Bill Text: CA AB1929 | 2015-2016 | Regular Session | Amended
Bill Title: Personal income taxes: earned income credit: report.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2016-11-30 - From committee without further action. [AB1929 Detail]
Download: California-2015-AB1929-Amended.html
BILL NUMBER: AB 1929 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 28, 2016
INTRODUCED BY Assembly Member Brough
FEBRUARY 12, 2016
An act to amend Section 17052 of the Revenue and Taxation Code,
relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 1929, as amended, Brough. Personal income taxes: earned income
credit: report.
The Personal Income Tax Law allows various credits against the
taxes imposed by that law, including, in modified conformity with
federal income tax laws, an earned income credit against personal
income tax, as provided. Existing law requires the Franchise Tax
Board to annually prepare a written report regarding the credit and
to provide that report to specified legislative committees.
This bill would require the Franchise Tax Board to include in that
annual report the number of false or fraudulent claims for
the credit. returns claiming the credit that are
reduced in part before a refund is issued and the number of returns
claiming the credit that are denied in full before a
refund is issued.
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. 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 in 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 The credit The phaseout
eligible individual percentage percentage
with: is: is:
No qualifying children 7.65% 7.65%
1 qualifying child 34% 34%
2 or more qualifying 40% 40%
children
(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 The earned The
eligible individual income phaseout
with: amount is: amount is:
No qualifying children $3,290 $3,290
1 qualifying child $4,940 $4,940
2 or more qualifying $6,935 $6,935
children
(B) Section 32(b)(2)(B) of the Internal Revenue Code, relating to
joint returns, shall not apply.
(3) Section 32(b)(3)(A) of the Internal Revenue Code, relating to
increased percentage for three or more qualifying children, is
modified by substituting "the credit percentage and phaseout
percentage is 45 percent" for "the credit percentage is 45 percent."
(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) 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.
(3) 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) 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.
(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) 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.
(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,
including the number of false or fraudulent claims.
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.
(F) The number of returns claiming the credit that are reduced in
part before any refund is issued.
(G) The number of returns claiming the credit that are denied in
full before any refund is issued.
(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 Committees 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.
