Bill Text: CA AB2770 | 2021-2022 | Regular Session | Amended

California Assembly Bill 2770 (Prior Session Legislation)

Bill Title: Income tax: credits: Export Investment Act of 2022.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2022-05-19 - In committee: Held under submission. [AB2770 Detail]

Download: California-2021-AB2770-Amended.html

Amended IN Assembly April 25, 2022

Amended IN Assembly April 19, 2022

Amended IN Assembly March 24, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 2770

Introduced by Assembly Member Villapudua

February 18, 2022

An act to add and repeal Sections 17060, 17060.5, 23660, and 23660.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 2770, as amended, Villapudua. Income tax: credits: Export Investment Act of 2022.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2027, to a qualified taxpayer in an amount equal to the product of ~~$1.50~~ $1.50, except as otherwise provided, and the number of tons of additional qualified cargo moved by the qualified taxpayer in the taxable year. The bill would require a qualified taxpayer to submit an application, as specified, to the Franchise Tax Board for certification of qualified cargo, and would require the applicant to pay an application fee, as specified. The bill would limit the total aggregate amount of the credit awarded in a taxable year, as specified, and would ~~authorize~~ require the Franchise Tax Board to reduce the credit formula, as necessary, if the number of applicants exceeds the total aggregate amount of the credit authorized.

This bill would also allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2025, to a qualified taxpayer in an amount equal to the product of ~~$30~~ $30, except as otherwise provided, and the number of pieces of hired export equipment by the qualified taxpayer in the taxable year. The bill would require a qualified taxpayer to submit an application, as specified, to the Franchise Tax Board for certification of qualified hired equipment, and would require the taxpayer to pay an additional fee, as specified. The bill would limit the total aggregate amount of the credit awarded in a taxable year, as specified, and would ~~authorize~~ require the Franchise Tax Board to reduce the credit formula, as necessary.

The Administrative Procedure Act generally governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.
This bill would authorize the Franchise Tax Board to prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of these provisions. The bill would exempt these provisions from the Administrative Procedure Act.

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.

This bill would include additional information required for any bill authorizing a new income tax credit.

This bill would take effect immediately as a tax levy.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

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

SECTION 1.

This act shall be known as the Export Investment Act of 2022.

SEC. 2.

The Legislature finds and declares all of the following:

(a) California is experiencing the effects of an unprecedented global supply chain crisis with disruptions to the movement of goods caused and exacerbated by the COVID-19 pandemic and surges in product demand that outstrip equipment supply and availability.

(b) The impacts on the global supply chain are increasing costs and threatening the access of California exporters to foreign markets, which in turn threatens the sustainable economic growth of the state.

(c) The primary purpose of this act is to encourage the development and growth of California-originated export cargoes, improve access to foreign markets for California’s exported goods by reducing the real costs of transportation, and create and support jobs provided by California employers who are able to grow their export business and maintain their export market.

(d) California’s exporters and the international trade that they facilitate are critical components of the state economy, directly or indirectly employing millions of Californians, contributing billions of dollars in economic activity, and generating significant local and state tax revenues. As such, our exports must be given the ability to successfully compete and continue to grow.

(e) The development, improvement, expansion, and maintenance of the state’s exportation of cargoes from farming, distribution, manufacturing, fabrication, assembly, processing, and warehousing sites in California are essential to the growth of the state’s economic well-being and the ability of those businesses and workers associated with trade-related industries to continue to compete cost-effectively on a regional, national, and global scale.

(f) The global pandemic has demonstrated that access to the global supply chain in times of excessive demand can be limited by extenuating factors beyond the control of Californians, and that the impacts of a lack of access to equipment, vessels, and foreign markets on the California exporter and the California export economy can be significant. California must be able to protect and nurture its exporters in the wake of the pandemic and assist exporters in weathering the increased costs of access to foreign markets.

SEC. 3.

Section 17060 is added to the Revenue and Taxation Code, to read:

17060.

(a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2027, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer in an amount equal to the product of one dollar and fifty cents ~~($1.50)~~ ($1.50), except as provided in paragraph (3) of subdivision (e), and the number of tons of additional qualified cargo moved by the qualified taxpayer in the taxable year.

(b) This section and Section 23660 shall be known as the Export Cargo Tax Credit.

(1) “Additional qualified cargo” means the amount of qualified cargo moved by a qualified taxpayer in a taxable year that exceeds the amount the qualified taxpayer moved in the preceding taxable year.

(2) “Breakbulk or bulk cargo” means any nonliquid commodities, automobiles, trucks, lumber, agricultural products or commodities, machinery, equipment, materials, products, or other cargo transported as palletized or unpalletized bagged, packaged, wrapped, drummed, baled, or crated goods, or that are loaded in bulk directly into the hold of a ship that are shipped via oceangoing vessel. “Breakbulk or bulk cargo” does not include any liquid commodities handled in bulk or any containerized cargo.

(3) “Containerized cargo” means any machinery, equipment, materials, products, commodities, or any other cargo transported by containers, that are rigid, sealable, and reusable metal boxes built to a recognized international standard, in which goods are shipped via oceangoing vessel.

(4) “Export” means any breakbulk or bulk cargo or containerized cargo that is shipped in interstate or foreign commerce from the state to a foreign country or a domestic noncontiguous state or territory via oceangoing vessel.

(5) “Oceangoing vessel” means a vessel, ship, or barge engaged, for compensation, in transporting breakbulk or bulk cargo or containerized cargo in interstate or foreign commerce.

(6) “Public port” means any port or harbor operating under grant from the state, subject to the restrictions of the tidelands trust, or any other public port or harbor district established by a political subdivision of the state for the purposes of conducting interstate or foreign trade.

(7) “Qualified cargo” means any breakbulk or bulk cargo or containerized cargo that is exported from a farming, manufacturing, fabrication, assembly, distribution, processing, or warehouse facility located in the state and that is moved by way of an oceangoing vessel berthed at a public port facility in the state during the taxable year and certified by the Franchise Tax Board as meeting the terms of this section. For purposes of this section, all agricultural products and commodities shipped from or to the state by way of an oceangoing vessel berthed at a public port facility in the state shall be considered qualified cargo.

(8) “Qualified taxpayer” means a commercial entity, all or a portion of whose activities involve the export of breakbulk or bulk cargo or containerized cargo to or from cargo facilities located within the state. For purposes of this section, a marine terminal, intermodal rail terminal, or truck terminal that handles cargo, but that is not a usual and regular final destination or origination point of those cargoes, shall not be considered a qualified taxpayer.

(9) “Ton” means a net ton of 2,000 pounds and, for containerized cargo, shall exclude the weight of the container.

(d) (1) A To be eligible for the credit allowed by this section, a qualified taxpayer seeking certification of qualified cargo shall submit, during the taxable year for which the credit is being sought, an application to the Franchise Tax Board that includes the following information:

(A) A verified statement of the estimated additional cargo volume data for the taxable year for which the credit is being sought and the cargo volumes for the taxable year prior to the taxable year of the application, specifically including the total annual volume and tons of breakbulk or containerized cargo exported from farming, manufacturing, fabrication, assembly, distribution, processing, or warehousing facilities located in the state.

(B) Any other information required by the Franchise Tax Board.

(2) If the application is incomplete, The Franchise Tax Board may request additional information from the applicant prior to taking further action on the application.

(3) The applicant shall remit a fee paid to the Franchise Tax Board equal to the reasonable costs of the Franchise Tax Board’s review and evaluation of the application and certification.

(4) In order to receive certification, the applicant shall provide to the Franchise Tax Board a verified statement of the actual additional cargo volume data for the taxable year for which the credit is being sought when that data is available.

(5) The Franchise Tax Board may audit an applicant in order to verify claims presented to the Franchise Tax Board in the application.

(6) The Franchise Tax Board shall issue a certification for qualified cargo to a qualified taxpayer upon making a finding that the certification requirements are met.

(7) The Franchise Tax Board may develop a standard form and instructions to facilitate the submission of applications pursuant to this subdivision.

(e) (1) The total aggregate amount of the credit for the taxable year beginning on and after January 1, 2023, and before January 1, 2024, that may be awarded to all qualified taxpayers pursuant to this section and Section 23660 shall not exceed ninety million dollars ($90,000,000).

(2) The total aggregate amount of the credit for each taxable year beginning on and after January 1, 2024, that may be awarded to all qualified taxpayers pursuant to this section and Section 23660 shall be zero dollars ($0), ~~plus the unallocated credit amount, if any, from the preceding calendar year,~~ unless otherwise specified in the annual Budget Act.

(3) The dollar amount to be multiplied by the additional qualified cargo shall not exceed one dollar and fifty cents ($1.50) per ton. The Franchise Tax Board ~~may~~ shall reduce that dollar amount, equally for all qualified taxpayers, if the Franchise Tax Board ~~believes~~ determines that, due to the cumulative amount of ~~certified cargo~~ qualified cargo certified by the Franchise Tax Board under this section, the cumulative amount of the credit claimed by qualified taxpayers will exceed the total aggregate amount of the credit for that taxable year.

(4) The Franchise Tax Board shall post on its internet website the total aggregate amount of the credit authorized by the Legislature for the following taxable year and the ~~expected~~ estimated dollar amount to be multiplied by the additional qualified cargo for that taxable year.

(f) (1) If the Franchise Tax Board finds that any claims regarding additional cargo for which a qualified taxpayer received credits were inaccurate, the qualified taxpayer shall remit the amount of the credit back to the Franchise Tax Board in a form and manner as specified by the Franchise Tax Board.

(2) Interest may be assessed and collected on recovered credits computed from the original due date of the return on which the credit was taken.

(3) The provisions of this section shall be in addition to and shall not limit the authority of the Franchise Tax Board to assess or to collect under any other provision of law.

(g) 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 up to and including eight succeeding years if necessary, until the credit is exhausted.

(h) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance 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.

(i) For purposes of complying with Section 41, with respect to this section and Section 23660, the Legislative Analyst shall prepare, by January 1, 2027, an evaluation of the effectiveness of the Export Cargo Tax Credit. The report, submitted in compliance with Section 9795 of the Government Code, shall include the overall impact of the credits, the amount of credits issued, the economic impact of the credits on jobs in the state, tax revenues, and the economy, and any other factors that describe the impact of the credits.

(j) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

SEC. 4.

Section 17060.5 is added to the Revenue and Taxation Code, to read:

17060.5.

(a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2025, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer in an amount equal to the product of thirty dollars ~~($30)~~ ($30), except as provided in paragraph (3) of subdivision (e), and the number of pieces of hired export equipment by the qualified taxpayer in the taxable year.

(b) This section and Section 23660.5 shall be known as the Export Equipment Access Tax Credit.

(1) “Breakbulk or bulk cargo” means any nonliquid commodities, automobiles, trucks, lumber, agricultural products or commodities, machinery, equipment, materials, products, or other cargo transported as palletized or unpalletized bagged, packaged, wrapped, drummed, baled, or crated goods, or that are loaded in bulk directly into the hold of a ship that are shipped via oceangoing vessel. “Breakbulk or bulk cargo” does not include any liquid commodities handled in bulk or any containerized cargo.

(2) “Containerized cargo” means any machinery, equipment, materials, products, commodities, or any other cargo transported by containers, that are rigid, sealable, and reusable metal boxes built to a recognized international standard, in which goods are shipped via oceangoing vessel.

(3) “Export” means any breakbulk or bulk cargo or containerized cargo that is shipped in interstate or foreign commerce from the state to a foreign country or a domestic noncontiguous state or territory via oceangoing vessel.

(4) “Export equipment” means any chassis used by an exporter to move an empty intermodal container which is subsequently loaded and taken to a marine terminal located within the state for export.

(5) “Hired export equipment” shall mean any piece of export equipment that is hired for utilization in a nonrevenue repositioning prior to the equipment being utilized for an export move.

(6) “Nonrevenue repositioning” means a repositioning of a chassis for hire which has no other transaction associated with its movement. Nonrevenue repositioning does not include any component of the hire of the export equipment to facilitate the move of an empty container that is paid by any third party other than the qualified taxpayer seeking a credit pursuant to this section.

(7) “Oceangoing vessel” means a vessel, ship, or barge engaged, for compensation, in transporting breakbulk or bulk cargo or containerized cargo in interstate or foreign commerce.

(d) (1) A To be eligible for the credit allowed by this section, a qualified taxpayer seeking certification of qualified pieces of hired equipment shall submit, during the taxable year for which the credit is being sought, an application to the Franchise Tax Board that includes the following information:

(A) A verified statement of the estimated number of qualified pieces of hired equipment used in the year.

(B) A verified statement of the estimated number of export moves associated with the equipment hires.

(2) If the information submitted pursuant to this subdivision is incomplete, the Franchise Tax Board may request additional information from the qualified taxpayer.

(3) The qualified taxpayer shall remit a fee to the Franchise Tax Board equal to the reasonable costs of the Franchise Tax Board’s review and evaluation of the application and certification.

(4) In order to receive certification, the applicant shall provide to the Franchise Tax Board all of the following when that data is available:

(A) A summary of the number of qualified pieces of hired equipment used in the year accompanied by a verified statement and history of the equipment hires.

(B) A summary of the number of export moves associated with the equipment hires accompanied by a verified statement and history of the export moves.

(5) The Franchise Tax Board may audit a qualified taxpayer in order to verify claims presented in the submitted information.

(6) The Franchise Tax Board shall issue a certification for qualified pieces of hired equipment to a qualified taxpayer upon making a finding that the certification requirements are met.

(7) The Franchise Tax Board may develop a standard form and instructions to facilitate the submission of information pursuant to this subdivision.

(e) (1) The total aggregate amount of the credit for the taxable year beginning on and after January 1, 2023, and before January 1, 2024, that may be awarded to all qualified taxpayers pursuant to this section and Section 23660.5 shall not exceed eighty-one million dollars ($81,000,000).

(2) The total aggregate amount of the credit for each taxable year beginning on and after January 1, 2024, that may be awarded to all qualified taxpayers pursuant to this section and Section 23660.5 shall be zero dollars ($0), ~~plus the unallocated credit amount, if any, from the preceding calendar year,~~ unless otherwise authorized in the annual Budget Act.

(3) The dollar amount to be multiplied by the number of pieces of hired export equipment shall not exceed thirty dollars ($30). The Franchise Tax Board ~~may~~ shall reduce that dollar amount, equally for all qualified taxpayers, if the Franchise Tax Board ~~believes~~ determines that, due to the cumulative amount of ~~certified hired export equipment~~ qualified hired export equipment certified by the Franchise Tax Board under this section, the estimated cumulative amount of the credit claimed by qualified taxpayers will exceed the total aggregate amount of the credit authorized in the Budget Act for that taxable year.

(f) (1) If the Franchise Tax Board finds that any claims regarding ~~additional cargo~~ hired export equipment for which a qualified taxpayer received credits were inaccurate, the qualified taxpayer shall remit the amount of the credit back to the Franchise Tax Board in a form and manner as specified by the Franchise Tax Board.

(2) Interest may be assessed and collected on recovered credits computed from the original due date of the return on which the credit was taken.

(3) The provisions of this section shall be in addition to and shall not limit the authority of the Franchise Tax Board to assess or to collect under any other provision of law.

(g) (1) 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 up to and including eight succeeding years if necessary, until the credit is exhausted.

(2) If a credit allowed by this section is claimed by a qualified taxpayer, any deduction otherwise allowed under this section for that amount of the value of the ordinary and necessary business expenses that is eligible for the credit that is claimed shall be reduced by the amount of the credit allowed.

(i) For purposes of complying with Section 41, with respect to this section and Section 23660.5, the Legislative Analyst shall prepare, by January 1, 2025, an evaluation of the effectiveness of the Export Equipment Access Tax Credit. The report, submitted in compliance with Section 9795 of the Government Code, shall include the overall impact of the credits, the amount of credits issued, the economic impact of the credits on jobs in the state, tax revenues, and the economy, and any other factors that describe the impact of the credits.

(j) This section shall remain in effect only until December 1, 2025, and as of that date is repealed.

SEC. 5.

Section 23660 is added to the Revenue and Taxation Code, to read:

23660.

(a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2027, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer in an amount equal to the product of one dollar and fifty cents ~~($1.50)~~ ($1.50), except as provided in paragraph (3) of subdivision (e), and the number of tons of additional qualified cargo moved by the qualified taxpayer in the taxable year.

(b) This section and Section 17060 shall be known as the Export Cargo Tax Credit.