Bill Text: CA AB1515 | 2021-2022 | Regular Session | Amended

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Bill Title: Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2021-04-13 - Re-referred to Com. on REV. & TAX. [AB1515 Detail]

Download: California-2021-AB1515-Amended.html

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Amended  IN  Assembly  April 12, 2021

Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 1515

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Introduced by Assembly Member Santiago

February 19, 2021

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An act to amend Section 18624 of, and to add Part 10.4 (commencing with Section 19900) to Division 2 of, of the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor. taxation.

LEGISLATIVE COUNSEL'S DIGEST

AB 1515, as amended, Santiago. Income taxes: earned income tax credit: nonresident aliens: identifying numbers.Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program.

The Personal Income Tax Law imposes a tax on the entire taxable income of an individual taxpayer subject to that law, and provides for a specified treatment of the income of nonresidents. The Personal Income Tax Law, beginning on or after January 1, 2015, in modified conformity with federal income tax laws, allows 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. For taxable years beginning on and after January 1, 2020, this tax credit is available to any eligible individuals using an individual taxpayer identification number.

Existing law requires the Controller to make a one-time Golden State Stimulus payment to each qualified recipient, as defined, of an applicable amount, as specified, in a form and manner determined by the Franchise Tax Board, in order to provide relief to low-income Californians impacted by the COVID-19 emergency.

Existing law requires identifying numbers to be included on state tax returns, statements, and other documents, and in conformity with federal law, defines identifying numbers to mean a federal social security number (SSN) or individual tax identification number (ITIN), unless otherwise provided. Existing law, for taxable years beginning on or after January 1, 2021, and before January 1, 2026, prohibits the Franchise Tax Board from requiring a nonresident alien, as defined, to provide a SSN or ITIN when filing a state tax return, statement, or other document if the nonresident alien is not eligible for or has not been issued a SSN or ITIN.

This bill would establish the Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program, and upon appropriation by the Legislature, would require the Franchise Tax Board to allocate grants to qualified nonprofit community-based organizations or local government agencies to increase the number of eligible households claiming the state and federal Earned Income Tax Credit, the Golden State Stimulus, and other relevant tax credits and stimulus payments, and to increase awareness of ITIN tax status eligibility. The bill would authorize the Franchise Tax Board to administratively partner with the Department of Community Services and Development to administer the program. The bill would establish the Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Fund in the State Treasury for these purposes.

This bill would, for taxable years beginning on or after January 1, 2021, prohibit the Franchise Tax Board from requiring a nonresident alien who is not eligible for or has not been issued a federal SSN or a federal ITIN to provide a SSN or ITIN in order to claim the California Earned Income Tax Credit, the Golden State Stimulus, and other related tax credits and stimulus payments. The bill would specify that a nonresident alien who applies for a federal individual taxpayer identification number (ITIN) by October 15, 2021, and who does not receive the ITIN prior to applying for the Golden State Stimulus, shall be deemed retroactively eligible for the Golden State Stimulus, as provided.

Existing law establishes the continuously appropriated Tax Relief and Refund Account and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account, including any amount to be paid as an earned income tax credit in excess of any tax liabilities.

By increasing the amounts to be paid with funds from the Tax Relief and Refund Account, and thus, authorizing new payments from that account for additional amounts in excess of personal income tax liabilities, this bill would make an appropriation.

Digest Key

Vote: TWO_THIRDSMAJORITY   Appropriation: YESNO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

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

SECTION 1.

 The Legislature finds and declares all of the following:

(a) California is home to over 2,000,000 undocumented immigrants who collectively pay $3.2 billion in local and state taxes. These Californians make up one-tenth of the California workforce, yet are ineligible for any type of unemployment insurance, including pandemic unemployment assistance.

(b) Undocumented workers in California have been disproportionately affected by the pandemic’s economic devastation. According to one estimate, unemployment increased among undocumented workers at a rate seven times higher than citizens in similar jobs. Without access to unemployment insurance, undocumented workers have been forced to work in unsafe and unlawful working conditions - many earning subminimum wagesin order to provide for their families.

(c) These Californians are now eligible for relief through both the California Earned Income Tax Credit (CalEITC), the Young Child Tax Credit (YCTC), and the Golden State Stimulus, but only for those undocumented Californians who file their taxes with an Individual Taxpayer Identification Number (ITIN), underscoring the need to have effective outreach, education, and free tax filing services. An estimated 1,300,000 undocumented Californians are likely eligible for, yet lack, ITINs, and will therefore continue to be excluded from relief.

(d) At a time of economic insecurity, alongside complex and evolving relief packages, the need for clear outreach, education, and free tax assistance from trusted sources is increasing in communities across our state experiencing extreme financial stress.

(e) The CalEITC is one of California’s best tools to help alleviate poverty, stimulate local economies and businesses, and act as a frontline defense against the deepest risks of economic downturn.

(f) The CalEITC and the YCTC are key to tackling California’s poverty crisis and as our state grapples with COVID-19 and the economic realities of reduced work hours and income, it has become even more critical to help low-income individuals and households file their taxes to access these credits and the Golden State Stimulus.

(g) California has championed the CalEITC for years, continually expanding access to the credit, most recently to workers who file their taxes with an Individual Taxpayer Identification Number (ITIN), underscoring the need to have effective outreach, education, and free tax filing services for those who are newly eligible for the CalEITC, YCTC, and other stimulus programs like the Golden State Stimulus.

(h) California must consistently invest in a robust infrastructure of free tax assistance and a growing network of Certified Acceptance Agents who are culturally and linguistically competent to help process ITIN applications so that all Californians are able to leverage the full power and potential of all credits and stimulus payments available.

(i) To make the Outreach and Education and Free Tax Assistance grants even more effective, California should adjust the timing of these grants to make them year-round and over two-year increments to align with IRS programs and ensure equitable access to services for all Californians.

SEC. 2.Section 18624 of the Revenue and Taxation Code, as amended by Section 3 of Chapter 102 of the Statutes of 2020, is amended to read:

18624.

(a)Section 6109 of the Internal Revenue Code, relating to identifying numbers, shall apply, except as otherwise provided.

(b)Identifying numbers shall be required on state tax returns, statements, or other documents in the form and manner as the Franchise Tax Board may require.

(c)Section 6109(h) of the Internal Revenue Code, relating to identifying information required with respect to certain seller-provided financing, shall not apply.

(d)The amendments made to Section 6109(a) of the Internal Revenue Code, relating to identifying number of income tax return preparer, by Public Law 105-206 shall apply.

(e)The amendments made by Chapter 931 of the Statutes of 1999 shall be operative on the effective date of that chapter.

(f)(1)For taxable years beginning on or after January 1, 2021, and before January 1, 2026, the Franchise Tax Board shall not require a nonresident alien who is not eligible for or has not been issued a federal social security number (SSN) or a federal individual taxpayer identification number (ITIN) to provide a SSN or ITIN in order to file a state tax return, statement, or other document required under this part. If a nonresident alien subsequently becomes eligible for and is issued a SSN or ITIN, the Franchise Tax Board may require the nonresident alien to provide a letter or other form documenting the nonresident alien’s SSN or ITIN.

(2)(A)For taxable years beginning on or after January 1, 2021, the Franchise Tax Board shall not require a nonresident alien who is not eligible for or has not been issued a federal social security number (SSN) or a federal individual taxpayer identification number (ITIN) to provide a SSN or ITIN in order to claim the California Earned Income Tax Credit, the Golden State Stimulus, and other related tax credits and stimulus payments. If a nonresident alien subsequently becomes eligible for and is issued a SSN or ITIN, the Franchise Tax Board may require the nonresident alien to provide a letter or other form documenting the nonresident alien’s SSN or ITIN.

(B)A nonresident alien who applies for a federal individual taxpayer identification number (ITIN) by October 15, 2021, and who does not receive the ITIN prior to applying for the Golden State Stimulus shall be deemed retroactively eligible for the Golden State Stimulus and, if qualified, a stimulus payment shall be disbursed upon receipt of that individual’s tax filings regardless of whether the taxpayer provides the ITIN.

(3)For purposes of this subdivision, “nonresident alien” shall mean a nonresident, as defined in Section 17015, who also meets the requirements of Section 7701(b)(1)(B) of the Internal Revenue Code.

(g)This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

SEC. 3.Section 18624 of the Revenue and Taxation Code, as added by Section 4 of Chapter 102 of the Statutes of 2020, is amended to read:

18624.

(a)Section 6109 of the Internal Revenue Code, relating to identifying numbers, shall apply, except as otherwise provided.

(b)Identifying numbers shall be required on state tax returns, statements, or other documents in the form and manner as the Franchise Tax Board may require.

(c)Section 6109(h) of the Internal Revenue Code, relating to identifying information required with respect to certain seller-provided financing, shall not apply.

(d)The amendments made to Section 6109(a) of the Internal Revenue Code, relating to identifying number of income tax return preparer, by Public Law 105-206 shall apply.

(e)The amendments made by Chapter 931 of the Statutes of 1999 shall be operative on the effective date of that chapter.

(f)(1)For taxable years beginning on or after January 1, 2021, the Franchise Tax Board shall not require a nonresident alien who is not eligible for or has not been issued a federal social security number (SSN) or a federal individual taxpayer identification number (ITIN) to provide a SSN or ITIN in order to claim the California Earned Income Tax Credit, the Golden State Stimulus, and other related tax credits and stimulus payments. If a nonresident alien subsequently becomes eligible for and is issued a SSN or ITIN, the Franchise Tax Board may require the nonresident alien to provide a letter or other form documenting the nonresident alien’s SSN or ITIN.

(2)A nonresident alien who applies for a federal individual taxpayer identification number (ITIN) by October 15, 2021, and who does not received the ITIN prior to applying for the Golden State Stimulus shall be deemed retroactively eligible for the Golden State Stimulus and, if qualified, a stimulus payment shall be disbursed upon receipt of that individual’s tax filings regardless of whether the taxpayer provides the ITIN.

(3)For purposes of this subdivision, “nonresident alien” shall mean a nonresident, as defined in Section 17015, who also meets the requirements of Section 7701(b)(1)(B) of the Internal Revenue Code.

(g)This section shall become operative on December 1, 2026.

SEC. 4.SEC. 2.

 Part 10.4 (commencing with Section 19900) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 10.4. Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program

19900.

 This part shall be known and may be cited as the Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program.

19901.

 (a) The Franchise Tax Board shall administer the Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program in accordance with this article.

(b) The Franchise Tax Board may contract or administratively partner with the Department of Community Services and Development to administer any provisions of this part as the Franchise Tax Board deems necessary.

(c) The Franchise Tax Board may adopt regulations for purposes of this part in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.

19902.

 (a) Upon appropriation by the Legislature, the Franchise Tax Board shall allocate grants to qualified nonprofit community-based organizations or local government agencies to increase the number of eligible households claiming the state and federal Earned Income Tax Credit, the Golden State Stimulus, and other relevant tax credits and stimulus payments, and to increase awareness of ITIN tax status eligibility, pursuant to the requirements in this section.

(b) The Franchise Tax Board shall equally allocate grant moneys for all of the following purposes:

(1) Provide timely distribution of funds for state and federal Earned Income Tax Credit, the Golden State Stimulus, and other relevant tax credits and stimulus payments and ITIN eligibility.

(2) To existing California Earned Income Tax Credit outreach contracts.

(3) To existing Volunteer Income Tax Assistance (VITA) clinic contracts to provide free tax preparation assistance and ITIN application assistance.

(4) Focus funding in regions of the state with low participation in the state Earned Income Tax Credit relative to the estimated eligible population in that area.

(5) Focus funding in regions of the state with estimated high percentages of ITIN filers and ITIN eligible workers who do not have a current ITIN status.

(6) Emphasize collaboration of grantees with other community-based organizations and local government agencies.

(7) Encourage targeting of specific underserved communities, particularly those that experience barriers to taking advantage of the credit or stimulus, with a focus on extremely low-income households, likely ITIN eligible workers, populations with limited English proficiency, rural and other hard-to-reach populations.

(c) Grant contracts allocated under this part shall be effective for 12 months to ensure continuity of services.

(d) (1) The award of grants under this part shall be exempt from the State Contract Act (Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code).

(2) Grants awarded under this part shall be at the sole discretion of the Executive Officer of the Franchise Tax Board.

(e) Beginning January 1, 2023, and annually thereafter, the Franchise Tax Board shall submit a report to the Legislature annually, pursuant to Section 9795 of the Government Code, on the effectiveness of the program.

19903.

 (a) There is hereby established in the State Treasury the Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Fund.

(b) The Franchise Tax Board shall use moneys in the fund, upon appropriation by the Legislature, to allocate grants to qualified nonprofit community-based organizations or local government agencies pursuant to Section 19902.