BILL NUMBER: AB 1847 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Mark Stone
FEBRUARY 9, 2016
An act to amend Sections 19851, 19852, 19853, and 19854 of the
Revenue and Taxation Code, relating to tax administration.
LEGISLATIVE COUNSEL'S DIGEST
AB 1847, as introduced, Mark Stone. Earned Income Tax Credit
Information Act: California Earned Income Tax Credit.
The Personal Income Tax Law allows various credits against the
taxes imposed by that law, including certain credits that are allowed
in modified conformity to credits allowed by federal income tax
laws. Federal income tax laws allow a refundable earned income tax
credit for certain low-income individuals who have earned income and
who meet certain other requirements.
The Personal Income Tax Law, in modified conformity with federal
income tax laws, allows an earned income credit against personal
income tax, and a payment in excess of that credit amount, to an
eligible individual that is equal to that portion of the earned
income tax credit allowed by federal law as determined by the earned
income tax credit adjustment factor as set forth in the annual Budget
Act.
Existing law, the Earned Income Tax Credit Information Act,
requires an employer, as defined, to notify all employees that they
may be eligible for the federal earned income tax credit, as
specified.
This bill would require those same employers currently required to
notify employees who may be eligible for the federal earned income
tax credit to also notify these employees that they may be eligible
for the California Earned Income Tax Credit under the same
conditions.
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 19851 of the Revenue and Taxation Code is
amended to read:
19851. The Legislature finds and declares as follows:
(a) Congress created the federal earned income tax credit (EITC)
in 1975 to offset the adverse effects of the Medicare and social
security payroll taxes on working poor families and to encourage
low-income workers to seek employment rather than welfare.
(b) Due to a relatively low percentage of federal earned income
tax credit eligible persons who participate in the federal Earned
Income Tax Credit program, hundreds of millions of federal dollars go
unclaimed by the working poor in California.
(c) In 2015, the State of California authorized a state EITC to
amplify the poverty-reducing effects of the federal EITC for the
poorest working Californians.
(c)
(d) In order to alleviate the tax burden on working
poor persons and families, to enhance the wages and income of working
poor persons and families, to ensure that California receives its
share of the federal money available in the federal Earned Income Tax
Credit program, to ensure that the poorest working Californians
access the additional state EITC, and to inject additional
federal money into the California economy, the state shall facilitate
the furnishing of information to working poor persons and families
regarding the availability of the federal and state earned
income tax credit so that they may claim that credit
those credits on their federal and state
income tax returns.
(d)
(e) It is the intent of this act to offer the most
cost-effective assistance to eligible taxpayers through the
following:
(1) Notices provided by their employers.
(2) Notices provided by state departments and agencies that serve
those who may qualify for the EITC.
(3) By taking steps to ensure that eligible Californians claim
both the federal and state EITC.
SEC. 2. Section 19852 of the Revenue and Taxation Code is amended
to read:
19852. For purposes of this part, the following terms have the
following meanings:
(a) "Employer" means any California employer who is subject to,
and is required to provide, unemployment insurance to his or her
employees, under the Unemployment Insurance Code.
(b) "Employee" means any person who is covered by unemployment
insurance by his or her employer, pursuant to the Unemployment
Insurance Code.
(c) "EITC" means the federal earned income tax credit, as defined
in Section 32 of the Internal Revenue Code.
Code, and the California Earned Income Tax Credit, as defined in
Section 17052.
(d) "State departments and agencies that serve those who may
qualify for the EITC" means the following programs in the specified
departments and agencies:
(1) The State Department of Education: free or reduced-price meal
program and National School Lunch Program.
(2) Employment Development Department: California Unemployment
Insurance.
(3) State Department of Health Care Services: the Medi-Cal
program.
(4) Managed Risk Medical Insurance Board (MRMIB): the Healthy
Families Program.
SEC. 3. Section 19853 of the Revenue and Taxation Code is amended
to read:
19853. (a) An employer shall notify all employees that they may
be eligible for the EITC within one week before or after, or at the
same time, that the employer provides an annual wage summary,
including, but not limited to, a Form W-2 or a Form 1099, to any
employee.
(b) The state departments and agencies that serve those who may
qualify for the EITC, as defined in subdivision (d) of Section 19852,
shall notify their program recipients that they may be eligible for
the EITC, at least once a year during the months of January through
April, or alternatively, shall provide this annual notification
during a regularly scheduled contact with a recipient by telephone,
mail, or electronic communication, or by an in-person communication.
State departments or agencies that do not directly communicate with
persons or households with persons who may qualify for the EITC may
communicate indirectly through agencies, districts, or regulated
entities that serve eligible persons or households with eligible
persons. Departments, agencies, and programs are encouraged to
develop the most effective method to provide notice to recipients of
EITC eligibility, as long as the notice contains substantially the
same language as the notice described in Section 19854.
(c) The employer shall provide the notification required by
subdivision (a) by handing directly to the employee or mailing to the
employee's last known address either of the following:
(1) Instructions on how to obtain any notices available from the
Internal Revenue Service or the Franchise Tax Board for
this purpose, including, but not limited to, the IRS Notice 797 and
Form W-5, California Form 3514, or any successor notice or
form.
(2) Any notice created by the employer, as long as it contains
substantially the same language as the notice described in paragraph
(1) or in Section 19854.
(d) The employer shall not satisfy the notification required by
subdivision (a) by posting a notice on an employee bulletin board or
sending it through office mail. However, these methods of
notification are encouraged to help inform all employees of the EITC.
(e) Every employer shall process, in accordance with federal law,
Form W-5 for advance payments of the EITC, and California Form
3514, upon the request of the employee.
SEC. 4. Section 19854 of the Revenue and Taxation Code is amended
to read:
19854. The notice furnished to employees regarding the
availability of the EITC shall state as follows:
BASED ON YOUR ANNUAL EARNINGS, YOU MAY BE ELIGIBLE TO RECEIVE THE
EARNED INCOME TAX CREDIT FROM THE FEDERAL GOVERNMENT.
GOVERNMENT OR THE STATE OF CALIFORNIA. THE
EARNED INCOME TAX CREDIT IS A REFUNDABLE FEDERAL
INCOME TAX CREDIT FOR LOW-INCOME WORKING INDIVIDUALS AND FAMILIES.
THE EARNED INCOME TAX CREDIT HAS NO EFFECT ON CERTAIN WELFARE
BENEFITS. IN MOST CASES, EARNED INCOME TAX CREDIT PAYMENTS WILL NOT
BE USED TO DETERMINE ELIGIBILITY FOR MEDICAID, SUPPLEMENTAL SECURITY
INCOME, FOOD STAMPS, LOW-INCOME HOUSING OR MOST TEMPORARY ASSISTANCE
FOR NEEDY FAMILIES PAYMENTS. EVEN IF YOU DO NOT OWE FEDERAL
TAXES, OR STATE TAXES , YOU MUST FILE
A TAX RETURN TO RECEIVE THE EARNED INCOME TAX CREDIT. BE SURE TO
FILL OUT THE EARNED INCOME TAX CREDIT FORM IN THE FEDERAL INCOME TAX
RETURN BOOKLET. BOOKLET AND ANY RELATED STATE
FORMS. FOR INFORMATION REGARDING YOUR ELIGIBILITY TO RECEIVE
THE FEDERAL EARNED INCOME TAX CREDIT, INCLUDING
INFORMATION ON HOW TO OBTAIN THE IRS NOTICE 797 OR FORM W-5, OR ANY
OTHER NECESSARY FEDERAL FORMS AND INSTRUCTIONS, CONTACT
THE INTERNAL REVENUE SERVICE BY CALLING 1-800-829-3676 OR THROUGH ITS
WEB SITE AT WWW.IRS.GOV. FOR MORE INFORMATION REGARDING YOUR
ELIGIBILITY FOR THE CALIFORNIA EARNED INCOME TAX CREDIT, INCLUDING
INFORMATION ON HOW TO OBTAIN CALIFORNIA FORM 3514 CONTACT THE
FRANCHISE TAX BOARD THROUGH ITS INTERNET WEB SITE AT WWW.FTB.CA.GOV.