Bill Text: CA SB1216 | 2015-2016 | Regular Session | Amended
Bill Title: Trade Corridors Improvement Fund: federal funds.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2016-11-30 - From Assembly without further action. [SB1216 Detail]
Download: California-2015-SB1216-Amended.html
BILL NUMBER: SB 1216 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 19, 2016
AMENDED IN ASSEMBLY JUNE 29, 2016
AMENDED IN ASSEMBLY JUNE 28, 2016
AMENDED IN SENATE MAY 4, 2016
INTRODUCED BY Senator Hueso
( Coauthor: Assembly Member
Frazier )
FEBRUARY 18, 2016
An act to add and repeal Sections 17053.75 and 23675 of
the Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy. An act to amend Sections 2192
and 2192.2 of the Streets and Highways Code, relating to
transportation.
LEGISLATIVE COUNSEL'S DIGEST
SB 1216, as amended, Hueso. Income taxes: credits:
qualified employees. Trade Corridors Improvement Fund:
federal funds.
The Highway Safety, Traffic Reduction, Air Quality, and Port
Security Bond Act of 2006 (Proposition 1B) created the Trade
Corridors Improvement Fund (TCIF) and provided for allocation by the
California Transportation Commission of $2 billion in bond funds for
infrastructure improvements on highway and rail corridors that have a
high volume of freight movement, and specified categories of
projects eligible to receive these funds. Existing law continues the
TCIF in existence in order to receive revenues from sources other
than the bond act for these purposes.
This bill would require revenues apportioned to the state from the
National Highway Freight Program established by the federal Fixing
America's Surface Transportation Act to be allocated for trade
corridor improvement projects approved pursuant to these provisions.
Existing law requires the commission, in determining projects
eligible for funding, to consult various state freight and regional
infrastructure and goods movement plans and the statewide port master
plan.
This bill would delete consideration of the State Air Resources
Board's Sustainable Freight Strategy and the statewide port master
plan and would instead include consideration of the applicable port
master plan and, for the nonfederal funds, the California Sustainable
Freight Action Plan when determining eligible projects for funding.
The bill would also expand eligible projects to include rail landside
access improvements, landside freight access improvements to
airports, and certain capital and operational improvements. The bill
would authorize the commission to revise the guidelines adopted in
2007 for the TCIF and would require the commission to allocate funds
to projects pursuant to the guidelines, but would require the
commission to allocate the above-referenced federal funds consistent
with the original guidelines adopted in 2007, as specified.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws, including
hiring credits within the specified economic development areas.
Existing law requires any bill authorizing a new personal income tax
or corporation tax credit to contain, among other things, specific
goals, purposes, and objectives that the tax credit will achieve,
detailed performance indicators, and data collection requirements, as
provided.
This bill, under both laws for taxable years beginning on or after
January 1, 2017, and before January 1, 2022, would allow a credit
against the net tax or tax in an amount equal to 23.5% of qualified
wages paid by a qualified taxpayer, as defined, to qualified
full-time employees, as defined, which are persons between 18 and 25
years of age who complete a work readiness program, and meet other
specified requirements, not to exceed $15,000 per qualified taxpayer
per taxable year, as provided. The bill would also include that
additional information required for any bill authorizing a new income
tax credit.
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 2192 of the Streets
and Highways Code is amended to read:
2192. (a) (1) The Trade Corridors
Improvement Fund, Fund (TCIF), created
pursuant to subdivision (c) of Section 8879.23 of the Government
Code, is hereby continued in existence to receive revenues from
state sources other than the Highway Safety, Traffic Reduction,
Air Quality, and Port Security Bond Act of 2006. This
chapter shall govern expenditure of those other revenues.
(2) Revenues apportioned to the state under Section 167 of Title
23 of the United States Code from the National Highway Freight
Program, pursuant to the federal Fixing America's Surface
Transportation Act ("FAST Act"; Public Law 114-94) shall be allocated
for projects approved pursuant to this chapter.
(b) This chapter shall govern expenditure of those state and
federal revenues described in subdivision (a).
(b)
(c) The moneys funding
described in the fund from those other sources
subdivision (a) shall be available upon
appropriation for allocation by the California Transportation
Commission for infrastructure improvements in this state on federally
designated Trade Corridors of National and Regional Significance, on
the Primary Freight Network, and along other corridors that have a
high volume of freight movement, as determined by the commission. In
determining the projects eligible for funding,
funding pursuant to paragraphs (1) and (2) of subdivision (a),
the commission shall consult the Transportation Agency's state
freight plan as described in Section 13978.8 of the Government Code,
the State Air Resources Board's Sustainable Freight Strategy
adopted by Resolution 14-2, and the trade infrastructure
and goods movement plan submitted to the commission by the
Secretary of Transportation and the Secretary for Environmental
Protection. The commission shall also consult trade infrastructure
and goods movement plans adopted by regional transportation
planning agencies, adopted regional transportation plans required by
state and federal law, and the statewide
applicable port master plan prepared by
plan. In determining the California Marine and
Intermodal Transportation System Advisory Council (Cal-MITSAC)
projects eligible for funding pursuant to
Section 1730 paragraph (1) of
subdivision (a), the Harbors and Navigation Code, when
determining eligible projects for funding. commission
shall also consult the California Sustainable Freight Action Plan.
Eligible projects for these funds the
funding described in subdivision (a) include, but are not
limited to, all of the following:
(1) Highway capacity improvements, rail landside access
improvements, landside freight access improvements to
airports, and operational improvements to more efficiently
accommodate the movement of freight, particularly for ingress and
egress to and from the state's land ports of entry
entry, rail terminals, and seaports, including navigable
inland waterways used to transport freight between seaports, land
ports of entry, and airports, and to relieve traffic congestion along
major trade or goods movement corridors.
(2) Freight rail system improvements to enhance the ability to
move goods from seaports, land ports of entry, and airports to
warehousing and distribution centers throughout California, including
projects that separate rail lines from highway or local road
traffic, improve freight rail mobility through mountainous regions,
relocate rail switching yards, and other projects that improve the
efficiency and capacity of the rail freight system.
(3) Projects to enhance the capacity and efficiency of ports.
(4) Truck corridor and capital and operational
improvements, including dedicated truck facilities or truck toll
facilities.
(5) Border access capital and operational
improvements that enhance goods movement between California and
Mexico and that maximize the state's ability to access
coordinated border infrastructure funds made available to
the state by federal law.
(6) Surface transportation and connector road improvements to
effectively facilitate the movement of goods, particularly for
ingress and egress to and from the state's land ports of entry,
airports, and seaports, to relieve traffic congestion along major
trade or goods movement corridors.
(c)
(d) (1) The Except as provided
in paragraph (2), the commission shall allocate funds
the funding described in subdivision (a) for
trade infrastructure improvements from the fund
consistent with Section 8879.52 of the Government Code and the
Trade Corridors Improvement Fund (TCIF) TCIF
Guidelines adopted by the commission on November 27, 2007, or
as amended by the commission, and in a manner that (A) addresses the
state's most urgent needs, (B) balances the demands of various land
ports of entry, seaports, and airports, (C) provides reasonable
geographic balance between the state's regions, and
(D) places emphasis on projects that improve trade corridor
mobility and safety while reducing emissions of diesel
particulate and other pollutant emissions.
emissions, and reducing other negative community impacts, and (E)
makes a significant contribution to the state's economy.
(2) The commission shall allocate the federal freight funding,
specifically, consistent with the original TCIF Guidelines, as
adopted by the commission on November 27, 2007, and in the manner
described in subparagraphs (A) to (E), inclusive, of paragraph (1).
In allocating funding pursuant to the original TCIF Guidelines, the
commission shall appropriately revise the dates in those guidelines.
(2)
(3) In addition, the commission shall also consider the
following factors when allocating these funds:
(A) "Velocity," which means the speed by which large cargo would
travel from the land port of entry or seaport through the
distribution system.
(B) "Throughput," which means the volume of cargo that would move
from the land port of entry or seaport through the distribution
system.
(C) "Reliability," which means a reasonably consistent and
predictable amount of time for cargo to travel from one point to
another on any given day or at any given time in California.
(D) "Congestion reduction," which means the reduction in recurrent
daily hours of delay to be achieved.
SEC. 2. Section 2192.2 of the Streets
and Highways Code is amended to read:
2192.2. The commission shall allocate funds made available by
this chapter to projects that have identified and committed
supplemental funding from appropriate local, federal, or private
sources. The commission shall determine the appropriate amount of
supplemental funding each project should have to be eligible for
moneys from the fund based on a project-by-project
review and an assessment of the project's benefit to the state and
the program. Except for border access Funded
improvements described in paragraph (5) of subdivision
(b) of Section 2192, improvements funded with moneys from the fund
shall have supplemental funding that is at least equal to
the amount of the contribution from the fund.
under this chapter. The commission may give priority for
funding to projects with higher levels of committed supplemental
funding.
SECTION 1. Section 17053.75 is added to the
Revenue and Taxation Code, to read:
17053.75. (a) (1) For each taxable year beginning on or after
January 1, 2017, and before January 1, 2022, there shall be allowed
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, and that receives a tentative credit
reservation for that qualified full-time employee, a credit against
the "net tax," as defined in Section 17039, in an amount calculated
under this section.
(2) The amount of the credit allowable under this section for a
taxable year shall be equal to 23.5 percent of all qualified wages
paid or incurred to the qualified full-time employee, not to exceed
fifteen thousand dollars ($15,000) per qualified taxpayer per taxable
year.
(3) The credit allowed by this section may be claimed only on a
timely filed original return of the qualified taxpayer and only with
respect to a qualified full-time employee for whom 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, another credit shall
not be allowed to the qualified taxpayer under this part with respect
to any wage consisting in whole or in part of those qualified wages.
(b) For purposes of this section:
(1) "Acquire" includes any gift, inheritance, transfer incident to
divorce, or any other transfer, whether or not for consideration.
(2) "Job training provider" means an entity that delivers a
combined job readiness and life-skills training program that, at a
minimum, includes high school or continuing education courses or
services to connect individuals to high school or continuing
education courses. The entity's program may also offer additional
services like job placement, career and mental health counseling,
prisoner reentry services, and relapse prevention and sober-living
support.
(3) "Minimum wage" means the wage established pursuant to Chapter
1 (commencing with Section 1171) of Part 4 of Division 2 of the Labor
Code.
(4) (A) "Qualified full-time employee" means an individual who
meets all of the following requirements:
(i) Receives starting wages that are at least 150 percent of the
minimum wage.
(ii) Is hired by the qualified taxpayer on or after January 1,
2017.
(iii) 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.
(iv) Is an ex-offender previously convicted of a felony who is, at
the time of hiring, between 18 and 25 years of age and who
demonstrates documented completion of a work readiness program.
(v) Performs at least 50 percent of his or her services for the
qualified taxpayer during the taxable year in the state.
(B) An individual may be considered a qualified full-time employee
only for the period of time commencing with the date the individual
is first employed by the qualified taxpayer and ending 60 months
thereafter.
(5) (A) "Qualified taxpayer" means a person or entity engaged in a
trade or business within the state that, during the taxable year,
pays or incurs qualified wages.
(B) In the case of any pass-thru entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any credit under this section or
Section 23675 shall be allowed to the pass-thru entity and passed
through to the partners and shareholders in accordance with
applicable provisions of this part or Part 11 (commencing with
Section 23001). For purposes of this subdivision, the term "pass-thru
entity" means any partnership or "S" corporation.
(C) "Qualified taxpayers" shall not include any of the following:
(i) Employers that provide temporary help services, as described
in Code 561320 of the North American Industry Classification System
(NAICS) published by the United States Office of Management and
Budget, 2012 edition.
(ii) Employers that provide retail trade services, as described in
Sector 44-45 of the North American Industry Classification System
(NAICS) published by the United States Office of Management and
Budget, 2012 edition.
(iii) Employers that are primarily engaged in providing food
services, as described in Code 711110, 722511, 722513, 722514, or
722515 of the North American Industry Classification System (NAICS)
published by the United States Office of Management and Budget, 2012
edition.
(iv) Employers that are primarily engaged in services as described
in Code 713210, 721120, or 722410 of the North American Industry
Classification System (NAICS) published by the United States Office
of Management and Budget, 2012 edition.
(v) (I) An employer that is a sexually oriented business.
(II) For purposes of this clause:
(ia) "Sexually oriented business" means a nightclub, bar,
restaurant, or similar commercial enterprise that provides for an
audience of two or more individuals live nude entertainment or live
nude performances where the nudity is a function of everyday business
operations and where nudity is a planned and intentional part of the
entertainment or performance.
(ib) "Nude" means clothed in a manner that leaves uncovered or
visible, through less than fully opaque clothing, any portion of the
genitals or, in the case of a female, any portion of the breasts
below the top of the areola of the breasts.
(6) "Qualified wages" means those wages that meet all of the
following requirements:
(A) (i) That portion of wages paid or incurred by the qualified
taxpayer during the taxable year to each qualified full-time employee
that exceeds 150 percent of minimum wage, but does not exceed 350
percent of minimum wage.
(ii) (I) In the case of a qualified full-time employee who
provides services only in a designated pilot area, that portion of
wages paid or incurred by the qualified taxpayer during the taxable
year to each qualified full-time employee that exceeds ten dollars
($10) per hour or an equivalent amount for salaried employees, but
does not exceed 350 percent of minimum wage. For qualified full-time
employees described in the preceding sentence, clause (i) of
subparagraph (A) of paragraph (4) is modified by substituting "ten
dollars ($10) per hour or an equivalent amount for salaried employees"
for "150 percent of the minimum wage."
(II) For purposes of this clause, "designated pilot area" means an
area designated as a designated pilot area by the Governor's Office
of Business and Economic Development, pursuant to Sections 17053.73
and 23626.
(B) Wages paid or incurred during the 60-month period beginning
with the first day the qualified full-time employee commences
employment with the qualified taxpayer. In the case of any employee
who is reemployed, including a regularly occurring seasonal increase,
in the trade or business operations of the qualified taxpayer, this
reemployment shall not be treated as constituting commencement of
employment for purposes of this section.
(7) "Seasonal employment" means employment by a qualified taxpayer
that has regular and predictable substantial reductions in trade or
business operations.
(8) "Work readiness program" means a program offered by a job
training provider that provides vocational job training, educational
opportunities, and life skills. A work readiness program shall focus
on skills acquisition and educational advancement and shall foster
behavioral changes that promote personal responsibility and positive
contributions to society. A work readiness program shall include all
of the following:
(A) Paid or unpaid on-the-job training opportunities,
preapprenticeship programs, vocational instruction, or internship
placement.
(B) The opportunity for academic advancement.
(C) The opportunity to earn at least one industry recognized
certification.
(D) A life-skills training component.
(c) 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.
(d) (1) To be eligible for the credit allowed by this section, a
qualified taxpayer shall, upon hiring a qualified full-time employee,
request a tentative credit reservation from the Franchise Tax Board
within 30 days of complying with the Employment Development
Department's new hire reporting requirements as provided in Section
1088.5 of the Unemployment Insurance Code, in the form and manner
prescribed by the Franchise Tax Board.
(2) To obtain a tentative credit reservation with respect to a
qualified full-time employee, the qualified taxpayer shall provide
necessary information, as determined by the Franchise Tax Board,
including the name, social security number, the start date of
employment, and the rate of pay of the qualified full-time employee.
(3) The qualified taxpayer shall provide the Franchise Tax Board
an annual certification of employment with respect to each qualified
full-time employee hired in a previous taxable year, on or before,
the 15th day of the third month of the taxable year. The
certification shall include necessary information, as determined by
the Franchise Tax Board, including the name, social security number,
start date of employment, and rate of pay for each qualified
full-time employee employed by the qualified taxpayer.
(4) A tentative credit reservation provided to a taxpayer with
respect to an employee of that taxpayer shall not constitute a
determination by the Franchise Tax Board with respect to any of the
requirements of this section regarding a taxpayer's eligibility for
the credit authorized by this section.
(e) The Franchise Tax Board shall do all of the following:
(1) Approve a tentative credit reservation with respect to a
qualified full-time employee hired during a calendar year.
(2) Determine the aggregate tentative reservation amount.
(3) Notwithstanding Section 19542, provide as a searchable
database on its Internet Web site, for each taxable year beginning on
or after January 1, 2017, and before January 1, 2022, the employer
names, amounts of tax credit claimed, and number of new jobs created
for each taxable year pursuant to this section and Section 23675.
(f) For purposes of this section:
(1) 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.
(2) 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.
(3) Principles that apply in the case of controlled groups of
corporations, as specified in subdivision (f) of Section 23675, shall
apply with respect to determining employment.
(4) 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 (g), 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.
(g) (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.
(h) In the case of an estate or trust, both of the following
apply:
(1) The qualified wages for a taxable year shall be apportioned
between the estate or trust and the beneficiaries on the basis of the
income of the estate or trust allocable to each.
(2) A beneficiary to whom any qualified wages have been
apportioned under paragraph (1) shall be treated, for purposes of
this part, as the employer with respect to those wages.
(i) 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.
(j) 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.
(k) The Franchise Tax Board shall annually provide to the Joint
Legislative Budget Committee, in compliance with Section 9795 of the
Government Code, by no later than March 1, a report of the total
dollar amount of the credits claimed under this section with respect
to the relevant fiscal year. The report shall compare the total
dollar amount of credits claimed under this section with respect to
that fiscal year with the department's estimate with respect to that
same fiscal year. If the total dollar amount of credits claimed for
the fiscal year is less than the estimate for that fiscal year, the
report shall identify options for increasing annual claims of the
credit so as to meet estimated amounts.
(l) No deduction shall be allowed under this part for wages paid
or incurred in a taxable year to the extent that those wages are
qualified wages with respect to calculating a credit under this
section for that taxable year.
(m) This section shall remain in effect only until
December 1, 2022, and as of that date is repealed.
SEC. 2. Section 23675 is added to the Revenue
and Taxation Code, to read:
23675. (a) (1) For each taxable year beginning on or after
January 1, 2017, and before January 1, 2022, there shall be allowed
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, and that receives a tentative credit
reservation for that qualified full-time employee, a credit against
the "tax," as defined in Section 23036, in an amount calculated under
this section.
(2) The amount of the credit allowable under this section for a
taxable year shall be equal to 23.5 percent of all qualified wages
paid or incurred to the qualified full-time employee, not to exceed
fifteen thousand dollars ($15,000) per qualified taxpayer per taxable
year.
(3) The credit allowed by this section may be claimed only on a
timely filed original return of the qualified taxpayer and only with
respect to a qualified full-time employee for whom 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, another credit shall
not be allowed to the qualified taxpayer under this part with respect
to any wage consisting in whole or in part of those qualified wages.
(b) For purposes of this section:
(1) "Acquire" includes any gift, inheritance, transfer incident to
divorce, or any other transfer, whether or not for consideration.
(2) "Job training provider" means an entity that delivers a
combined job readiness and life-skills training program that, at a
minimum, includes high school or continuing education courses or
services to connect individuals to high school or continuing
education courses. The entity's program may also offer additional
services like job placement, career and mental health counseling,
prisoner reentry services, and relapse prevention and sober-living
support.
(3) "Minimum wage" means the wage established pursuant to Chapter
1 (commencing with Section 1171) of Part 4 of Division 2 of the Labor
Code.
(4) (A) "Qualified full-time employee" means an individual who
meets all of the following requirements:
(i) Receives starting wages that are at least 150 percent of the
minimum wage.
(ii) Is hired by the qualified taxpayer on or after January 1,
2017.
(iii) 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.
(iv) Is an ex-offender previously convicted of a felony who is, at
the time of hiring, between 18 and 25 years of age and who
demonstrates documented completion of a work readiness program.
(v) Performs at least 50 percent of his or her services for the
qualified taxpayer during the taxable year in the state.
(B) An individual may be considered a qualified full-time employee
only for the period of time commencing with the date the individual
is first employed by the qualified taxpayer and ending 60 months
thereafter.
(5) (A) "Qualified taxpayer" means a corporation engaged in a
trade or business within the state that, during the taxable year,
pays or incurs qualified wages.
(B) In the case of any pass-thru entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any credit under this section or
Section 17053.75 shall be allowed to the pass-thru entity and passed
through to the partners and shareholders in accordance with
applicable provisions of this part or Part 10 (commencing with
Section 17001). For purposes of this subdivision, the term "pass-thru
entity" means any partnership.
(C) "Qualified taxpayers" shall not include any of the following:
(i) Employers that provide temporary help services, as described
in Code 561320 of the North American Industry Classification System
(NAICS) published by the United States Office of Management and
Budget, 2012 edition.
(ii) Employers that provide retail trade services, as described in
Sector 44-45 of the North American Industry Classification System
(NAICS) published by the United States Office of Management and
Budget, 2012 edition.
(iii) Employers that are primarily engaged in providing food
services, as described in Code 711110, 722511, 722513, 722514, or
722515 of the North American Industry Classification System (NAICS)
published by the United States Office of Management and Budget, 2012
edition.
(iv) Employers that are primarily engaged in services as described
in Code 713210, 721120, or 722410 of the North American Industry
Classification System (NAICS) published by the United States Office
of Management and Budget, 2012 edition.
(v) (I) An employer that is a sexually oriented business.
(II) For purposes of this clause:
(ia) "Sexually oriented business" means a nightclub, bar,
restaurant, or similar commercial enterprise that provides for an
audience of two or more individuals live nude entertainment or live
nude performances where the nudity is a function of everyday business
operations and where nudity is a planned and intentional part of the
entertainment or performance.
(ib) "Nude" means clothed in a manner that leaves uncovered or
visible, through less than fully opaque clothing, any portion of the
genitals or, in the case of a female, any portion of the breasts
below the top of the areola of the breasts.
(6) "Qualified wages" means those wages that meet all of the
following requirements:
(A) (i) That portion of wages paid or incurred by the qualified
taxpayer during the taxable year to each qualified full-time employee
that exceeds 150 percent of minimum wage, but does not exceed 350
percent of minimum wage.
(ii) (I) In the case of a qualified full-time employee who
provides services only in a designated pilot area, that portion of
wages paid or incurred by the qualified taxpayer during the taxable
year to each qualified full-time employee that exceeds ten dollars
($10) per hour or an equivalent amount for salaried employees, but
does not exceed 350 percent of minimum wage. For qualified full-time
employees described in the preceding sentence, clause (i) of
subparagraph (A) of paragraph (4) is modified by substituting "ten
dollars ($10) per hour or an equivalent amount for salaried employees"
for "150 percent of the minimum wage."
(II) For purposes of this clause, "designated pilot area" means an
area designated as a designated pilot area by the Governor's Office
of Business and Economic Development, pursuant to Sections 17053.73
and 23626.
(B) Wages paid or incurred during the 60-month period beginning
with the first day the qualified full-time employee commences
employment with the qualified taxpayer. In the case of any employee
who is reemployed, including a regularly occurring seasonal increase,
in the trade or business operations of the qualified taxpayer, this
reemployment shall not be treated as constituting commencement of
employment for purposes of this section.
(7) "Seasonal employment" means employment by a qualified taxpayer
that has regular and predictable substantial reductions in trade or
business operations.
(8) "Work readiness program" means a program offered by a job
training provider that provides vocational job training, educational
opportunities, and life skills. A work readiness program shall focus
on skills acquisition and educational advancement and shall foster
behavioral changes that promote personal responsibility and positive
contributions to society. A work readiness program shall include all
of the following:
(A) Paid or unpaid on-the-job training opportunities,
preapprenticeship programs, vocational instruction, or internship
placement.
(B) The opportunity for academic advancement.
(C) The opportunity to earn at least one industry recognized
certification.
(D) A life-skills training component.
(c) 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.
(d) (1) To be eligible for the credit allowed by this section, a
qualified taxpayer shall, upon hiring a qualified full-time employee,
request a tentative credit reservation from the Franchise Tax Board
within 30 days of complying with the Employment Development
Department's new hire reporting requirements as provided in Section
1088.5 of the Unemployment Insurance Code, in the form and manner
prescribed by the Franchise Tax Board.
(2) To obtain a tentative credit reservation with respect to a
qualified full-time employee, the qualified taxpayer shall provide
necessary information, as determined by the Franchise Tax Board,
including the name, social security number, the start date of
employment, and the rate of pay of the qualified full-time employee.
(3) The qualified taxpayer shall provide the Franchise Tax Board
an annual certification of employment with respect to each qualified
full-time employee hired in a previous taxable year, on or before,
the 15th day of the third month of the taxable year. The
certification shall include necessary information, as determined by
the Franchise Tax Board, including the name, social security number,
start date of employment, and rate of pay for each qualified
full-time employee employed by the qualified taxpayer.
(4) A tentative credit reservation provided to a taxpayer with
respect to an employee of that taxpayer shall not constitute a
determination by the Franchise Tax Board with respect to any of the
requirements of this section regarding a taxpayer's eligibility for
the credit authorized by this section.
(e) The Franchise Tax Board shall do all of the following:
(1) Approve a tentative credit reservation with respect to a
qualified full-time employee hired during a calendar year.
(2) Determine the aggregate tentative reservation amount.
(3) Notwithstanding Section 19542, provide as a searchable
database on its Internet Web site, for each taxable year beginning on
or after January 1, 2017, and before January 1, 2022, the employer
names, amounts of tax credit claimed, and number of new jobs created
for each taxable year pursuant to this section and Section 17053.75.
(f) (1) For purposes of this section:
(A) All employees of corporations that are members of the same
controlled group of corporations shall be treated as employed by a
single taxpayer.
(B) 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.
(C) 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 an 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.
(g) (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.
(h) In the case in which 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 four years if necessary,
until the credit is exhausted.
(i) 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.
(j) The Franchise Tax Board shall annually provide to the Joint
Legislative Budget Committee, in compliance with Section 9795 of the
Government Code, by no later than March 1, a report of the total
dollar amount of the credits claimed under this section with respect
to the relevant fiscal year. The report shall compare the total
dollar amount of credits claimed under this section with respect to
that fiscal year with the department's estimate with respect to that
same fiscal year. If the total dollar amount of credits claimed for
the fiscal year is less than the estimate for that fiscal year, the
report shall identify options for increasing annual claims of the
credit so as to meet estimated amounts.
(k) No deduction shall be allowed under this part for wages paid
or incurred in a taxable year to the extent that those wages are
qualified wages with respect to calculating a credit under this
section for that taxable year.
(l) This section shall remain in effect only until December 1,
2022, and as of that date is repealed.
SEC. 3. For purposes of complying with Section
41 of the Revenue and Taxation Code, relating to Sections 17053.75
and 23675 of the Revenue and Taxation Code, the Legislature finds and
declares as follows:
(a) Specific goals, purposes, and objectives: Provide an economic
incentive for qualified employers to hire qualified employees, which
includes persons between 18 and 25 years of age who have felony
convictions and have completed a work readiness program, in an effort
to help them overcome barriers to employment and promote their
successful transition back into society.
(b) Performance indicators: The Franchise Tax Board shall annually
report to the Joint Legislative Budget Committee the total dollar
amount of the credits claimed under Sections 17053.75 and 23675 of
the Revenue and Taxation Code with respect to the relevant fiscal
year, as well as the growth or decline of credits claimed under these
sections each successive fiscal year from January 1, 2017, to
January 1, 2022, so that the Legislature can monitor the overall
progress of the economic incentive. The report shall be submitted in
compliance with Section 9795 of the Government Code.
SEC. 4. This act provides for a tax levy within
the meaning of Article IV of the California Constitution and shall
go into immediate effect.
