42.
(a) Notwithstanding any other law, a taxpayer allowed a credit, which is enacted and becomes effective on or after January 1, 2018, against the “net tax,” as defined in Section 17039, or against the “tax,” as defined in Section 23036, shall also meet the following supplier diversity goals:(1) Prior to the first taxable year in which the credit is claimed, meet a 5 percent supplier diversity goal.
(2) Prior to the third taxable year in which the credit is claimed, meet a 10 percent supplier diversity goal.
(3) Prior to the fifth taxable year in which the credit is claimed, meet a 20 percent supplier diversity goal.
(b) “Supplier diversity” is defined as procurement of supplies from business entities with certifications from either of the following entities:
(1) National Minority Supplier Development Council.
(2) United States Small Business Administration’s 8(a) Business Development Program.
(c) For each taxable year that the supplier diversity goal is not fully met by the taxpayer but the taxpayer has achieved a supplier diversity goal of at least 5 percent or at least 50 percent of its goal, whichever is greater, the percentage of the goal achieved shall be the percentage of the tax credit awarded to the taxpayer.
(d) The Franchise Tax Board shall from time to time audit compliance with this section.
The taxpayer under audit shall pay for the cost of the audit, not to exceed 1 percent of the tax credit initially awarded. The Franchise Tax Board may also impose substantial penalties on taxpayers found to be out of compliance with this section.
(e) This section does not apply to the following taxpayers:
(1) An individual.
(2) A small business. “Small business” is defined as a trade or business that has aggregate gross receipts, less returns and allowances reportable to this state, of less than two million dollars ($2,000,000) during the taxable year.