AB 194

Bill Subjects

Abstract

(1) Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, and provides various exemptions from the taxes imposed by those laws. This bill would, on and after October 1, 2022, and before October 1, 2023, exempt from those taxes the gross receipts from the sale of, and the storage, use, or other consumption of, diesel fuel, as defined. Existing law imposes or dedicates certain state sales and use tax rates for local funding, including through the Local Revenue Fund 2011, and imposes certain additional state sales and use tax rates on the sale or use of diesel fuel. This bill would specify that this exemption does not apply to those state sales and use tax rates imposed or dedicated for local government funding, including those rates for which revenues are deposited into the Local Revenue Fund 2011, or to those certain additional state sales and use tax rates on the sale or use of diesel fuel. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws. This bill would specify that this exemption does not apply to local sales and use taxes or transactions and use taxes. Existing law, pursuant to Proposition 116, as approved by the voters at the June 5, 1990, statewide general election, establishes the Public Transportation Account in the State Transportation Fund as a trust fund, with revenues derived from a portion of the sales tax on fuels to be used for mass transportation and transportation planning purposes authorized by the Legislature. This bill would, on and after April 1, 2023, and before April 1, 2024, require the California Department of Tax and Fee Administration, with the concurrence of the Department of Finance, to estimate the amount of sales tax revenues foregone due to the above-described sales and use tax exemption, as described. The bill would require the Controller to transfer this estimated amount from the Retail Sales Tax Fund to the Public Transportation Account on a quarterly basis. (2) The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally define "gross income" as income from whatever source derived, except as specifically excluded, and provide various exclusions from gross income. Existing law, in conformity with the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) , and its subsequent amendments in the Paycheck Protection Program and Health Care Enhancement Act, the Paycheck Protection Program Flexibility Act of 2020, and the Consolidated Appropriations Act, 2021, among other things, excludes any amounts of covered loans forgiven under the CARES Act from gross income for purposes of the Personal Income Tax Law and the Corporation Tax Law for taxable years beginning on or after January 1, 2019. This bill would exclude from gross income any covered loan amounts forgiven pursuant to the PPP Extension Act of 2021. (3) The Personal Income Tax Law and the Corporation Tax Law authorize various credits against the taxes imposed by those laws, including a credit against the personal income and corporate income taxes for each taxable year beginning on or after January 1, 2022, and before January 1, 2027, in an amount between $2,500 and $10,000, to a qualified taxpayer that employs an individual who is or recently was homeless, and who meets other specified requirements, as certified by a continuum of care or a community-based service provider, as provided. That credit also applies where the employee is receiving supportive services from a homeless services provider. This bill would expand the credit to include qualified taxpayers that employ a person who has recently received services from a homeless services provider. The bill would also allow a continuum of care or a community-based service provider to issue recertifications, as described. (4) The Personal Income Tax Law and the Corporation Tax Law authorize a credit against the taxes imposed by those laws for each taxable year beginning on or after January 1, 2020, and before January 1, 2021, to a qualified small business employer that receives a tentative credit reservation, in an amount equal to $1,000 for each net increase in qualified employees, not to exceed $100,000 for any qualified small business employer. Existing law authorizes a qualified small business employer that received a tentative credit reservation to irrevocably elect to apply the credit against qualified sales and use taxes imposed on the qualified small business employer in reporting periods commencing on January 1, 2021, and until April 20, 2026, as specified. Existing law requires the qualified small business employer to submit an application to the California Department of Tax and Fee Administration for a tentative credit reservation under these provisions, and requires the department to allocate the credit reservations on a first-come-first-served basis, not to cumulatively exceed $100,000,000. Existing law authorizes a credit under these provisions only for credits claimed on a timely filed original return, as specified. Existing law repealed these provisions on December 1, 2021. This bill, for taxable years beginning on or after January 1, 2020, and before January 1, 2021, would remove the limitation that the credit be claimed on a timely filed original return, as provided. The Personal Income Tax Law and the Corporation Tax Law authorizes a 2nd credit against the personal income and corporate income taxes for each taxable year beginning on or after January 1, 2021, and before January 1, 2022, to a qualified small business employer that receives a tentative credit reservation, in an amount equal to $1,000 for each net increase in qualified employees, not to exceed $150,000 for any qualified small business employer. Existing law authorizes a qualified small business employer that received a tentative credit reservation to irrevocably elect to apply the credit against qualified sales and use taxes imposed on the qualified small business employer in reporting periods commencing on January 1, 2022, and until April 30, 2027, as specified. Existing law requires a qualified small business employer to submit an application to the California Department of Tax and Fee Administration for a tentative credit reservation under these provisions, and requires the department to allocate the credit reservations on a first-come-first-served basis not to cumulatively exceed the amount equal to $70,000,000 plus any unallocated and available amount remaining from the prior credit described above. Existing law authorizes a credit under these provisions only for credits claimed on a timely filed original return, as specified. Existing law repeals these provisions on December 1, 2022. This bill, for taxable years beginning on or after January 1, 2021, and before January 1, 2022, would remove the limitation that the credit be claimed on a timely filed original return, as provided. The bill would extend the repeal date for these provisions to December 1, 2026. (5) Existing law requires the Controller to state an account with persons that receive funds or property belonging to the state and fail to properly render account thereof to the state, and persons that fail to pay to the State Treasury any money belonging to the state. Existing law requires the Controller to offset delinquent accounts against personal income tax refunds that have been certified by the Franchise Tax Board, subject to a specified priority. This bill, for taxable years beginning on or after January 1, 2024, would prohibit the Controller from offsetting delinquent accounts against the personal income tax refunds of an individual who received the above-described earned income tax credit or the young child tax credit for the taxable year. The bill would specify that these provisions do not apply to delinquent accounts for the nonpayment of child or family support. (6) The Personal Income Tax Law and the Corporation Tax Law allow a credit against the taxes imposed by those laws, known as the California Competes Tax Credit, for each taxable year beginning on and after January 1, 2014, and before January 1, 2030, in an amount allocated by GO-Biz through the 2022–23 fiscal year, and provided in a written agreement between GO-Biz and the taxpayer, approved by the California Competes Tax Credit Committee, and based on specified factors, including the number of jobs the taxpayer will create or retain in the state and the amount of investment in the state by the taxpayer. Existing law limits the aggregate amount of credit that may be allocated in any fiscal year, including a limit of $180,000,000 for the 2022–23 fiscal year. This bill would extend the fiscal years for which GO-Biz can allocate credits to 2027–28, and would limit the aggregate amount of credit that may be allocated to $180,000,000 for each fiscal year from 2023–24 to 2027–28, inclusive. The bill would also authorize GO-Biz to consider, when determining whether to enter into a written agreement with a taxpayer for the 2023–24 fiscal year, and each fiscal year thereafter, the taxpayer's commitment to treating their workforce fairly and creating quality, full-time, wage and salary jobs in the state and the taxpayer's willingness to relocate jobs into California from a state that, among other things, has enacted a law that authorizes or requires discrimination against same-sex couples or their families or discriminates on the basis of sexual orientation, gender identity, or gender expression, or a law that denies or interferes with a woman's right to choose to bear a child or to choose and obtain an abortion, as specified. The bill would make additional conforming changes related to these provisions. (7) Existing law imposes penalties when a taxpayer fails to timely file an income tax return or fails to timely pay the tax due as shown on, or as required to be shown on, the tax return, unless it is shown that the failure is due to reasonable cause and not due to willful neglect. This bill, for taxable years beginning on and after January 1, 2022, would require the Franchise Tax Board, upon request by an individual taxpayer, to grant a one­time abatement of a failure-to-file or failure-to-pay timeliness penalty if the taxpayer was not previously required to file a California personal income tax return or has not previously been granted abatement under the bill's provisions, the taxpayer has filed all required returns as of the date of the request for abatement, and the taxpayer has paid, or is in a current arrangement to pay, all tax currently due. (8) Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would provide findings to comply with the additional information requirement for any bill authorizing a new tax expenditure. (9) This bill would also make findings and declarations related to a gift of public funds. (10) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.