
completed by applicants to participate in the program, including
the types of proof necessary to comply with the program.

(2) By regulation, establish reasonable and necessary application
and renewal fees in an amount not to exceed the reasonable costs
of administering the application and renewal process.

(3) Develop procedures and adopt regulations to inform
taxpayers on how to contribute directly to a charitable organization
or state or local agency if that charitable organization or state or
local agency is not eligible to receive contributions because it did
not meet the required minimum contribution amount.

(4) In consultation with other agencies that regulate charitable
organizations, develop policies and procedures to ensure that
qualified applicants are in compliance with applicable statutes
affecting those charitable organizations.

(5) Develop a plan to transition the remaining funds on the tax
return to the program. That plan should be submitted to the relevant
committees of the Legislature by January 1, 2020.

begin insert

(6) Work in consultation with the Department of Finance to
develop a strategy to propose to the Legislature for a continuous
appropriation to distribute taxpayers’ contributions to the
designated qualified applicants.

end insert

(b) The office may do the following:

(1) Form an advisory body or related bodies as deemed
necessary.

(2) Contract with other agencies, public or private, as deemed
necessary in pursuit of the duties described in this act.

(3) Adopt regulations necessary for the administration of this
article.

(4) In order to develop the program and sustain the integrity of
its operations, the office may adopt policies and guidelines that
may include, but not be limited to, application cut-off dates, a
first-come-first-served system, or a lottery, to begin delete regulate end delete begin insert limit end insert the
number of qualified applicants begin insert within the number specified in
subdivision (c) of Section 18702, end insert participating in the program based
on legislative appropriations and workforce capacity. begin delete This
paragraph shall become inoperative on January 1, 2023. end delete

(c) (1) The office shall annually provide to the Legislature, and
make publicly available, a report on the program, including goals,
a baseline, metrics and targets to track, over time, the effectiveness
of efforts to encourage charitable giving. The annual report shall
include information on total contributions received, administrative
and related costs, and total contribution distributed to qualified
applicants.

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

(B) This subdivision shall be become inoperative on January 1,
2020, pursuant to Section 10231.5 of the Government Code.

(d) The Franchise Tax Board shall revise the tax form and any
other related materials, including online materials, in order to allow
an individual to designate a contribution to any one of the qualified
applicants approved pursuant to Section 18703 begin insert and to the
Charitable Giving Fund end insert . These forms and materials may include,
but not be limited to, a separate schedule, booklet, or any other
material necessary to inform an individual about qualified
applicants and how to make a designation on the personal income
tax return.

18711.  

Any regulation adopted pursuant to this article shall be
adopted pursuant to the Administrative Procedure Act (Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of
Title 2 of the Government Code).

18712.  

This article shall remain in effect only until January 1,
begin delete 2030, end delete begin insert 2023, end insert and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, begin delete 2030, end delete begin insert 2023, end insert deletes or
extends that date.