Bill Text: CA SB1327 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Income taxation: credits: local news media: data extraction transactions.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Engrossed) 2024-08-12 - From committee with author's amendments. Read second time and amended. Re-referred to Com. on REV. & TAX. [SB1327 Detail]

Download: California-2023-SB1327-Amended.html

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Amended  IN  Senate  March 20, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1327

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Introduced by Senator Glazer

February 16, 2024

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An act to amend Section 1840 add and repeal Sections 17053.76 and 23622 of the Revenue and Taxation Code, relating to taxation. taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

SB 1327, as amended, Glazer. Property taxation. Personal Income Tax Law: Corporation Tax Law: credits: local news media.

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

This bill would, for taxable years beginning on or after January 1, 2024, and before January 1, 2029, allow a credit against the taxes imposed by those laws for portions of the costs for qualified services paid or incurred by a qualified taxpayer. The bill would define “qualified taxpayer” for this purpose to mean an eligible local news organization or a qualified broadcast station, as those terms are defined. The bill would require a taxpayer to request a tentative credit reservation from the Franchise Tax Board in the form and manner prescribed by the Franchise Tax Board, and would limit the amount of credit allocated by the Franchise Tax Board per calendar year.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

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

This bill would take effect immediately as a tax levy.

The California Constitution generally exempts real property that is owned by a local government from property taxation, but provides that real property owned by a local government that is located outside its boundaries is taxable if it was taxable when acquired. Existing law authorizes a county, city and county, or municipal corporation that owns taxable property to apply to the State Board of Equalization for a review, equalization, or adjustment of a property tax assessment relating to this publicly owned property.

This bill would make a nonsubstantive change to that provision.

Digest Key

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

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Bill Text

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

SECTION 1.

 Section 17053.76 is added to the Revenue and Taxation Code, to read:

17053.76.

 (a) (1) For each taxable year beginning on or after January 1, 2024, and before January 1, 2029, there shall be allowed a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer that pays or incurs costs for qualified services and that receives a tentative credit reservation.

(2) The amount of the credit shall be equal to the sum of all of the following:

(A) ____ of qualified wages paid in the taxable year for qualified full-time employees.

(B) Either of the following amounts:

(i) ____ of qualified wages paid in the taxable year to a qualified full-time employee hired by the qualified taxpayer on or after the effective date of the act adding this section, and before January 1, 2029.

(ii) ____ of qualified wages paid in the taxable year to qualified full-time employee hired by the qualified taxpayer on or after the effective date of the act adding this section, and before January 1, 2029, when the qualified taxpayer provides the qualified full-time employee both of the following:

(I) Employer-provided group health insurance.

(II) Employer-provided retirement benefits or pension benefits, including stock in the employer under employee stock ownership plans where the employer pays for the full value of the stock.

(C) ____ of costs incurred to acquire freelance content produced by individuals performing qualified services that is subsequently published or broadcast by the qualified taxpayer.

(b) For purposes of this section, the following definitions shall apply:

(1) “Disqualified organization” means any of the following:

(A) Any organization exempt from tax under Chapter 4 (commencing with Section 23701) of Part 11.

(B) Any organization described in Section 527 of the Internal Revenue Code.

(C) Any organization that is owned or controlled, directly or indirectly, by one or more organizations described in subparagraph (A) or (B).

(2) “Eligible local news organization” means, with respect to any taxable year, any person or entity with primary circulation or distribution in the state who meets all of the following requirements:

(A) Publishes four or more qualifying publications distributed in the state during the taxable year.

(B) Is not a disqualified organization.

(C) Does not derive more than 50 percent of its gross receipts, less returns and allowances, from disqualified organizations in the taxable year.

(3) “Local community” means, with respect to any qualifying broadcast station or qualifying publication, a geographically contiguous area in the state that does not exceed the boundaries of:

(A) In the case of a qualifying broadcast station, the area in the state for which the qualifying broadcast station is licensed to serve by the Federal Communications Commission under Section 307 of the federal Communications Act of 1934 (Public Law 73-416).

(B) (i) In the case of a qualifying publication, the following:

(I) If the qualifying publication is primarily distributed in a metropolitan or micropolitan statistical area in the state, as defined by the federal Office of Management and Budget, the metropolitan or micropolitan statistical area in which the qualifying publication is primarily distributed.

(II) If the qualifying publication is not primarily distributed in a metropolitan or micropolitan statistical area, the county in which the qualifying publication is primarily distributed.

(ii) For purposes of this subparagraph, in the case of a qualifying publication that is a digital publication, the qualifying publication shall be considered primarily distributed in the area where the publication is primarily consumed.

(4) “Qualified broadcast station” means an employer who meets all of the following requirements:

(A) Owns or operates a broadcast station, as defined in Section 3 of the federal Communications Act of 1934 (Public Law 73-416), in the state.

(B) Is not a disqualified organization.

(C) Derives no more than 50 percent of its gross receipts, less returns and allowances, from disqualified organizations in the taxable year in which the credit is claimed.

(5) “Qualified full-time employee” means an individual who meets both of the following requirements:

(A) Provides qualified services for an average of not less than 35 hours per week for each week the employee is employed by the qualified taxpayer, or is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.

(B) Resides within 50 miles of the local community of the qualifying publication or qualifying broadcast station with respect to which the qualified services are provided.

(6) “Qualified services” means gathering, preparing, recording, directing the recording of, producing, collecting, photographing, writing, editing, reporting, presenting, or publishing original local community news for dissemination to the local community.

(7) “Qualified taxpayer” means a person that satisfies all of the following:

(A) Is an eligible local news organization or a qualified broadcast station in the state.

(B) Employs qualified full-time employees to perform qualified services.

(C) Has a net increase in employment in the taxable year in which they claim the credit.

(8) “Qualified wages” means those wages subject to withholding pursuant to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code. For purposes of subparagraphs (B) and (C) of paragraph (2) of subdivision (a), “qualified wages” also means only those wages paid or incurred beginning with the first day the qualified full-time employee provides qualified services to the qualified taxpayer.

(9) “Qualifying publication” means any print or digital publication that satisfies all of the following:

(A) The primary purpose of the publication is to serve a local community in the state by providing local news.

(B) The publication was published in the state during the taxable year and the prior taxable year.

(C) The publication is covered by media liability insurance.

(c) For purposes of this section, the following shall apply:

(1) All employees of trades or businesses that are treated as related under Section 267, 318, or 707 of the Internal Revenue Code shall be treated as employed by a single qualified taxpayer.

(2) All employees of trades or businesses that are not incorporated, and that are under common control, shall be treated as employed by a single qualified taxpayer.

(3) The credit, if any, allowable by this section with respect to each trade or business shall be determined by reference to its proportionate share of the expense of the qualified wages giving rise to the credit, and shall be allocated to that trade or business in that manner.

(4) Principles that apply in the case of controlled groups of corporations, as specified in subdivision (c) of Section 23622, shall apply with respect to determining employment.

(d) In case the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and the succeeding seven years if necessary, until the credit is exhausted.

(e) (1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under 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.

(2) (A) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed.

(B) The adoption of any regulations pursuant to subparagraph (A) may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

(f) (1) Any deduction otherwise allowed under this part for qualified wages shall be reduced by the amount of the credit allowed under this section.

(2) The credit allowed by this section shall be in lieu of any other credit that the qualified taxpayer may otherwise be allowed under this part with respect to amounts taken into account in calculating the credit allowed by this section.

(3) The credit allowed under this section must be claimed on a timely filed original return and when the qualified taxpayer has received a tentative credit reservation.

(4) If the qualified taxpayer is allowed a credit pursuant to this section for qualified wages paid or incurred, only one credit shall be allowed to the taxpayer under this part with respect to any wage consisting in whole or in part of those qualified wages.

(g) The net increase in full-time employees of a qualified taxpayer shall be determined as follows:

(1) The net increase in full-time employees shall be determined on an annual full-time equivalent basis by subtracting from the amount determined in subparagraph (A) the amount determined in subparagraph (B).

(A) The total number of full-time employees employed in the previous year by the taxpayer and by any trade or business acquired by the taxpayer during the current taxable year.

(B) The total number of full-time employees employed in the current taxable year by the taxpayer and by any trade or business acquired during the current taxable year.

(2) For taxpayers who first commence doing business in this state during the taxable year, the number of full-time employees for the base year shall be zero.

(h) (1) The total aggregate amount of the credit that may be allocated by credit reservations per calendar year to all qualified taxpayers pursuant to this section and Section 23622 shall not exceed ____, plus the unallocated credit amount, if any, from the preceding calendar year.

(2) (A) To be eligible for the credit allowed by this section, a qualified taxpayer shall request a credit reservation from the Franchise Tax Board, in the form and manner prescribed by the Franchise Tax Board.

(B) To obtain a credit reservation, the qualified taxpayer shall provide necessary information, as determined by the Franchise Tax Board.

(3) The Franchise Tax Board shall do both of the following:

(A) Approve a tentative credit reservation with respect to an eligible individual.

(B) Subject to the annual cap established as provided in paragraph (1), allocate an aggregate amount of credits under this section and Section 23622, and allocate any carryover of unallocated credits from the prior year. If credit reservation credit requests exceed the amount in (1), the Franchise Tax Board shall reduce the amount of credit on a proportional basis, and notify qualified taxpayers of the revised credit amount.

(i) (1) For purposes of complying with Section 41, as it relates to the credit allowed by this section and Section 23622, the Legislature finds and declares as follows:

(A) The goal of the credit is to increase employment of local journalists in local news organizations.

(B) The performance indicators for the Legislature to use in determining whether the credits meet the goal described in subparagraph (A) are the number of taxpayers who utilized the credits and the total dollar amount of credits claimed.

(2) (A) The Franchise Tax Board shall analyze the performance indicators in subparagraph (B) of paragraph (1) for each taxable year, and shall report its findings to the Legislature, in compliance with Section 9795 of the Government Code, on or before May 1, 2032.

(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.

(j) (1) Except as provided in paragraph (2), this section shall remain in effect only until December 1, 2029, and as of that date is repealed.

(2) Notwithstanding paragraph (1) of subdivision (a), this section shall continue to be operative for taxable years beginning on or after January 1, 2029, but only with respect to qualified full-time employees who commenced employment with a qualified taxpayer in a taxable year beginning before January 1, 2029, and in no case shall the wages of a qualified full-time employee be considered in determining any credit under this section for taxable years beginning on or after January 1, 2034.

SEC. 2.

 Section 23622 is added to the Revenue and Taxation Code, to read:

23622.

 (a) (1) For each taxable year beginning on or after January 1, 2024, and before January 1, 2029, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer that pays or incurs costs for qualified services and that receives a tentative credit reservation.

(2) The amount of the credit shall be equal to the sum of all of the following:

(A) ____ of qualified wages paid in the taxable year for qualified full-time employees.

(B) Either of the following amounts:

(i) ____ of qualified wages paid in the taxable year to a qualified full-time employee hired by the qualified taxpayer on or after the effective date of the act adding this section, and before January 1, 2029.

(ii) ____ of qualified wages paid in the taxable year to qualified full-time employee hired by the qualified taxpayer on or after the effective date of the act adding this section, and before January 1, 2029, when the qualified taxpayer provides the qualified full-time employee both of the following:

(I) Employer-provided group health insurance.

(II) Employer-provided retirement benefits or pension benefits, including stock in the employer under employee stock ownership plans where the employer pays for the full value of the stock.

(C) ____ of costs incurred to acquire freelance content produced by individuals performing qualified services that is subsequently published or broadcast by the qualified taxpayer.

(b) For purposes of this section, the following definitions shall apply:

(1) “Disqualified organization” means any of the following:

(A) Any organization exempt from tax under Chapter 4 (commencing with Section 23701).

(B) Any organization described in Section 527 of the Internal Revenue Code.

(C) Any organization that is owned or controlled, directly or indirectly, by one or more organizations described in subparagraph (A) or (B).

(2) “Eligible local news organization” means, with respect to any taxable year, any person or entity with primary circulation or distribution in the state who meets all of the following requirements:

(A) Publishes four or more qualifying publications distributed in the state during the taxable year.

(B) Is not a disqualified organization.

(C) Does not derive more than 50 percent of its gross receipts, less returns and allowances, from disqualified organizations in the taxable year.

(3) “Local community” means, with respect to any qualifying broadcast station or qualifying publication, a geographically contiguous area in the state that does not exceed the boundaries of:

(A) In the case of a qualifying broadcast station, the area in the state for which the qualifying broadcast station is licensed to serve by the Federal Communications Commission under Section 307 of the federal Communications Act of 1934 (Public Law 73-416).

(B) (i) In the case of a qualifying publication, the following:

(I) If the qualifying publication is primarily distributed in a metropolitan or micropolitan statistical area in the state, as defined by the federal Office of Management and Budget, the metropolitan or micropolitan statistical area in which the qualifying publication is primarily distributed.

(II) If the qualifying publication is not primarily distributed in a metropolitan or micropolitan statistical area, the county in which the qualifying publication is primarily distributed.

(ii) For purposes of this subparagraph, in the case of a qualifying publication that is a digital publication, the qualifying publication shall be considered primarily distributed in the area where the publication is primarily consumed.

(4) “Qualified broadcast station” means an employer who meets all of the following requirements:

(A) Owns or operates a broadcast station, as defined in Section 3 of the federal Communications Act of 1934 (Public Law 73-416), in the state.

(B) Is not a disqualified organization.

(C) Derives no more than 50 percent of its gross receipts, less returns and allowances, from disqualified organizations in the taxable year in which the credit is claimed.

(5) “Qualified full-time employee” means an individual who meets both of the following requirements:

(A) Provides qualified services for an average of not less than 35 hours per week for each week the employee is employed by the qualified taxpayer, or is a salaried employee and was paid compensation during the taxable year for full-time employment, within the meaning of Section 515 of the Labor Code, by the qualified taxpayer.

(B) Resides within 50 miles of the local community of the qualifying publication or qualifying broadcast station with respect to which the qualified services are provided.

(6) “Qualified services” means gathering, preparing, recording, directing the recording of, producing, collecting, photographing, writing, editing, reporting, presenting, or publishing original local community news for dissemination to the local community.

(7) “Qualified taxpayer” means a person that satisfies all of the following:

(A) Is an eligible local news organization or a qualified broadcast station in the state.

(B) Employs qualified full-time employees to perform qualified services.

(C) Has a net increase in employment in the taxable year in which they claim the credit.

(8) “Qualified wages” means those wages subject to withholding pursuant to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code. For purposes of subparagraphs (B) and (C) of paragraph (2) of subdivision (a), “qualified wages” also means only those wages paid or incurred beginning with the first day the qualified full-time employee provides qualified services to the qualified taxpayer.

(9) “Qualifying publication” means any print or digital publication that satisfies all of the following:

(A) The primary purpose of the publication is to serve a local community in the state by providing local news.

(B) The publication was published in the state during the taxable year and the prior taxable year.

(C) The publication is covered by media liability insurance.

(c) (1) For purposes of this section, the following shall apply:

(A) All employees of trades or businesses that are treated as related under Section 267, 318, or 707 of the Internal Revenue Code shall be treated as employed by a single qualified taxpayer.

(B) All employees of trades or businesses that are not incorporated, and that are under common control, shall be treated as employed by a single qualified taxpayer.

(C) The credit, if any, allowable by this section with respect to each trade or business shall be determined by reference to its proportionate share of the expense of the qualified wages giving rise to the credit, and shall be allocated to that trade or business in that manner.

(2) For purposes of this subdivision, “controlled group of corporations” means a controlled group of corporations as defined in Section 1563(a) of the Internal Revenue Code, except that:

(A) “More than 50 percent” shall be substituted for “at least 80 percent” each place it appears in Section 1563(a)(1) of the Internal Revenue Code.

(B) The determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of Section 1563 of the Internal Revenue Code.

(3) Rules similar to the rules provided in Sections 46(e) and 46(h) of the Internal Revenue Code, as in effect on November 4, 1990, shall apply to both of the following:

(A) An organization to which Section 593 of the Internal Revenue Code applies.

(B) A regulated investment company or a real estate investment trust subject to taxation under this part.

(d) In case the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and the succeeding seven years if necessary, until the credit is exhausted.

(e) (1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under 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.

(2) (A) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed.

(B) The adoption of any regulations pursuant to subparagraph (A) may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

(f) (1) Any deduction otherwise allowed under this part for qualified wages shall be reduced by the amount of the credit allowed under this section.

(2) The credit allowed by this section shall be in lieu of any other credit that the qualified taxpayer may otherwise be allowed under this part with respect to amounts taken into account in calculating the credit allowed by this section.

(3) The credit allowed under this section must be claimed on a timely filed original return and when the qualified taxpayer has received a tentative credit reservation.

(4) If the qualified taxpayer is allowed a credit pursuant to this section for qualified wages paid or incurred, only one credit shall be allowed to the taxpayer under this part with respect to any wage consisting in whole or in part of those qualified wages.

(g) The net increase in full-time employees of a qualified taxpayer shall be determined as follows:

(1) The net increase in full-time employees shall be determined on an annual full-time equivalent basis by subtracting from the amount determined in subparagraph (A) the amount determined in subparagraph (B).

(A) The total number of full-time employees employed in the previous year by the taxpayer and by any trade or business acquired by the taxpayer during the current taxable year.

(B) The total number of full-time employees employed in the current taxable year by the taxpayer and by any trade or business acquired during the current taxable year.

(2) For taxpayers who first commence doing business in this state during the taxable year, the number of full-time employees for the base year shall be zero.

(h) (1) The total aggregate amount of the credit that may be allocated by credit reservations per calendar year to all qualified taxpayers pursuant to this section and Section 17053.76 shall not exceed ____, plus the unallocated credit amount, if any, from the preceding calendar year.

(2) (A) To be eligible for the credit allowed by this section, a qualified taxpayer shall request a credit reservation from the Franchise Tax Board, in the form and manner prescribed by the Franchise Tax Board.

(B) To obtain a credit reservation, the qualified taxpayer shall provide necessary information, as determined by the Franchise Tax Board.

(3) The Franchise Tax Board shall do both of the following:

(A) Approve a tentative credit reservation with respect to an eligible individual.

(B) Subject to the annual cap established as provided in paragraph (1), allocate an aggregate amount of credits under this section and Section 17053.76, and allocate any carryover of unallocated credits from the prior year. If credit reservation credit requests exceed the amount in (1), the Franchise Tax Board shall reduce the amount of credit on a proportional basis, and notify qualified taxpayers of the revised credit amount.

(i) (1) Except as provided in paragraph (2), this section shall remain in effect only until December 1, 2029, and as of that date is repealed.

(2) Notwithstanding paragraph (1) of subdivision (a), this section shall continue to be operative for taxable years beginning on or after January 1, 2029, but only with respect to qualified full-time employees who commenced employment with a qualified taxpayer in a taxable year beginning before January 1, 2029, and in no case shall the wages of a qualified full-time employee be considered in determining any credit under this section for taxable years beginning on or after January 1, 2034.

SEC. 3.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.

SECTION 1.Section 1840 of the Revenue and Taxation Code is amended to read:

1840.

If a county, city and county, or municipal corporation desires to secure a review, equalization, or adjustment of the assessment of its property by the board pursuant to subdivision (g) of Section 11 of Article XIII of the California Constitution, it shall apply to the board for that review, equalization, or adjustment in writing on or before November 30. If the assessment objected to is one made outside the regular period for those assessments, the application for review shall be filed with the board within 60 days from the date the tax bill is mailed to the assessee.

Every application shall show the facts claimed to require action of the board, and a copy of the application shall be filed with the assessor whose assessment is questioned. Upon receipt of a timely application, the board shall afford the applicant notice and a hearing in accordance with any rules and regulations as the board may prescribe. The failure to file a timely application shall bar the applicant from relief under subdivision (g) of Section 11 of Article XIII or this section.