Bill Text: CA SB1216 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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

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BILL NUMBER: SB 1216	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 4, 2016

INTRODUCED BY   Senator Hueso

                        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.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1216, as amended, Hueso. Income taxes: credits: qualified
employees.
   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.
   This bill would, under both laws for taxable years beginning on or
after January 1,  2016,   2017,  and
before January 1, 2021,   2022,  allow a
credit against tax in an amount equal to 20% of qualified wages paid
by a qualified taxpayer, as defined, to qualified employees, which
includes persons between 18 and 25 years of age who complete a work
readiness program, not to exceed $15,000 per qualified taxpayer per
taxable year.
   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 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,  2016,   2017,  and before
January 1,  2021,   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 20 percent of all qualified wages paid
or incurred to the qualified full-time employee, not to exceed
 $15,000   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 taxpayer is allowed a credit pursuant to this section
for qualified wages paid or incurred, another credit shall not be
allowed to the 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. 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,
 2016.   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.
   (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 employed 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  person  
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,  2016,   2017,  and
before January 1,  2021,   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. 
   (5) 
    (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) Section 41 shall not apply to the credit allowed by this
section.
   (m) This section shall remain in effect only until December 1,
 2021,   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,  2016,   2017,  and before
January 1, 2021,   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,"   "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 20 percent of all qualified wages paid
or incurred to the qualified full-time employee, not to exceed
 $15,000   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 taxpayer is allowed a credit pursuant to this section
for qualified wages paid or incurred, another credit shall not be
allowed to the 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. 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,
 2016.   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.
   (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 or "S" corporation. 
 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 employed 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  person  
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,  2016,   2017,  and
before January 1,  2021,   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) Section 41 shall not apply to the credit allowed by this
section.
   (l) This section shall remain in effect only until December 1,
 2021,   2022,  and as of that date is
repealed.
  SEC. 3.  This act provides for a tax levy within the meaning of
Article IV of the  California  Constitution and shall go
into immediate effect.