BILL NUMBER: AB 1847 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 16, 2016
PASSED THE ASSEMBLY MAY 31, 2016
AMENDED IN ASSEMBLY APRIL 7, 2016
AMENDED IN ASSEMBLY MARCH 8, 2016
INTRODUCED BY Assembly Member Mark Stone
(Coauthors: Assembly Members Dodd, McCarty, and Mullin)
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, 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.
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.
(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 those credits on their federal and state income
tax returns.
(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) "Federal EITC" means the federal earned income tax credit, as
defined in Section 32 of the Internal Revenue Code.
(d) "California EITC" means the California earned income tax
credit, as defined in Section 17052 of the Revenue and Taxation Code.
(e) "State departments and agencies that serve those who may
qualify for the federal EITC and the California 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.
(f) The amendments made to this section by the act adding this
subdivision shall apply to notices required pursuant to Section 19853
furnished on or after the effective date of that act.
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 federal and the California 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 federal and the California EITC, as defined in
subdivision (e) of Section 19852, shall notify their program
recipients that they may be eligible for the federal and the
California 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 federal and the California 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 federal and California 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 and the Franchise Tax Board for this
purpose, including, but not limited to, the IRS Notice 797 and
information on the California EITC at the Web site www.ftb.ca.gov.
(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
federal and the California EITC.
(e) The amendments made to this section by the act adding this
subdivision shall apply to notices furnished on or after the
effective date of that act.
SEC. 4. Section 19854 of the Revenue and Taxation Code is amended
to read:
19854. (a) The notice furnished to employees regarding the
availability of the federal and the California 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 (FEDERAL EITC).
THE FEDERAL EITC IS A REFUNDABLE FEDERAL INCOME TAX CREDIT FOR
LOW-INCOME WORKING INDIVIDUALS AND FAMILIES. THE FEDERAL EITC HAS NO
EFFECT ON CERTAIN WELFARE BENEFITS. IN MOST CASES, FEDERAL EITC
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, YOU MUST FILE A FEDERAL TAX RETURN TO RECEIVE
THE FEDERAL EITC. BE SURE TO FILL OUT THE FEDERAL EITC FORM IN THE
FEDERAL INCOME TAX RETURN BOOKLET. FOR INFORMATION REGARDING YOUR
ELIGIBILITY TO RECEIVE THE FEDERAL EITC, INCLUDING INFORMATION ON HOW
TO OBTAIN THE IRS NOTICE 797 OR ANY OTHER NECESSARY FORMS AND
INSTRUCTIONS, CONTACT THE INTERNAL REVENUE SERVICE BY CALLING
1-800-829-3676 OR THROUGH ITS WEB SITE AT WWW.IRS.GOV.
YOU ALSO MAY BE ELIGIBLE TO RECEIVE THE CALIFORNIA EARNED INCOME
TAX CREDIT (CALIFORNIA EITC) STARTING WITH THE CALENDAR YEAR 2015 TAX
YEAR. THE CALIFORNIA EITC IS A REFUNDABLE STATE INCOME TAX CREDIT
FOR LOW-INCOME WORKING INDIVIDUALS AND FAMILIES. THE CALIFORNIA EITC
IS TREATED IN THE SAME MANNER AS THE FEDERAL EITC AND GENERALLY WILL
NOT BE USED TO DETERMINE ELIGIBILITY FOR WELFARE BENEFITS UNDER
CALIFORNIA LAW. TO CLAIM THE CALIFORNIA EITC, EVEN IF YOU DO NOT OWE
CALIFORNIA TAXES, YOU MUST FILE A CALIFORNIA INCOME TAX RETURN AND
COMPLETE AND ATTACH THE CALIFORNIA EITC FORM (FTB 3514). FOR
INFORMATION ON THE AVAILABILITY OF THE CREDIT, ELIGIBILITY
REQUIREMENTS, AND HOW TO OBTAIN THE NECESSARY CALIFORNIA FORMS AND
GET HELP FILING, CONTACT THE FRANCHISE TAX BOARD AT 1-800-852-5711 OR
THROUGH ITS WEB SITE AT WWW.FTB.CA.GOV.
(b) The amendments made to this section by the act adding this
subdivision shall apply to notices furnished on or after the
effective date of that act.