Bill Text: CA SB670 | 2015-2016 | Regular Session | Amended

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Bill Title: Income taxes: credit: child care.

Sponsorship: Bipartisan Bill

Status: (Failed) 2016-11-30 - From Assembly without further action. [SB670 Detail]

Download: California-2015-SB670-Amended.html

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BILL NUMBER: SB 670	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 20, 2015
	AMENDED IN ASSEMBLY  AUGUST 18, 2015
	AMENDED IN SENATE  JUNE 1, 2015
	AMENDED IN SENATE  MAY 13, 2015
	AMENDED IN SENATE  APRIL 23, 2015

INTRODUCED BY   Senator Jackson
    (   Coauthor:   Senator   Nguyen
  ) 

                        FEBRUARY 27, 2015

   An act to add and repeal Sections 17052.17, 17052.18, 23617, and
23618 of the Revenue and Taxation Code, relating to taxation, to take
effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 670, as amended, Jackson. Income taxes: credit: child care.
   The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
   This bill, for taxable years beginning on and after January 1,
2016, and before January 1, 2021, would allow a credit in the amount
of 30% of the costs of startup expenses for child care programs,
constructing a child care facility, providing child care information
and referral services, and contributing to a qualified care plan, as
defined. The bill would authorize, in the case where the credit
allowed for the taxable year exceeds the "net tax" or "tax" the
excess to be carried over to reduce the "net tax" or "tax" in the
following year, and the succeeding 7 years if necessary, as
specified. The bill would also require the Franchise Tax Board to
report to the Legislature on the effectiveness of these credits, as
specified.
   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 17052.17 is added to the Revenue and Taxation
Code, to read:
   17052.17.  (a) For each taxable year beginning on or after January
1, 2016, and before January 1, 2021, there shall be allowed as a
credit against the "net tax," as defined by Section 17039, an amount
equal to the amount determined in subdivision (b).
   (b) (1) The amount of the credit allowed by this section shall be
30 percent of any of the following:
   (A) The cost paid or incurred by the taxpayer on or after January
1, 2016, for the startup expenses of establishing a child care
program or constructing a child care facility in California, to be
used primarily by the children of the taxpayer's employees.
   (B) For each taxable year beginning on or after January 1, 2016,
the cost paid or incurred by the taxpayer for startup expenses of
establishing a child care program or constructing a child care
facility in California, to be used primarily by the children of
employees of tenants leasing commercial or office space in a building
owned by the taxpayer.
   (C) (i) The cost paid or incurred by the taxpayer on or after
January 1, 2016, for contributions to California child care
information and referral services, including, but not limited to,
those that identify local child care services, offer information
describing these resources to the taxpayer's employees, and make
referrals of the taxpayer's employees to child care services where
there are vacancies.
   (ii) In the case of a child care facility established by two or
more taxpayers, the credit shall be allowed to each taxpayer if the
facility is to be used primarily by the children of the employees of
each of the taxpayers or the children of the employees of the tenants
of each of the taxpayers.
   (2) The amount of the credit allowed by this section shall not
exceed fifty thousand dollars ($50,000) for a taxable year.
   (c) For purposes of this section, "startup expenses" include, but
are not limited to, feasibility studies, site preparation, and
construction, renovation, or acquisition of facilities for purposes
of establishing or expanding onsite or nearsite centers by one or
more employers or one or more building owners leasing space to
employers.
   (d) If two or more taxpayers share in the costs eligible for the
credit provided by this section, each taxpayer shall be eligible to
receive a tax credit with respect to his, her, or its respective
share of the costs paid or incurred.
   (e) (1) In the case where the credit allowed and limited under
subdivision (b) for the taxable year 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
has been exhausted. However, the excess from any one year shall not
exceed fifty thousand dollars ($50,000).
   (2) If the credit carryovers from preceding taxable years allowed
under paragraph (1) plus the credit allowed for the taxable year
under subdivision (b) would exceed an aggregate total of fifty
thousand dollars ($50,000), then the credit allowed to reduce the
"net tax" under this section for the taxable year shall be limited to
fifty thousand dollars ($50,000) and the amount in excess of the
fifty-thousand-dollar ($50,000) limit may be carried over and applied
against the "net tax" in the following year, and succeeding years if
necessary, in an amount which, when added to the credit allowed
under subdivision (b) for that succeeding taxable year, does not
exceed fifty thousand dollars ($50,000).
   (f) A deduction shall not be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those expenses.
   (g) In lieu of claiming the tax credit provided by this section,
the taxpayer may elect to take depreciation pursuant to Section
17250. In addition, the taxpayer may take depreciation pursuant to
that section for the cost of a facility in excess of the amount of
the tax credit claimed under this section.
   (h) The basis for any child care facility for which a credit is
allowed shall be reduced by the amount of the credit attributable to
the facility. The basis adjustment shall be made for the taxable year
for which the credit is allowed.
   (i) A credit shall not be allowed under subparagraph (B) of
paragraph (1) of subdivision (b) in the case of any taxpayer that is
required by any local ordinance or regulation to provide a child care
facility.
   (j) (1) In order to be eligible for the credit allowed under
subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
taxpayer shall submit to the Franchise Tax Board upon request a
statement certifying that the costs for which the credit is claimed
are incurred with respect to the startup expenses of establishing a
child care program or constructing a child care facility in
California to be used primarily by the children of the taxpayer's
employees or the children of the employees of tenants leasing
commercial or office space in a building owned by the taxpayer and
which will be in operation for at least 60 consecutive months after
completion.
   (2) If the child care center for which a credit is claimed
pursuant to this section is disposed of or ceases to operate within
60 months after completion, that portion of the credit claimed which
represents the remaining portion of the 60-month period shall be
added to the taxpayer's tax liability in the taxable year of that
disposition or nonuse.
   (k) In order to be allowed the credit under subparagraph (A) or
(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
in the form and manner prescribed by the Franchise Tax Board, the
number of children that the child care program or facility will be
able to legally accommodate.
   (l) (1) On or before January 1, 2018, the Franchise Tax Board
shall submit to the Legislature a report on the following:
   (A) The dollar amount of credits claimed annually.
   (B) The number of child care facilities established or constructed
by taxpayers claiming the credit.
   (C) The number of children served by these facilities.
   (2) The report to be submitted by paragraph (1) shall be submitted
in compliance with Section 9795 of the Government Code. 
   (3) Section 41 does not apply to the credit allowed by this
section. 
   (m) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
  SEC. 2.  Section 17052.18 is added to the Revenue and Taxation
Code, to read:
   17052.18.  (a) For each taxable year beginning on or after January
1, 2016, and before January 1, 2021, there shall be allowed as a
credit against the "net tax," as defined by Section 17039, an amount
equal to the amount determined in subdivision (b).
   (b) (1) The amount of the credit allowed by this section shall be
30 percent of the cost paid or incurred by the taxpayer for
contributions to a qualified care plan made on behalf of any
qualified dependent of the taxpayer's qualified employee.
   (2) The amount of the credit allowed by this section in any
taxable year shall not exceed three hundred sixty dollars ($360) for
each qualified dependent.
   (c) For purposes of this section:
   (1) "Qualified care plan" means a plan providing qualified care.
   (2) "Qualified care" includes, but is not limited to, onsite
service, center-based service, in-home care or home-provider care,
and a dependent care center as defined by Section 21(b)(2)(D) of the
Internal Revenue Code that is a specialized center with respect to
short-term illnesses of an employee's dependents. "Qualified care"
must be provided in this state under the authority of a license when
required by California law.
   (3) "Specialized center" means a facility that provides care to
mildly ill children and that may do all of the following:
   (A) Be staffed by pediatric nurses and day care workers.
   (B) Admit children suffering from common childhood ailments
(including colds, flu, and chickenpox).
   (C) Make special arrangements for well children with minor
problems associated with diabetes, asthma, breaks or sprains, and
recuperation from surgery.
   (D) Separate children according to their illness and symptoms in
order to protect them from cross-infection.
   (4) "Contributions" include direct payments to child care programs
or providers. "Contributions" do not include amounts contributed to
a qualified care plan pursuant to a salary reduction agreement to
provide benefits under a dependent care assistance program within the
meaning of Section 129 of the Internal Revenue Code, as applicable,
for purposes of Part 11 (commencing with Section 23001) and this
part.
   (5) "Qualified employee" means any employee of the taxpayer who is
performing services for the taxpayer in this state, within the
meaning of Section 25133, during the period in which the qualified
care is performed.
   (6) "Employee" includes an individual who is an employee within
the meaning of Section 401(c)(1) of the Internal Revenue Code,
relating to self-employed individual treated as employee.
   (7) "Qualified dependent" means any dependent of a qualified
employee who is under 12 years of age.
   (d) If an employer makes contributions to a qualified care plan
and also collects fees from parents to support a child care facility
owned and operated by the employer, a credit shall not be allowed
under this section for contributions in the amount, if any, by which
the sum of the contributions and fees exceed the total cost of
providing care. The Franchise Tax Board may require information about
fees collected from parents of children served in the facility from
taxpayers claiming credits under this section.
   (e) If the duration of the child care received is less than 42
weeks, the employer shall claim a prorated portion of the allowable
credit. The employer shall prorate the credit using the ratio of the
number of weeks of care received divided by 42 weeks.
   (f) If 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 has been exhausted.
   (g) The credit shall not be available to an employer if the care
provided on behalf of an employee is provided by an individual who:
   (1) Qualifies as a dependent of that employee or that employee's
spouse under subdivision (d) of Section 17054.
   (2) Is, within the meaning of Section 17056, a son, stepson,
daughter, or stepdaughter of that employee and is under 19 years of
age at the close of that taxable year.
   (h) The contributions to a qualified care plan shall not
discriminate in favor of employees who are officers, owners, or
highly compensated, or their dependents.
   (i) A deduction shall not be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year that is equal to the amount of the credit allowed under this
section.
   (j) If the credit is taken by an employer for contributions to a
qualified care plan that is used at a facility owned by the employer,
the basis of that facility shall be reduced by the amount of the
credit. The basis adjustment shall be made for the taxable year for
which the credit is allowed.
   (k) In order to be allowed the credit authorized under this
section, the taxpayer shall indicate, in the form and manner
prescribed by the Franchise Tax Board, the number of children of
employees served by the qualified child care plan.
   (l) (1) On or before January 1, 2018, the Franchise Tax Board
shall submit to the Legislature a report on the following:
   (A) The dollar amount of credits claimed annually.
   (B) The number of children of employees served by the qualified
child care plan for which the taxpayer claimed a credit.
   (2) The report to be submitted by paragraph (1) shall be submitted
in compliance with Section 9795 of the Government Code. 
   (3) Section 41 does not apply to the credit allowed by this
section. 
   (m) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
  SEC. 3.  Section 23617 is added to the Revenue and Taxation Code,
to read:
   23617.  (a) For each taxable year beginning on or after January 1,
2016, and before January 1, 2021, there shall be allowed as a credit
against the "tax," as defined by Section 23036, an amount equal to
the amount determined in subdivision (b).
   (b) (1) The amount of the credit allowed by this section shall be
30 percent of any of the following:
   (A) The cost paid or incurred by the taxpayer on or after January
1, 2016, for the startup expenses of establishing a child care
program or constructing a child care facility in California, to be
used primarily by the children of the taxpayer's employees.
   (B) For each taxable year beginning on or after January 1, 2016,
the cost paid or incurred by the taxpayer for startup expenses of
establishing a child care program or constructing a child care
facility in California to be used primarily by the children of
employees of tenants leasing commercial or office space in a building
owned by the taxpayer.
   (C) (i) The cost paid or incurred by the taxpayer on or after
January 1, 2016, for contributions to California child care
information and referral services, including, but not limited to,
those that identify local child care services, offer information
describing these resources to the taxpayer's employees, and make
referrals of the taxpayer's employees to child care services where
there are vacancies.
   (ii) In the case of a child care facility established by two or
more taxpayers, the credit shall be allowed to each taxpayer if the
facility is to be used primarily by the children of the employees of
each of the taxpayers or the children of the employees of the tenants
of each of the taxpayers.
   (2) The amount of the credit allowed by this section shall not
exceed fifty thousand dollars ($50,000) for a taxable year.
   (c) For purposes of this section, "startup expenses" include, but
are not limited to, feasibility studies, site preparation, and
construction, renovation, or acquisition of facilities for purposes
of establishing or expanding onsite or nearsite centers by one or
more employers or one or more building owners leasing space to
employers.
   (d) If two or more taxpayers share in the costs eligible for the
credit provided by this section, each taxpayer shall be eligible to
receive a tax credit with respect to its respective share of the
costs paid or incurred.
   (e) (1) In the case where the credit allowed and limited under
subdivision (b) for the taxable year 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 has been
exhausted. However, the excess from any one year shall not exceed
fifty thousand dollars ($50,000).
   (2) If the credit carryovers from preceding taxable years allowed
under paragraph (1) plus the credit allowed for the taxable year
under subdivision (b) would exceed an aggregate total of fifty
thousand dollars ($50,000), then the credit allowed to reduce the
"tax" under this section for the taxable year shall be limited to
fifty thousand dollars ($50,000) and the amount in excess of the
fifty-thousand-dollar ($50,000) limit may be carried over and applied
against the "tax" in the following year, and succeeding years if
necessary, in an amount which, when added to the credit allowed under
subdivision (b) for that succeeding taxable year, does not exceed
fifty thousand dollars ($50,000).
   (f) A deduction shall not be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those expenses.
   (g) The basis for any child care facility for which a credit is
allowed shall be reduced by the amount of the credit attributable to
the facility. The basis adjustment shall be made for the taxable year
for which the credit is allowed.
   (h) A credit shall not be allowed under subparagraph (B) of
paragraph (1) of subdivision (b) in the case of any taxpayer that is
required by any local ordinance or regulation to provide a child care
facility.
   (i) (1) In order to be eligible for the credit allowed under
subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
taxpayer shall submit to the Franchise Tax Board upon request a
statement certifying that the costs for which the credit is claimed
are incurred with respect to the startup expenses of establishing a
child care program or constructing a child care facility in
California to be used primarily by the children of the taxpayer's
employees or the children of the employees of tenants leasing
commercial or office space in a building owned by the taxpayer and
which will be in operation for at least 60 consecutive months after
completion.
   (2) If the child care center for which a credit is claimed
pursuant to this section is disposed of or ceases to operate within
60 months after completion, that portion of the credit claimed which
represents the remaining portion of the 60-month period shall be
added to the taxpayer's tax liability in the taxable year of that
disposition or nonuse.
   (j) In order to be allowed the credit under subparagraph (A) or
(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
in the form and manner prescribed by the Franchise Tax Board, the
number of children that the child care program or facility will be
able to legally accommodate.
   (k) (1) On or before January 1, 2018, the Franchise Tax Board
shall submit to the Legislature a report on the following:
   (A) The dollar amount of credits claimed annually.
   (B) The number of child care facilities established or constructed
by taxpayers claiming the credit.
   (C) The number of children served by these facilities.
   (2) The report to be submitted by paragraph (1) shall be submitted
in compliance with Section 9795 of the Government Code. 
   (3) Section 41 does not apply to the credit allowed by this
section. 
   (l) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
  SEC. 4.  Section 23618 is added to the Revenue and Taxation Code,
to read:
   23618.  (a) For each taxable year beginning on or after January 1,
2016, and before January 1, 2021, there shall be allowed as a credit
against the "tax," as defined by Section 23036, an amount equal to
the amount determined in subdivision (b).
   (b) (1) The amount of the credit allowed by this section shall be
30 percent of the cost paid or incurred by the taxpayer for
contributions to a qualified care plan made on behalf of any
qualified dependent of the taxpayer's qualified employee.
   (2) The amount of the credit allowed by this section in any
taxable year shall not exceed three hundred sixty dollars ($360) for
each qualified dependent.
   (c) For purposes of this section:
   (1) "Qualified care plan" means a plan providing qualified care.
   (2) "Qualified care" includes, but is not limited to, onsite
service, center-based service, in-home care or home-provider care,
and a dependent care center as defined by Section 21(b)(2)(D) of the
Internal Revenue Code that is a specialized center with respect to
short-term illnesses of an employee's dependents. "Qualified care"
must be provided in this state under the authority of a license when
required by California law.
   (3) "Specialized center" means a facility that provides care to
mildly ill children and that may do all of the following:
   (A) Be staffed by pediatric nurses and day care workers.
   (B) Admit children suffering from common childhood ailments
(including colds, flu, and chickenpox).
   (C) Make special arrangements for well children with minor
problems associated with diabetes, asthma, breaks or sprains, and
recuperation from surgery.
   (D) Separate children according to their illness and symptoms in
order to protect them from cross-infection.
   (4) "Contributions" include direct payments to child care programs
or providers. "Contributions" do not include amounts contributed to
a qualified care plan pursuant to a salary reduction agreement to
provide benefits under a dependent care assistance program within the
meaning of Section 129 of the Internal Revenue Code, as applicable,
for purposes of Part 10 (commencing with Section 17001) and this
part.
   (5) "Qualified employee" means any employee of the taxpayer who is
performing services for the taxpayer in this state, within the
meaning of Section 25133, during the period in which the qualified
care is performed.
   (6) "Employee" includes an individual who is an employee within
the meaning of Section 401(c)(1) of the Internal Revenue Code,
relating to self-employed individual treated as employee.
   (7) "Qualified dependent" means any dependent of a qualified
employee who is under 12 years of age.
   (d) If an employer makes contributions to a qualified care plan
and also collects fees from parents to support a child care facility
owned and operated by the employer, a credit shall not be allowed
under this section for contributions in the amount, if any, by which
the sum of the contributions and fees exceed the total cost of
providing care. The Franchise Tax Board may require information about
fees collected from parents of children served in the facility from
taxpayers claiming credits under this section.
   (e) If the duration of the child care received is less than 42
weeks, the employer shall claim a prorated portion of the allowable
credit. The employer shall prorate the credit using the ratio of the
number of weeks of care received divided by 42 weeks.
   (f) If 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 has
been exhausted.
   (g) The credit shall not be available to an employer if the care
provided on behalf of an employee is provided by an individual who:
   (1) Qualifies as a dependent of that employee or that employee's
spouse under subdivision (d) of Section 17054.
   (2) Is, within the meaning of Section 17056, a son, stepson,
daughter, or stepdaughter of that employee and is under 19 years of
age at the close of that taxable year.
   (h) The contributions to a qualified care plan shall not
discriminate in favor of employees who are officers, owners, or
highly compensated, or their dependents.
   (i) A deduction shall not be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year that is equal to the amount of the credit allowed under this
section.
   (j) If the credit is taken by an employer for contributions to a
qualified care plan that is used at a facility owned by the employer,
the basis of that facility shall be reduced by the amount of the
credit. The basis adjustment shall be made for the taxable year for
which the credit is allowed.
   (k) In order to be allowed the credit authorized under this
section, the taxpayer shall indicate, in the form and manner
prescribed by the Franchise Tax Board, the number of children of
employees served by the qualified child care plan.
   (l) (1) On or before January 1, 2018, the Franchise Tax Board
shall submit to the Legislature a report on the following:
   (A) The dollar amount of credits claimed annually.
   (B) The number of children of employees served by the qualified
child care plan for which the taxpayer claimed a credit.
   (2) The report to be submitted by paragraph (1) shall be submitted
in compliance with Section 9795 of the Government Code. 
   (3) Section 41 does not apply to the credit allowed by this
section. 
   (m) This section shall remain in effect only until December 1,
2021, and as of that date is repealed.
  SEC. 5.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.