Bill Text: CA SB1272 | 2015-2016 | Regular Session | Amended
Bill Title: Income taxes: credit: small business employee savings plan.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2016-11-30 - From committee without further action. [SB1272 Detail]
Download: California-2015-SB1272-Amended.html
BILL NUMBER: SB 1272 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 4, 2016
AMENDED IN SENATE APRIL 12, 2016
INTRODUCED BY Senator Runner
FEBRUARY 18, 2016
An act to add and repeal Sections 17053.50 and 23650 of the
Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1272, as amended, Runner. Income taxes: credit: small business
employee savings plan.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
This bill would allow, for taxable years beginning on or after
January 1, 2016, and before January 1, 2021, a tax credit under both
laws in an amount equal to 50% of the qualified taxpayer's
matching contributions to an the
account of an eligible employee's Employee Savings Match Plan,
as provided. provided, not to exceed $1,000.
This bill would take effect immediately as a tax levy.
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 17053.50 is added to the Revenue and Taxation
Code, to read:
17053.50. (a) For each taxable years
year beginning on or after January 1, 2016, and
before January 1, 2021, there shall be allowed to a qualified
taxpayer a credit against the "net tax," as defined in Section 17039,
in an amount equal to 50 percent of the qualified taxpayer's
dollar-for-dollar matching contributions to an
the account of an eligible employee's Employee
Savings Match Plan not to exceed up to
two thousand dollars ($2,000) per employee per taxable year. The
maximum amount of credit allowed pursuant to this section is one
thousand dollars ($1,000).
(b) For purposes of this section:
(1) "Employee Savings Match Plan" means a savings plan established
by a qualified taxpayer that meets all of the following conditions:
(A) The employer may match A
qualified taxpayer may match, on a dollar-for-dollar basis, the
voluntary contributions of participating employees, described in
subparagraph (B), without limitation. Contributions in excess of
two thousand dollars ($2,000) per employee per taxable year shall
not be eligible for a credit pursuant to this section.
(B) Any employee who has an annual salary of at least
twelve thousand dollars ($12,000) California wages
subject to Division 6 (commencing with Section 13000) of the
Unemployment Insurance Code and has been continuously employed
by the qualified taxpayer for at least six months may participate in
and contribute to an Employee Savings Match Plan.
(C) At least one-half of the participating employees, described in
subparagraph (B), earn less than forty thousand dollars ($40,000)
during the calendar taxable year in
wages subject to Division 6 (commencing with Section 13000) of
the Unemployment Insurance Code for work performed for the
employer contributing to the plan. Employee
Savings Match Plan.
(D) Deposits Contributions are held
in an insured bank or other financial institution subject to
withdrawal in individual accounts as separate
property of each participating employee and may be withdrawn by
employees, as provided in subparagraph (E). An insured bank or
financial institution maintaining the accounts of employees
participating in an Employee Savings Match Plan shall provide to the
qualified taxpayer and each participating employee such
information, at the time and in the manner as the Franchise Tax Board
may prescribe, to prepare a Form 1099 for each employee. Upon
request, the qualified taxpayer and participating employee shall
provide the information described in the preceding sentence to the
Franchise Tax Board.
(E) Any (i) If an
employee who withdraws funds from an
Employee Savings Match Plan less than one year
12 months after the employee's first contribution, or less
than one year 12 months after a
previous withdrawal shall not be eligible to participate in
that plan for the remainder of the year withdrawal,
other than a qualified withdrawal, then a qualified taxpayer is not
eligible for a credit pursuant to this section for any matching
contributions made with respect to contributions made by that
employee during the remainder of the taxable year in which that
withdrawal was made or during the next calendar year. A
transfer of funds from an Employee Savings Match Plan into an IRA or
other deferred compensation plan shall not be considered a withdrawal
for purposes of this subparagraph. the next taxable
year.
(ii) Clause (i) shall not apply if the total amount withdrawn in a
taxable year does not exceed the amount considered a qualified
withdrawal.
(2) "Matching contributions" means any contributions made by a
qualified taxpayer for the benefit of employees which are eligible to
be taken into account for purposes of computing the credit allowed
pursuant to this section.
(2)
(3) "Qualified taxpayer" means a taxpayer that
is a small business as defined in Section 14837 of the Government
Code. that, for the taxable year for which a credit is
allowed pursuant to this section, satisfies both of the following
conditions:
(A) Has gross receipts, less returns and allowances, derived from
or attributable to this state for the taxable year of ten million
dollars ($10,000,000) or less.
(i) "Gross receipts, less returns and allowances reportable to
this state," means the sum of the gross receipts from the production
of business income, as defined in subdivision (a) of Section 25120,
and the gross receipts from the production of nonbusiness income, as
defined in subdivision (d) of Section 25120.
(ii) "Gross receipts, less returns and allowances reportable to
this state," shall be determined using the rules for assigning sales
under Sections 25135 and 25136, and the regulations thereunder, as
modified by the regulations under Section 25137, other than those
provisions that exclude receipts from the sales factor.
(iii) In determining the gross receipts derived from or
attributable to the state of any other business, in whatever form
conducted, that is owned, directly or indirectly, by persons, within
the meaning of Section 17007, that are treated as related, within the
meaning of Section 267, 318, or 707 of the Internal Revenue Code, to
the small business, shall be aggregated with the gross receipts
derived from or attributable to the state of the small business to
determine whether the small business qualifies for the credit
pursuant to this section.
(B) Has fewer than 100 employees at any time during the taxable
year. In determining the number of employees of the taxpayer, all
employees of any trades or businesses, in whatever form conducted or
organized, that are treated as related, within the meaning of Section
267, 318, or 707 of the Internal Revenue Code, shall be treated as
employed by the taxpayer for purposes of determining the 100-employee
limitation applicable to the taxpayer.
(4) "Qualified withdrawal" means a withdrawal from an Employee
Savings Match Plan during a taxable year which does not exceed the
amount the employee contributed to a qualified retirement plan under
Section 408 of the Internal Revenue Code, relating to individual
retirement accounts, or a Secure Choice account established pursuant
to Section 100012 of the Government Code, during the same taxable
year.
(c) (1) The credit allowed by this section must be claimed on a
timely filed original return.
(2) The qualified taxpayer shall annually report the social
security number and account information for each employee
participating in and contributing to the Employee Savings Match Plan
in the form and manner prescribed by the Franchise Tax Board.
(3) No other credit or deduction shall be allowed under this part
with respect to matching contributions of a qualified taxpayer that
are taken into account in computing the credit allowed by this
section.
(c)
(d) In the case where the credit allowed by this
section exceeds the "net tax" tax," the
excess may be carried over to reduce the "net tax,"
tax" in the following year, and succeeding three
years if necessary, until the credit is exhausted.
(d) Contributions to, and income from, an Employee Savings Match
Plan shall be treated as ordinary income.
(e) (1) Any matching contributions made by a qualified taxpayer to
an employee's account shall remain the property of the employee.
(2) A credit shall not be allowed pursuant to this section for any
contribution made by a qualified taxpayer to the account of an
employee who is not eligible under subparagraph (B) or (E) of
paragraph (1) of subdivision (b).
(f) (1) The Franchise Tax Board may prescribe rules, guidelines,
procedures, or regulations necessary or appropriate to carry out the
purposes of this section.
(2) 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
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this section.
(e)
(g) This section shall remain in effect only until
December 1, 2021, 2022, and as of that
date is repealed.
SEC. 2. Section 23650 is added to the Revenue and Taxation Code,
to read:
23650. (a) For each taxable years
year beginning on or after January 1, 2016, and before
January 1, 2021, there shall be allowed to a qualified taxpayer a
credit against the "tax," as defined in Section 23036, in an amount
equal to 50 percent of the qualified taxpayer's
dollar-for-dollar matching contributions to an
the account of an eligible employee's Employee
Savings Match Plan, not to exceed Plan up to
two thousand dollars ($2,000) per employee per taxable year.
The maximum amount of credit allowed pursuant to this section is
one thousand dollars ($1,000).
(b) For purposes of this section:
(1) "Employee Savings Match Plan" means a savings plan established
by a qualified taxpayer that meets all of the following conditions:
(A) The employer may match A qualified
taxpayer may match, on a dollar-for-dollar basis, the voluntary
contributions of participating employees, described in subparagraph
(B), without limitation. Contributions in excess of two thousand
dollars ($2,000) per employee per taxable year shall not be eligible
for a credit pursuant to this section.
(B) Any employee who has an annual salary of at least
twelve thousand dollars ($12,000) California wages
subject to Division 6 (commencing with Section 13000) of the
Unemployment Insurance Code and has been continuously employed
by the qualified taxpayer for at least six months may participate in
and contribute to an Employee Savings Match Plan.
(C) At least one-half of the participating employees, described in
subparagraph (B), earn less than forty thousand dollars ($40,000)
during the calendar taxable year in
wages subject to Division 6 (commencing with Section 13000) of
the Unemployment Insurance Code for work performed for the
employer contributing to the plan. Employee
Savings Match Plan.
(D) Deposits Contributions are held
in an insured bank or other financial institution subject to
withdrawal in individual accounts as separate
property of each participating employee and may be withdrawn by
employees, as provided in subparagraph (E). An insured bank or
financial institution maintaining the accounts of employees
participating in an Employee Savings Match Plan shall provide to the
qualified taxpayer and each participating employee such information,
at the time and in the manner as the Franchise Tax Board may
prescribe, to prepare a Form 1099 for each employee. Upon request,
the qualified taxpayer and participating employee shall provide the
information described in the preceding sentence to the Franchise Tax
Board.
(E) Any (i) If an
employee who withdraws funds from an
Employee Savings Match Plan less than one year
12 months after the employee's first contribution, or less
than one year 12 months after a
previous withdrawal shall not be eligible to participate in
that plan for the remainder of the year in which that withdrawal was
made or during the next calendar year. A transfer of funds from an
Employee Savings Match Plan into an IRA or other deferred
compensation plan shall not be considered a withdrawal for purposes
of this subparagraph. withdrawal, ot her
than a qualified withdrawal, then a qualified taxpayer is not
eligible for a credit pursuant to this section for any matching
contributions made with respect to contributions made by that
employee during the remainder of the taxable year in which that
withdrawal was made or the next taxable year.
(ii) Clause (i) shall not apply if the total amount withdrawn in a
taxable year does not exceed the amount considered a qualified
withdrawal.
(2) "Matching contributions" means any contributions made by a
qualified taxpayer for the benefit of employees which are eligible to
be taken into account for purposes of computing the credit allowed
pursuant to this section.
(2)
(3) "Qualified taxpayer" means a taxpayer that
is a small business as defined in Section 14837 of the Government
Code. that, for the taxable year for which a credit is
allowed pursuant to this section, satisfies both of the following
conditions:
(A) Has gross receipts, less returns and allowances, derived from
or attributable to this state for the taxable year of ten million
dollars ($10,000,000) or less.
(i) "Gross receipts, less returns and allowances reportable to
this state," means the sum of the gross receipts from the production
of business income, as defined in subdivision (a) of Section 25120,
and the gross receipts from the production of nonbusiness income, as
defined in subdivision (d) of Section 25120.
(ii) "Gross receipts, less returns and allowances reportable to
this state," shall be determined using the rules for assigning sales
under Sections 25135 and 25136, and the regulations thereunder, as
modified by the regulations under Section 25137, other than those
provisions that exclude receipts from the sales factor.
(iii) In determining the gross receipts derived from or
attributable to the state of any other business, in whatever form
conducted, that is owned, directly or indirectly, by persons, within
the meaning of Section 17007, that are treated as related, within the
meaning of Section 267, 318, or 707 of the Internal Revenue Code, to
the small business, shall be aggregated with the gross receipts
derived from or attributable to the state of the small business to
determine whether the small business qualifies for the credit
pursuant to this section.
(B) Has fewer than 100 employees at any time during the taxable
year. In determining the number of employees of the taxpayer, all
employees of any trades or businesses, in whatever form conducted or
organized, that are treated as related, within the meaning of Section
267, 318, or 707 of the Internal Revenue Code, shall be treated as
employed by the taxpayer for purposes of determining the 100-employee
limitation applicable to the taxpayer.
(4) "Qualified withdrawal" means a withdrawal from an Employee
Savings Match Plan during a taxable year which does not exceed the
amount the employee contributed to a qualified retirement plan under
Section 408 of the Internal Revenue Code, relating to individual
retirement accounts, or a Secure Choice account established pursuant
to Section 100012 of the Government Code, during the same taxable
year.
(c) (1) The credit allowed by this section must be claimed on a
timely filed original return.
(2) The qualified taxpayer shall annually report the social
security number and account information for each employee
participating in and contributing to the Employee Savings Match Plan
in the form and manner prescribed by the Franchise Tax Board.
(3) No other credit or deduction shall be allowed under this part
with respect to matching contributions of a qualified taxpayer that
are taken into account in computing the credit allowed by this
section.
(c)
(d) In the case where the credit allowed by this
section exceeds the "tax" "tax," the
excess may be carried over to reduce the "tax,"
"tax" in the following year, and succeeding three years if
necessary, until the credit is exhausted.
(d) Contributions to, and income from, an Employee Savings Match
Plan shall be treated as ordinary income.
(e) (1) Any matching contributions made by a qualified taxpayer to
an employee's account shall remain the property of the employee.
(2) A credit shall not be allowed pursuant to this section for any
contribution made by a qualified taxpayer to the account of an
employee who is not eligible under subparagraph (B) or (E) of
paragraph (1) of subdivision (b).
(f) (1) The Franchise Tax Board may prescribe rules, guidelines,
procedures, or regulations necessary or appropriate to carry out the
purposes of this section.
(2) 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
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this section.
(e)
(g) This section shall remain in effect only until
December 1, 2021, 2022, and as of that
date is repealed.
SEC. 3. (a) In accordance with Section 41 of the Revenue and
Taxation Code, the purpose of the credit allowed by Sections 17053.50
and 23650 of the Revenue and Taxation Code, as added by Sections 1
and 2 of this act is to promote savings for employees, especially
young and low-income workers who have no savings and no retirement
options other than social security. To measure whether the credit
achieves its intended purpose, on or before January 1, 2018, and each
January 1 thereafter, the Franchise Tax Board shall annually prepare
a written report to the Legislature of the following:
(1) The percentage of employees under 30 years of age who are
receiving matching funds. contributions.
(2) The percentage of employees earning less than forty thousand
dollars ($40,000) per annum taxable year
who are receiving matching funds.
contributions.
(b) A report submitted pursuant to subdivision (a) shall be
submitted in compliance with Section 9795 of the Government Code.
SEC. 4. This act provides for a tax levy within the meaning of
Article IV of the California Constitution and shall go
into immediate effect.
