CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2620

Introduced by Assembly Member Valladares

February 18, 2022

An act to amend Section 16428.8 of the Government Code, and to add and repeal Sections 17052.11 and 23652.11 of the Revenue and Taxation Code, relating to telecommuting.


LEGISLATIVE COUNSEL'S DIGEST


AB 2620, as introduced, Valladares. Income taxes: credits: telecommuting: transfer of funds.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. Existing law establishes the Greenhouse Gas Reduction Fund and requires all moneys, except as provided, collected by the State Air Resources Board from the auction or sale of allowances, as specified, to be deposited into the fund and be available for appropriation by the Legislature.
This bill, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, would allow a credit against those taxes to a qualified taxpayer, as defined, in an amount equal to one thousand dollars ($1,000) per qualified employee, as defined. The bill would require a taxpayer claiming the credit to retain documentation, including, but not limited to, a telecommuting agreement signed by the taxpayer and employee, demonstrating that the employee telecommutes at least 25 hours per week. The bill would require, upon request by the Franchise Tax Board, a taxpayer to provide, in a manner prescribed by the board, that documentation for purposes of verifying the taxpayer’s eligibility for the credit. The bill would require board to annually determine the amount of revenue lost as a result of the credits and to report the amount to the Controller. The bill would authorize the Controller to transfer moneys, to the extent permissible, from the Greenhouse Gas Reduction Fund to the General Fund up to the amount of revenue lost as a result of the credits.
Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
The bill also would include additional information required for any bill authorizing a new income tax credit.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 16428.8 of the Government Code is amended to read:

16428.8.
 (a) The Greenhouse Gas Reduction Fund, hereafter referred to in this article as the fund, is hereby created as a special fund in the State Treasury.
(b) Except for fines and penalties, all moneys collected by the State Air Resources Board from the auction or sale of allowances, pursuant to a market-based compliance mechanism established pursuant to Division 25.5 (commencing with Section 38500) of the Health and Safety Code and specified in Sections 95800 to 96022, inclusive, of Title 17 of the California Code of Regulations, shall be deposited in the fund and available for appropriation by the Legislature.
(c) All moneys deposited in the fund shall be appropriated and shall be separately identified in the annual Budget Act. No moneys from the General Fund or any other fund shall be deposited in the fund.
(d) Notwithstanding any other law, the Controller may use the moneys in the fund for cash flow loans to the General Fund as provided in Sections 16310 and 16381.
(e) Notwithstanding any other law, the Controller may transfer moneys, to the extent permissible, that are not continuously appropriated from the fund to the General Fund up to the amount of revenue lost as a result of the operation of Sections 17052.11 and 23652.11 of the Revenue and Taxation Code.

(e)

(f) Any technical amendments made by the State Air Resources Board to the regulations established under Sections 95800 to 96022, inclusive, of Title 17 of the California Code of Regulations to conform that regulation to this article shall be exempt from the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3) and from the review and approval of the Office of Administrative Law.

SEC. 2.

 Section 17052.11 is added to the Revenue and Taxation Code, to read:

17052.11.
 (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, in an amount equal to one thousand dollars ($1,000) per qualified employee.
(b) For purposes of this section, all of the following definitions apply:
(1) “Manufacturer” means a business that meets both of the following requirements:
(A) It is primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products.
(B) It is classified between Codes 31 to 33, inclusive, of the North American Industry Classification System.
(2) “Qualified employee” means an individual who is employed by the qualified taxpayer on a full-time basis, who performs work for the qualified taxpayer at a minimum of 30 hours per week for compensation, and who is permitted by the qualified taxpayer to telecommute. Hours taken for sick leave and vacation shall count toward the minimum hours per week.
(3) “Qualified taxpayer” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or is a manufacturer with 100 or fewer employees.
(4) “Telecommute” means the employee conducts the employee’s duties from the employee’s personal residence by telephone, email, the internet, or other means.
(c) In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and succeeding four years, if necessary, until the credit is exhausted.
(d) (1) The Franchise Tax Board shall annually determine the amount of revenue lost as a result of the operation of this section and shall report the amount to the Controller for purposes of subdivision (e) of Section 16428.8 of the Government Code. The board may prescribe rules and regulations that are necessary or appropriate to implement this section.
(2) A taxpayer claiming the credit under this section shall retain documentation, including, but not limited to, a telecommuting agreement signed by the taxpayer and employee, demonstrating that the employee telecommuted at least 25 hours per week in the taxable year the credit is claimed.
(3) Upon request by the Franchise Tax Board, the taxpayer shall provide, in a manner prescribed by the board, the documentation required by paragraph (2) to the board for purposes of confirming the taxpayer’s eligibility for the credit allowable by this section.
(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

SEC. 3.

 Section 23652.11 is added to the Revenue and Taxation Code, to read:

23652.11.
 (a) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed to a qualified taxpayer a credit against the “tax,” as defined in Section 23036, in an amount equal to one thousand dollars ($1,000) per qualified employee.
(b) For purposes of this section, all of the following definitions apply:
(1) “Manufacturer” means a business that meets both of the following requirements:
(A) It is primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products.
(B) It is classified between Codes 31 to 33, inclusive, of the North American Industry Classification System.
(2) “Qualified employee” means an individual who is employed by the qualified taxpayer on a full-time basis, who performs work for the qualified taxpayer at a minimum of 30 hours per week for compensation, and who is permitted by the qualified taxpayer to telecommute. Hours taken for sick leave and vacation shall count toward the minimum hours per week.
(3) “Qualified taxpayer” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has 100 or fewer employees, and average annual gross receipts of ten million dollars ($10,000,000) or less over the previous three years, or is a manufacturer with 100 or fewer employees.
(4) “Telecommute” means the employee conducts the employee’s duties from the employee’s personal residence by tphone, email, the internet, or other means.
(c) In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following taxable year, and succeeding four years, if necessary, until the credit is exhausted.
(d) (1) The Franchise Tax Board shall annually determine the amount of revenue lost as a result of the operation of this section and shall report the amount to the Controller for purposes of subdivision (e) of Section 16428.8 of the Government Code. The board may prescribe rules and regulations that are necessary or appropriate to implement this section.
(2) A taxpayer claiming the credit under this section shall retain documentation, including, but not limited to, a telecommuting agreement signed by the taxpayer and employee, demonstrating that the employee telecommuted at least 25 hours per week in the taxable year the credit is claimed.
(3) Upon request by the Franchise Tax Board, the taxpayer shall provide, in a manner prescribed by the board, the documentation required by paragraph (2) to the board for purposes of confirming the taxpayer’s eligibility for the credit allowable by this section.
(e) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

SEC. 4.

 For purposes of complying with Section 41 of the Revenue and Taxation Code, with respect to the tax credits allowed by Sections 17052.11 and 23652.11 of the Revenue and Taxation Code, as added by this act, hereafter “the credits,” the Legislature finds and declares all of the following:
(a) The specific goal, purpose, and objective of the credits is to incentivize the reduction of commuter vehicle emissions by providing businesses a tax deduction for offering their employees the option to telecommute.
(b) The effectiveness of the credits shall be measured by the number of taxpayers claiming the credits and the average credit amount on tax returns claiming the credit.
(c) The data collection requirements are as follows:
(1) Notwithstanding Section 19542 of the Revenue and Taxation Code, by January 1, 2026, the Franchise Tax Board shall prepare a written report on the number of taxpayers claiming the credit and the average credit amount on tax returns claiming the credit.
(2) The Franchise Tax Board shall provide the written report prepared pursuant to paragraph (1) to the Assembly Committee on Revenue and Taxation Committee and the Senate Committee on Governance and Finance.