Bill Text: CA AB1682 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Personal income taxes: caregiver tax credit.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2020-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1682 Detail]

Download: California-2019-AB1682-Amended.html

Amended  IN  Assembly  March 28, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 1682


Introduced by Assembly Member Wicks

February 22, 2019


An act to amend Section 17052 of add Section 17052.2 to the Revenue and Taxation Code, relating to taxation. taxation, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1682, as amended, Wicks. Personal income taxes: earned income caregiver tax credit.
The Personal Income Tax Law, beginning on or after January 1, 2015, in modified conformity with federal income tax laws, allows Law allows various credits against the taxes imposed by that law, including an earned income tax credit against personal income tax and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law as determined by the earned income tax credit adjustment factor, as specified.
This bill would make a nonsubstantive change to this credit. for taxable years beginning on or after January 1, 2019, would allow to an eligible caregiver, defined to mean an individual eligible to claim an earned income tax credit but who is not required to have earned income and who may claim this credit using a taxpayer identification number or a social security number, who provides uncompensated care for a qualified dependent, as defined, a credit in an amount equal to $1,200. The bill would limit the allowance of this credit to those taxable years in which the earned income tax credit is operative and when the earned income tax credit adjustment factor for a taxable year is not 0%. The bill would additionally require, for taxable years beginning on or after January 1, 2019, for a taxpayer with an allowable credit in excess of tax liability, a payment from the Tax Relief and Refund Account, a continuously appropriated account, to the taxpayer equal to the amount of the allowable credit that is in excess of tax liability, as provided. By authorizing additional payments from this account, this bill would make an appropriation.
Vote: MAJORITY2/3   Appropriation: NOYES   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Section 17052.2 is added to the Revenue and Taxation Code, to read:

17052.2.
 (a) (1) For each taxable year beginning on or after January 1, 2019, there shall be allowed against the “net tax,” as defined by Section 17039, to an eligible caregiver, a caregiver tax credit in an amount equal to one thousand two hundred dollars ($1,200), except as otherwise provided by this section.
(2) The caregiver tax credit authorized by this section shall only be operative for taxable years for which the earned income tax credit, allowed pursuant to Section 17052, is operative and the earned income tax credit adjustment factor for a taxable year for that credit is not 0 percent.
(3) The credit amount allowed shall be one thousand two hundred dollars ($1,200) regardless of how many qualified dependents the eligible caregiver provides care for.
(b) For purposes of this section:
(1) “Eligible caregiver” means a taxpayer who provides uncompensated care for a qualified dependent, and who would otherwise meet the requirements of an eligible individual pursuant to Section 17052, except as follows:
(A) An eligible caregiver is not required to have earned income for the taxable year. If the taxpayers are spouses filing jointly, the eligible caregiver shall have an earned income of zero ($0) dollars.
(B) The eligible caregiver or the qualified dependent, or both, may have a taxpayer identification number that is a social security number or is a federal individual taxpayer identification number.
(2) “Qualified dependent” means any of the following:
(A) A qualifying child, as that term is used in Section 17052, under six years of age during the taxable year in which the credit is claimed.
(B) A dependent for whom a deduction is allowed under Section 151 of the Internal Revenue Code, relating to allowance of deductions for personal exemptions, 70 years of age or older during the taxable year in which the credit is claimed.
(C) An individual described in Section 21(b)(1)(B) or Section 21(b)(1)(C) of the Internal Revenue Code.
(c) Where the qualifying dependent is an individual described in subparagraph (B) of paragraph (2) of subdivision (b), the tax return claiming the credit allowed by this section shall include the name, year of birth, and taxpayer identification number of that qualifying dependent.
(d) For taxable years beginning on or after January 1, 2019, if the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the taxpayer.
(e) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section.
(f) Notwithstanding any other law, amounts refunded pursuant to this section shall be treated in the same manner as the federal earned income refund for the purpose of determining eligibility to receive benefits under Division 9 (commencing with Section 10000) of the Welfare and Institutions Code or amounts of those benefits.
(g) For purposes of Section 41, the Franchise Tax Board shall include the credit allowed by this section in the annual report required by subdivision (j) of Section 17052, where applicable.

SECTION 1.Section 17052 of the Revenue and Taxation Code is amended to read:
17052.

(a)(1)For each taxable year beginning on or after January 1, 2015, there shall be allowed against the “net tax,” as defined by Section 17039, an earned income tax credit in an amount equal to an amount determined in accordance with Section 32 of the Internal Revenue Code, relating to earned income, as applicable for federal income tax purposes for the taxable year, except as otherwise provided by this section.

(2)(A)The amount of the credit determined under Section 32 of the Internal Revenue Code, relating to earned income, as modified by this section, shall be multiplied by the earned income tax credit adjustment factor for the taxable year.

(B)Unless otherwise specified in the annual Budget Act, the earned income tax credit adjustment factor for a taxable year beginning on or after January 1, 2015, shall be 0 percent.

(C)The earned income tax credit authorized by this section shall only be operative for taxable years for which resources are authorized in the annual Budget Act for the Franchise Tax Board to oversee and audit returns associated with the credit.

(b)(1)In lieu of the table prescribed in Section 32(b)(1) of the Internal Revenue Code, relating to percentages, the credit percentage and the phaseout percentage shall be determined as follows:

In the case of an eligible individual with:

The credit percentage is:

The phaseout percentage is:

No qualifying children

7.65%

7.65%

1 qualifying child

34%

34%

2 qualifying children

40%

40%

3 or more qualifying children

45%

45%

(2)(A)In lieu of the table prescribed in Section 32(b)(2)(A) of the Internal Revenue Code, the earned income amount and the phaseout amount shall be determined as follows:

In the case of an eligible individual with:

The earned income amount is:

The phaseout amount is:

No qualifying children

$3,290

$3,290

1 qualifying child

$4,940

$4,940

2 or more qualifying children

$6,935

$6,935

(B)Section 32(b)(2)(B) of the Internal Revenue Code, relating to joint returns, shall not apply.

(c)(1)Section 32(c)(1)(A)(ii)(I) of the Internal Revenue Code is modified by substituting “this state” for “the United States.”

(2)For each taxable year beginning on or after January 1, 2018, Section 32(c)(1)(A)(ii)(II) of the Internal Revenue Code is modified by deleting “25 but not attained age 65” and inserting in lieu thereof the following: “18.”

(3)Section 32(c)(2)(A) of the Internal Revenue Code is modified as follows:

(A)Section 32(c)(2)(A)(i) of the Internal Revenue Code is modified by deleting “plus” and inserting in lieu thereof the following: “and only if such amounts are subject to withholding pursuant to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code.”

(B)Section 32(c)(2)(A)(ii) of the Internal Revenue Code shall not apply.

(4)For taxable years beginning on or after January 1, 2017, paragraph (3) shall not apply and in lieu thereof Section 32(c)(2)(A) of the Internal Revenue Code is modified as follows:

(A)Section 32(c)(2)(A)(i) of the Internal Revenue Code is modified by deleting “plus” and inserting in lieu thereof the following: “and only if such amounts are subject to withholding pursuant to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code, plus.”

(B)Section 32(c)(2)(A)(ii) of the Internal Revenue Code shall apply.

(5)Section 32(c)(3)(C) of the Internal Revenue Code, relating to place of abode, is modified by substituting “this state” for “the United States.”

(d)Section 32(i)(1) of the Internal Revenue Code is modified by substituting “$3,400” for “$2,200.”

(e)(1)In lieu of Section 32(j) of the Internal Revenue Code, relating to inflation adjustments, for taxable years beginning on or after January 1, 2016, the amounts specified in paragraph (2) of subdivision (b) and in subdivision (d) shall be recomputed annually in the same manner as the recomputation of income tax brackets under subdivision (h) of Section 17041.

(2)For each taxable year beginning on or after January 1, 2018, and before January 1, 2019, when recomputing the amounts referenced in paragraph (1), the percentage change in the California Consumer Price Index shall be deemed to be the greater of 3.1 percent or the percentage change in the California Consumer Price Index as calculated under subdivision (h) of Section 17041 for that taxable year.

(f)If the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the taxpayer.

(g)(1)The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section.

(2)(A)The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed or improper payments from being made with respect to net earnings from self-employment.

(B)The adoption of any regulations pursuant to subparagraph (A) may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

(h)Notwithstanding any other law, amounts refunded pursuant to this section shall be treated in the same manner as the federal earned income refund for the purpose of determining eligibility to receive benefits under Division 9 (commencing with Section 10000) of the Welfare and Institutions Code or amounts of those benefits.

(i)(1)For the purpose of implementing the credit allowed by this section for the 2015 taxable year, the Franchise Tax Board shall be exempt from the following:

(A)Special Project Report requirements under State Administrative Manual Sections 4819.36, 4945, and 4945.2.

(B)Special Project Report requirements under Statewide Information Management Manual Section 30.

(C)Section 11.00 of the 2015 Budget Act.

(D)Sections 12101, 12101.5, 12102, and 12102.1 of the Public Contract Code.

(2)The Franchise Tax Board shall formally incorporate the scope, costs, and schedule changes associated with the implementation of the credit allowed by this section in its next anticipated Special Project Report for its Enterprise Data to Revenue Project.

(j)(1)In accordance with Section 41 of the Revenue and Taxation Code, the purpose of the California Earned Income Tax Credit is to reduce poverty among California’s poorest working families and individuals. To measure whether the credit achieves its intended purpose, the Franchise Tax Board shall annually prepare a written report on the following:

(A)The number of tax returns claiming the credit.

(B)The number of individuals represented on tax returns claiming the credit.

(C)The average credit amount on tax returns claiming the credit.

(D)The distribution of credits by number of dependents and income ranges. The income ranges shall encompass the phase-in and phaseout ranges of the credit.

(E)Using data from tax returns claiming the credit, including an estimate of the federal tax credit determined under Section 32 of the Internal Revenue Code, an estimate of the number of families who are lifted out of deep poverty by the credit and an estimate of the number of families who are lifted out of deep poverty by the combination of the credit and the federal tax credit. For the purposes of this subdivision, a family is in “deep poverty” if the income of the family is less than 50 percent of the federal poverty threshold.

(2)The Franchise Tax Board shall provide the written report to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate and Assembly Committees on Appropriations, the Senate Committee on Governance and Finance, the Assembly Committee on Revenue and Taxation, and the Senate and Assembly Committees on Human Services.

(k)The tax credit allowed by this section shall be known as the California Earned Income Tax Credit.

(l)The amendments made to this section by Chapter 722 of the Statutes of 2016 shall apply to taxable years beginning on or after January 1, 2016.

(m)(1)For each taxable year beginning on or after January 1, 2017, and before January 1, 2018, if the amount of credit computed pursuant to subdivisions (a) and (b) is less than or equal to one hundred dollars ($100) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with no qualifying children, or less than or equal to two hundred fifty dollars ($250) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with one or more qualifying children, and the earned income amount is greater than or equal to the corresponding amount in the table set forth in paragraph (2) below, then in lieu of the table prescribed in paragraph (1) of subdivision (b), the credit percentage and the phaseout percentage shall be determined as follows:

In the case of an eligible individual with:

The credit percentage is:

The phaseout percentage is:

No qualifying children

2.20%1.22%

1 qualifying child

3.10%2.29%

2 qualifying children

2.13%3.45%

3 or more qualifying children

2.12%3.49%

(2)For each taxable year beginning on or after January 1, 2017, and before January 1, 2018, if the amount of credit computed pursuant to subdivisions (a) and (b) is less than or equal to one hundred dollars ($100) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with no qualifying children, or less than or equal to two hundred fifty dollars ($250) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with one or more qualifying children, then in lieu of the table prescribed in subparagraph (A) of paragraph (2) of subdivision (b), the earned income amount and the phaseout amount shall be determined as follows:

In the case of an eligible individual with:

The earned income amount is:

The phaseout amount is:

No qualifying children

$5,354$5,354

1 qualifying child

$9,484$9,484

2 qualifying children

$13,794$13,794

3 or more qualifying children

$13,875$13,875

(n)(1)For each taxable year beginning on or after January 1, 2018, if the amount of credit computed pursuant to subdivisions (a) and (b) is less than or equal to one hundred three dollars ($103) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with no qualifying children, or less than or equal to two hundred fifty-eight dollars ($258) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with one or more qualifying children, and the earned income amount is greater than or equal to the corresponding amount in the table set forth in paragraph (2) below, then in lieu of the table prescribed in paragraph (1) of subdivision (b), the credit percentage and the phaseout percentage shall be determined as follows:

In the case of an eligible individual with:

The credit percentage is:

The phaseout percentage is:

No qualifying children

2.20%1.08%

1 qualifying child

3.10%2.00%

2 qualifying children

2.13%2.82%

3 or more qualifying children

2.12%2.85%

(2)For each taxable year beginning on or after January 1, 2018, if the amount of credit computed pursuant to subdivisions (a) and (b) is less than or equal to one hundred three dollars ($103) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with no qualifying children, or less than or equal to two hundred fifty-eight dollars ($258) multiplied by the ratio of the earned income tax credit adjustment factor for that taxable year divided by 0.85 for an eligible individual with one or more qualifying children, then in lieu of the table prescribed in subparagraph (A) of paragraph (2) of subdivision (b), the earned income amount and the phaseout amount shall be determined as follows:

In the case of an eligible individual with:

The earned income amount is:

The phaseout amount is:

No qualifying children

$5,520$5,520

1 qualifying child

$9,778$9,778

2 qualifying children

$14,222$14,222

3 or more qualifying children

$14,305$14,305

(3)For taxable years beginning on or after January 1, 2019, the amounts in paragraphs (1) and (2) shall be recomputed annually in the same manner as the recomputation of income tax brackets under subdivision (h) of Section 17041.

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