BILL NUMBER: AB 927 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 29, 2013
AMENDED IN ASSEMBLY APRIL 8, 2013
AMENDED IN ASSEMBLY APRIL 1, 2013
INTRODUCED BY Assembly Member Muratsuchi
FEBRUARY 22, 2013
An act to add Sections 17053.81 and23623.1
and 23623.1 to the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 927, as amended, Muratsuchi. Income taxes: credits: hiring.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
This bill would, under both laws, for taxable years beginning on
or after January 1, 2014, allow a credit to a qualified employer, as
defined, in an amount equal to $3,000 for each net increase in
qualified full-time employee hired during the taxable year by a
qualified employer, and an additional $1,000 per qualified full-time
employee hired during the taxable year by a qualified employer if the
qualified full-time employee is a veteran or an additional $2,000
per qualified full-time employee hired during the taxable year by a
qualified employer if the qualified full-time employee is a
service-connected disabled veteran, as provided. This bill would
limit the total amount of credit allowed to a qualified employer to
an amount not to exceed $5,000,000 for all taxable years. This bill
would cap the total amount of credit which may be allowed under those
provisions for any calendar year to $35,000,000.
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. It is the intent of the Legislature to create a
competitive tax policy for businesses involved with research,
development, and manufacturing.
SEC. 2. Section 17053.81 is added to the Revenue and Taxation
Code, to read:
17053.81. (a) (1) For each taxable year beginning on or after
January 1, 2014, there shall be allowed to a qualified employer a
credit against the "net tax," as defined in Section 17039, in an
amount described in paragraph (2).
(2) The amount of credit allowed under this section is as follows:
(A) (i) Three thousand dollars ($3,000) for each net increase in
qualified full-time employee hired during the taxable year by a
qualified employer.
(ii) An additional one thousand dollars ($1,000) per qualified
full-time employee hired during the taxable year by a qualified
employer if the qualified full-time employee is a veteran or an
additional two thousand dollars ($2,000) per qualified full-time
employee hired during the taxable year by a qualified employer if the
qualified full-time employee is a service-connected disabled veteran
, as measured by the percentage of increase in an
annual full-time equivalent that the veteran or service-connected
disabled veteran represents .
(B) The total amount of credits allowed under this section to a
qualified employer shall not exceed five million dollars ($5,000,000)
for all taxable years.
(b) For purposes of this section:
(1) "Annual full-time equivalent" means either of the following:
(A) In the case of a full-time employee paid hourly qualified
wages, "annual full-time equivalent" means the total number of hours
worked for the taxpayer by the employee (not to exceed 2,000 hours
per employee) divided by 2,000.
(B) In the case of a salaried full-time employee, "annual
full-time equivalent" means the total number of weeks worked for the
taxpayer by the employee divided by 52.
(2) "Qualified full-time employee" means either of the following:
(A) An employee who was paid wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code by
the qualified employer for services of not less than an average of
35 hours per week.
(B) An employee who was 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
employer.
(3)
(2) "Qualified employer" means a taxpayer who employed
qualified full-time employees who are located in this state and meets
any of the following:
(A) The taxpayer manufactures, assembles, tests, renovates, or
converts aircraft and spacecraft.
(B) The taxpayer manufactures or designs aircraft or spacecraft
engines and engine parts.
(C) The taxpayer manufactures or designs aircraft and spacecraft
auxiliary components, including detection equipment, navigation, and
guidance systems.
(D) The taxpayer provides aircraft and spacecraft support
services, including launching, operating, and retrieving air and
space vehicles.
(E) The taxpayer is a military contractor that is
involved with aerospace defense has contracted with
the United States military or federal government for the purpose of
national defense related to aerospace , including the
manufacturing of missiles and military airplanes.
(3) "Qualified full-time employee" means either of the following:
(A) An employee who was paid wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code by
the qualified employer for services of not less than an average of
35 hours per week.
(B) An employee who was 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
employer.
(4) "Service-connected disabled veteran" means a veteran who is
disabled by an injury or illness that was incurred or aggravated
during active military service.
(5) "Veteran" means a person honorably discharged from the Armed
Forces of the United States.
(c) The net increase in qualified full-time employees of a
qualified employer shall be determined as provided by this
subdivision:
(1) (A) The net increase in qualified full-time employees shall be
determined on an annual full-time equivalent basis by subtracting
from the amount determined in subparagraph (C) the amount determined
in subparagraph (B).
(B) The total number of qualified full-time employees employed in
the preceding taxable year by the taxpayer and by any trade or
business acquired by the taxpayer during the preceding
current taxable year.
(C) The total number of full-time employees employed in the
current taxable year by the taxpayer and by any trade or business
acquired during the current taxable year.
(2) For taxpayers who first commence doing business in this state
during the taxable year, the number of full-time employees for the
immediately preceding prior taxable year shall be zero.
(d) For purposes of this section:
(1) All employees of the trades or businesses that are treated as
related under either Section 267, 318, or 707 of the Internal Revenue
Code shall be treated as employed by a single taxpayer.
(2) In determining whether the taxpayer has first commenced doing
business in this state during the taxable year, the provisions of
subdivision (f) of Section 17276 17276.20
, without application of paragraph (7) of that subdivision,
shall apply.
(e) (1) The aggregate amount of credits that may be allowed for
any calendar taxable year under this
section and Section 23623.1 shall not exceed an amount equal to
thirty-five million dollars ($35,000,000).
(2) The credits allowed under this section and Section 23623.1
shall be allowed to a taxpayer on a first-come-first-served basis.
(3) The taxpayer shall claim the credit on a timely filed original
return.
(4) The date a return is received shall be determined by the
Franchise Tax Board.
(5) (A) The determinations of the Franchise Tax Board with respect
to the date a return is received and whether a return has been
timely filed for purposes of this subdivision may not be reviewed in
any administrative or judicial proceeding.
(B) Any disallowance of a credit claimed due to a determination
under this subdivision, including the application of the limitation
specified in paragraph (1), shall be treated as a mathematical error
appearing on the return. Any amount of tax resulting from such
disallowance may be assessed by the Franchise Tax Board in the same
manner as provided by Section 19051.
(6) The Franchise Tax Board shall periodically provide notice on
its Internet Web site with respect to the amount of credit
under this section and Section 23623.1 claimed on timely filed
original returns received by the Franchise Tax Board.
(f) In the case where 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 succeeding years if necessary, until the
credit is exhausted.
(g)
(f) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out the
purposes of this section , including any guidelines necessary to
avoid the application of subparagraph (B) of paragraph (2) of
subdivision (a) through split-ups, shell corporations, partnerships,
tiered ownership structures, or otherwise .
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this section.
SEC. 3. Section 23623.1 is added to the Revenue and Taxation Code,
to read:
23623.1. (a) (1) For each taxable year beginning on or after
January 1, 2014, there shall be allowed to a qualified employer a
credit against the "tax," as defined in Section 23036, in an amount
described in paragraph (2).
(2) The amount of credit allowed under this section is as follows:
(A) (i) Three thousand dollars ($3,000) for each net increase in
qualified full-time employee hired during the taxable year by a
qualified employer.
(ii) An additional one thousand dollars ($1,000) per qualified
full-time employee hired during the taxable year by a qualified
employer if the qualified full-time employee is a veteran or an
additional two thousand dollars ($2,000) per qualified full-time
employee hired during the taxable year by a qualified employer if the
qualified full-time employee is a service-connected disabled veteran
, as measured by the percentage of increase in an annual
full-time equivalent that the veteran or service-connected disabled
veteran represents .
(B) The total amount of credits allowed under this section to a
qualified employer shall not exceed five million dollars ($5,000,000)
for all taxable years.
(b) For purposes of this section:
(1) "Annual full-time equivalent" means either of the following:
(A) In the case of a full-time employee paid hourly qualified
wages, "annual full-time equivalent" means the total number of hours
worked for the taxpayer by the employee (not to exceed 2,000 hours
per employee) divided by 2,000.
(B) In the case of a salaried full-time employee, "annual
full-time equivalent" means the total number of weeks worked for the
taxpayer by the employee divided by 52.
(2) "Qualified full-time employee" means either of the following:
(A) An employee who was paid wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code by
the qualified employer for services of not less than an average of
35 hours per week.
(B) An employee who was 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
employer.
(3)
(2) "Qualified employer" means a taxpayer who employed
qualified full-time employees who are located in this state and meets
any of the following:
(A) The taxpayer manufactures, assembles, tests, renovates, or
converts aircraft and spacecraft.
(B) The taxpayer manufactures or designs aircraft or spacecraft
engines and engine parts.
(C) The taxpayer manufactures or designs aircraft and spacecraft
auxiliary components, including detection equipment, navigation, and
guidance systems.
(D) The taxpayer provides aircraft and spacecraft support
services, including launching, operating, and retrieving air and
space vehicles.
(E) The taxpayer is a military contractor that is
involved with aerospace defense has contracted with
the United States military or federal government for the purpose of
national defense related to aerospace , including the
manufacturing of missiles and military airplanes.
(3) "Qualified full-time employee" means either of the following:
(A) An employee who was paid wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance Code by
the qualified employer for services of not less than an average of
35 hours per week.
(B) An employee who was 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
employer.
(4) "Service-connected disabled veteran" means a veteran who is
disabled by an injury or illness that was incurred or aggravated
during active military service.
(5) "Veteran" means a person honorably discharged from the Armed
Forces of the United States.
(c) The net increase in qualified full-time employees of a
qualified employer shall be determined as provided by this
subdivision:
(1) (A) The net increase in qualified full-time employees shall be
determined on an annual full-time equivalent basis by subtracting
from the amount determined in subparagraph (C) the amount determined
in subparagraph (B).
(B) The total number of qualified full-time employees employed in
the preceding taxable year by the taxpayer and by any trade or
business acquired by the taxpayer during the preceding
current taxable year.
(C) The total number of full-time employees employed in the
current taxable year by the taxpayer and by any trade or business
acquired during the current taxable year.
(2) For taxpayers who first commence doing business in this state
during the taxable year, the number of full-time employees for the
immediately preceding prior taxable year shall be zero.
(d) For purposes of this section:
(1) All employees of the trades or businesses that are treated as
related under either Section 267, 318, or 707 of the Internal Revenue
Code shall be treated as employed by a single taxpayer.
(2) In determining whether the taxpayer has first commenced doing
business in this state during the taxable year, the provisions of
subdivision (f) (g) of Section
17276 24416.20 , without application of
paragraph (7) of that subdivision, shall apply.
(e) (1) The aggregate amount of credits that may be allowed for
any calendar taxable year under this
section and Section 17053.81 shall not exceed an amount equal to
thirty-five million dollars ($35,000,000).
(2) The credits allowed under this section and Section 17053.81
shall be allowed to a taxpayer on a first-come-first-served basis.
(3) The taxpayer shall claim the credit on a timely filed original
return.
(4) The date a return is received shall be determined by the
Franchise Tax Board.
(5) (A) The determinations of the Franchise Tax Board with respect
to the date a return is received and whether a return has been
timely filed for purposes of this subdivision may not be reviewed in
any administrative or judicial proceeding.
(B) Any disallowance of a credit claimed due to a determination
under this subdivision, including the application of the limitation
specified in paragraph (1), shall be treated as a mathematical error
appearing on the return. Any amount of tax resulting from such
disallowance may be assessed by the Franchise Tax Board in the same
manner as provided by Section 19051.
(6) The Franchise Tax Board shall periodically provide notice on
its Web site with respect to the amount of credit under this section
and Section 17053.81 claimed on timely filed original returns
received by the Franchise Tax Board.
(f) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" in the
following year, and succeeding years if necessary, until the credit
is exhausted.
(g)
(f) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out the
purposes of this section , including any guidelines necessary to
avoid the application of subparagraph (B) of paragraph (2) of
subdivision (a) through split-ups, shell corporations, partnerships,
tiered ownership structures, or otherwise .
(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this section.
SEC. 4. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.