Bill Text: CA SB471 | 2023-2024 | Regular Session | Amended
Bill Title: Personal Income Tax Law: Corporation Tax: hiring credit: lithium extraction: battery manufacturers.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2024-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB471 Detail]
Download: California-2023-SB471-Amended.html
|
Amended
IN
Senate
April 25, 2023 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Senate Bill
No. 471
| Introduced by Senator Padilla |
February 13, 2023 |
An act to add and repeal Sections 17053.74 and 23625.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 471, as amended, Padilla.
Personal Income Tax Law: Corporation Tax: hiring credit: lithium extraction: battery manufacturers.
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 to a qualified taxpayer for each taxable year beginning on or after January 1, 2023, and before January 1, 2028, except as provided, in an amount equal to the qualified wages paid to a qualified full-time employee, as defined, hired prior to January 1, 2028. The bill would define “qualified taxpayer” for this purpose to mean a person or entity that is located in the County of Imperial or in specified parts of the County of Riverside,
a designated census tract, as defined, and that is primarily engaged in the business of lithium extraction or electric battery manufacturing. The bill would define “qualified wages” as those wages paid or incurred for work performed by a qualified full-time employee within the 36-month period beginning on the first day the employee commences employment with the qualified taxpayer. taxpayer that exceed 150% of minimum wage but do not exceed 350% of minimum wage. The bill would require that, if a credit is allowed to a qualified taxpayer, and the employment of the qualified employee is terminated within the first 36 months of employment, the tax imposed in the year of termination is increased by the
amount of the credit received, except as provided.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives 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 make legislative findings and declarations as to the necessity of a special statute for the Counties of Imperial and
Riverside.
This bill would take effect immediately as a tax levy.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 17053.74 is added to the Revenue and Taxation Code, to read:17053.74.
(a) For each taxable year beginning on or after January 1,(b) For purposes of this section, the following definitions shall apply:
(1) “Acquired” includes any gift, inheritance, transfer incident to divorce, or any other transfer, whether or not for consideration.
(2) “Applicable region” means the County of Imperial and that portion of the Eastern Coachella Valley and Palo Verde Canyon that are located within the County of Riverside. a
designated census tract as defined in paragraph (7) of subdivision (b) of Section 17053.73.
(3) “Qualified full-time employee” means an individual who meets all of the following requirements:
(A) Performs at least 50 percent of the employee’s services for the qualified taxpayer during the taxable year within the applicable region. a designated census tract.
(B) Is hired by the qualified taxpayer on or after the effective date of the act adding this section, and before January 1, 2028.
(C) Satisfies either of the following conditions:
(i) Is paid qualified wages by the qualified taxpayer for services not less than an average of 35 hours per week.
(ii) 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.
(4) “Qualified taxpayer” means a person or entity located in the applicable region,
a designated census tract, engaged primarily in either of the following businesses:
(A) Lithium production.
(B) Manufacturing of electric batteries.
(5) “Qualified wages” means those wages paid or incurred during the 36-month period beginning with the first day the qualified full-time employee commences employment with the qualified taxpayer. taxpayer that are equal to or exceed at least 150 percent of the minimum wage and do not exceed 350 percent of minimum wage for that taxable year.
(c) For purposes of this section, the following shall apply:
(1) All employees of the 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 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 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 23625.5, shall apply with respect to determining employment.
(5) If an employer acquires the major portion of a trade or business of another employer, hereinafter in this paragraph referred to as the predecessor, or the major portion of a separate unit of a trade or business of a predecessor, then, for purposes of applying this section, other than subdivision (d), for any taxable year ending after that acquisition, the employment relationship between a qualified
full-time employee and an employer shall not be treated as terminated if the employee continues to be employed in that trade or business.
(d) (1) If the employment of any qualified full-time employee, with respect to whom qualified wages are taken into account under subdivision (a), is terminated by the qualified taxpayer at any time during the first 36 months after commencing employment with the qualified taxpayer, whether or not consecutive, the tax imposed by this part for the taxable year in which that employment is terminated shall be increased by an amount equal to the credit allowed under subdivision (a) for that taxable year and all prior taxable years attributable to qualified wages paid or incurred with respect to that employee.
(2) Paragraph (1) does not apply to any of the following:
(A) A termination of employment of a qualified full-time employee who voluntarily leaves the employment of the qualified taxpayer.
(B) A termination of employment of a qualified full-time employee who, before the close of the period referred to in paragraph (1), becomes disabled and unable to perform the services of that employment, unless that disability is removed before the close of that period and the qualified taxpayer fails to offer reemployment to that employee.
(C) A termination of employment of a qualified full-time employee, if it is determined that the termination was due to the misconduct, as defined in Sections 1256-30 to 1256-43, inclusive, of Title 22 of the California Code of Regulations, of that employee.
(D) A termination of employment of a qualified full-time employee due to a substantial reduction in the trade or business operations of the qualified taxpayer, including reductions due to seasonal employment.
(E) A termination of employment of a qualified full-time employee, if that employee is replaced by other qualified full-time employees so as
to create a net increase in both the number of employees and the hours of employment.
(F) A termination of employment of a qualified full-time employee, when that employment is considered seasonal employment and the qualified employee is rehired on a seasonal basis.
(3) For purposes of paragraph (1), the employment relationship between the qualified taxpayer and a qualified full-time employee shall not be treated as terminated by reason of a mere change in the form of conducting the trade or business of the qualified taxpayer, if the qualified full-time employee continues to be employed in that trade or business and the qualified taxpayer retains a
substantial interest in that trade or business.
(4) An increase in tax under paragraph (1) shall not be treated as tax imposed by this part for purposes of determining the amount of any credit allowable under this part.
(e) In the case in which 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 four years if necessary, until the credit is exhausted.
(f) 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.
(g) (1) A 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.
(g)
(h) (1) For purposes of complying with Section 41, as it relates to the credit allowed by this section and Section 23625.5, the Legislature finds and declares as follows:
(A) The goal, purpose, and objective of the credit is to address and ameliorate longstanding and stubbornly high unemployment rates in the communities surrounding the Salton Sea lithium deposits relative to the rest of California.
designated census tracts relative to the rest of California.
(B) The performance indicators for the Legislature to use in determining whether the credits meet the goal, purpose, and objective 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,
findings to the Legislature, in compliance with Section 9795 of the Government Code, on or before May 1, 2032, and in compliance with Section 9795 of the Government Code, to the Legislature.
2032.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(h)(1)For taxable years beginning on or after January 1, 2028, this section shall remain operative only with respect to the following:
(A)Qualified full-time employees who commenced employment with a qualified taxpayer in the applicable region in a taxable year beginning before January 1, 2028.
(B)The reporting requirements of subdivision (g).
(2)This section shall be repealed as of December 1, 2032.
(i) (1) This section shall remain in effect only until December 1, 2032, 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, 2028, but only with respect to qualified full-time employees who commenced employment with a qualified taxpayer in a designated census tract in a taxable year beginning before January 1, 2028.
(3) This section shall remain operative for any qualified taxpayer with respect to any qualified full-time employee after the designated census tract ceases to be a designated census tract, as defined in Section 17053.73, for
the remainder, if any, of the 36-month period after the original date of hiring of an otherwise qualified full-time employee and any wages paid or incurred with respect to a qualified full-time employee after the designated census tract ceases to be a designated census tract shall be treated as qualified wages under this section, provided the employee satisfies all other requirements.
SEC. 2.
Section 23625.5 is added to the Revenue and Taxation Code, to read:23625.5.
(a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer that hires a qualified full-time employee and pays or incurs qualified wages attributable to work performed by the qualified full-time employee in an amount(b) For purposes of this section, the following definitions shall apply:
(1) “Acquired” includes any gift, inheritance, transfer incident to divorce, or any other transfer, whether or not for consideration.
(2) “Applicable region” means the County of Imperial and that portion of the Eastern Coachella Valley and Palo Verde Canyon that are located within the County of Riverside. “Designated census tract” has the same meaning as that term is defined in paragraph (7) of subdivision (b) of Section 17053.73.
(3) “Qualified full-time employee” means an individual who meets all of the following requirements:
(A) Performs at least 50 percent of the employee’s services for the qualified taxpayer during the taxable year within the applicable region. a designated census tract.
(B) Is hired by the qualified taxpayer on or after the effective date of the act adding this section, and before January 1, 2028.
(C) Satisfies either of the following
conditions:
(i) Is paid qualified wages by the qualified taxpayer for services not less than an average of 35 hours per week.
(ii) 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.
(4) “Qualified taxpayer” means a person or entity located in the applicable region, a
designated census tract, engaged primarily in either of the following businesses:
(A) Lithium production.
(B) Manufacturing of electric batteries.
(5) “Qualified wages” means those wages paid or incurred during the 36-month period beginning with the first day the qualified full-time employee commences employment with the qualified taxpayer. taxpayer that are equal to or exceed at least 150 percent of the minimum wage and do not exceed 350 percent of minimum wage for that taxable year.
(c) (1) For purposes of this section, the following shall apply:
(A) All employees of the 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 all corporations that are members of the same controlled group of corporations shall be treated as employed by a single qualified taxpayer.
(C) The credit, if any, allowable by this section to each member 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 in that manner.
(D) If a qualified taxpayer acquires the major portion of a trade or business of another taxpayer, hereinafter in this paragraph referred to as the predecessor, or the major portion of a separate unit of a trade or business of a predecessor, then, for purposes of applying this section for any taxable year ending after that acquisition, the employment relationship between a qualified full-time employee and a qualified taxpayer shall not be treated as terminated if the employee continues to be employed in that trade or business.
(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) (1) If the employment of any qualified full-time employee, with respect to whom qualified wages are taken into account under subdivision (a), is terminated by the qualified taxpayer at any time during the first 36 months after commencing employment with the qualified taxpayer, whether or not consecutive, the tax imposed by this part for the taxable year in which that employment is terminated
shall be increased by an amount equal to the credit allowed under subdivision (a) for that taxable year and all prior taxable years attributable to qualified wages paid or incurred with respect to that employee.
(2) Paragraph (1) does not apply to any of the following:
(A) A termination of employment of a qualified full-time employee who voluntarily leaves the employment of the qualified taxpayer.
(B) A termination of employment of a qualified full-time employee who, before the close of the period referred to in paragraph (1), becomes disabled and
unable to perform the services of that employment, unless that disability is removed before the close of that period and the qualified taxpayer fails to offer reemployment to that employee.
(C) A termination of employment of a qualified full-time employee, if it is determined that the termination was due to the misconduct, as defined in Sections 1256-30 to 1256-43, inclusive, of Title 22 of the California Code of Regulations, of that employee.
(D) A termination of employment of a qualified full-time employee due to a substantial reduction in the trade or business operations of the qualified taxpayer, including reductions due to seasonal employment.
(E) A termination of employment of a qualified full-time employee, if that employee is replaced by other qualified full-time employees so as to create a net increase in both the number of employees and the hours of employment.
(F) A termination of employment of a qualified full-time employee, when that employment is considered seasonal employment and the qualified employee is rehired on a seasonal basis.
(3) For purposes of paragraph (1), the employment relationship between the qualified taxpayer and a qualified full-time employee shall not be treated as terminated by reason of a mere change in the
form of conducting the trade or business of the qualified taxpayer, if the qualified full-time employee continues to be employed in that trade or business and the qualified taxpayer retains a substantial interest in that trade or business.
(4) An increase in tax under paragraph (1) shall not be treated as tax imposed by this part for purposes of determining the amount of any credit allowable under this part.
(e) In the case in which 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 four years if necessary, until the credit is exhausted.
(f) 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.
(g)(1)For taxable years beginning on or after January 1, 2028, this section shall remain operative only with respect to qualified full-time employees who commenced employment with a qualified taxpayer in the applicable region in a taxable year beginning before January 1, 2028.
(2)This section shall be repealed as of December 1, 2031.
(g) (1) A 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.
(h) (1) This section shall remain in effect only until December 1, 2032, 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, 2028, but only
with respect to qualified full-time employees who commenced employment with a qualified taxpayer in a designated census tract in a taxable year beginning before January 1, 2028.
(3) This section shall remain operative for any qualified taxpayer with respect to any qualified full-time employee after the designated census tract ceases to be a designated census tract, as defined in Section 17053.73, for the remainder, if any, of the 36-month period after the original date of hiring of an otherwise qualified full-time employee and any wages paid or incurred with respect to a qualified full-time employee after the designated census tract ceases to be a designated census tract shall be treated as qualified wages under this section, provided the employee satisfies all other requirements.
The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique economic and employment circumstances of, and that apply to, the County of Imperial and those parts of the Eastern Coachella Valley and Palo Verde Canyon that are within the County of Riverside.
