Existing law authorizes an individual to contribute amounts in excess of his or her tax liability for the support of specified funds. Existing law also has administrative provisions applicable to voluntary contributions.

This bill would additionally allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the California Domestic Violence Victims Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the California Domestic Violence Victims Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available.

The bill would require moneys in the California Domestic Violence Victims Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs and the balance to the Office of Emergency Services (OES) for the distribution of funds to active grant recipients under the Comprehensive Statewide Domestic Violence Program within OES, as provided.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the California Domestic Violence Victims Fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual to contribute amounts in excess of his or her tax liability for the support of specified funds. Existing law also has administrative provisions applicable to voluntary contributions.

This bill would additionally allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the California Domestic Violence Victims Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the California Domestic Violence Victims Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available.

The bill would require moneys in the California Domestic Violence Victims Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs and the balance to the Office of Emergency Services (OES) for the distribution of funds to active grant recipients under the Comprehensive Statewide Domestic Violence Program within OES, as provided.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the California Domestic Violence Victims Fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual to contribute amounts in excess of his or her tax liability for the support of specified funds. Existing law also has administrative provisions applicable to voluntary contributions.

This bill would additionally allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the California Domestic Violence Victims Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the California Domestic Violence Victims Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available.

The bill would require moneys in the California Domestic Violence Victims Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs and the balance to the Office of Emergency Services (OES) for the distribution of funds to active grant recipients under the Comprehensive Statewide Domestic Violence Program within OES, as provided.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the California Domestic Violence Victims Fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual to contribute amounts in excess of his or her tax liability for the support of specified funds.

This bill would additionally allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the California Domestic Violence Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the California Domestic Violence Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available.

The bill would require moneys in the California Domestic Violence Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs and the balance to the Office of Emergency Services (OES) for the distribution of grants funds to existing active grant recipients under the Comprehensive Statewide Domestic Violence Program within OES, as provided.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the California Domestic Violence Fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not at least equal the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

Existing law authorizes an individual to contribute amounts in excess of his or her tax liability for the support of specified funds.

This bill would additionally allow an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the California Domestic Violence Fund, which would be created by this bill. The bill would prohibit a voluntary contribution designation for the California Domestic Violence Fund from being added on the tax return until another voluntary contribution designation is removed or a space is available.

The bill would require moneys in the California Domestic Violence Fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board and the Controller for reimbursement of costs, as provided, costs and the balance to the Office of Emergency Services (OES) for the distribution of grants to specified domestic violence programs. existing grant recipients under the Comprehensive Statewide Domestic Violence Program within OES, as provided.

The bill would provide that these provisions would remain in effect only until January 1 of the 5th taxable year following the first appearance of the California Domestic Violence Fund on the tax return, but would further provide for an earlier repeal if the Franchise Tax Board determines that the amount of contributions estimated to be received during a calendar year will not at least equal or exceed the minimum contribution amount, as defined, for that calendar year, in which case these provisions would be repealed on December 1 of that year.

The Corporation Tax Law allows various credits against the tax imposed by that law. Under existing law, the Office of Emergency Services is responsible for administering the Comprehensive Statewide Domestic Violence Program, which distributes grant awards to domestic violence shelter service providers and provides financial and technical assistance to local domestic violence centers in implementing specified services and requires priority for this assistance to be given to, among others, emergency shelters.

This bill would, for taxable years beginning on or after January 1, 2016, and before January 1, 2021, allow a credit against the tax imposed under that law for 50% of monetary contributions to a domestic violence shelter service provider or emergency shelter, as defined, eligible to receive a grant award or financial and technical assistance pursuant to that program. The bill would provide that the credit would not exceed $200,000 per taxpayer, that the credit would be awarded on a first-come-first-serve basis, and that the credit would have an aggregate cap of $50,000,000 for each calender year. The bill would require the Franchise Tax Board and the Office of Emergency Services to administer the credit, as specified.

This bill would take effect immediately as a tax levy.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1399

Author:(Baker)

As Amended Ver:June 9, 2016

Majority vote

Original Committee Reference: REV. & TAX.

SUMMARY: Authorizes the addition of the California Domestic Violence Victims Fund (Fund) checkoff to the personal income tax (PIT) return upon the removal of another voluntary contribution fund (VCF) from the return, or as soon as space is available.

The Senate amendments:

1. Add a coauthor.
2. Clarify that the Office of Emergency Services (OES) shall distribute funds to domestic violence programs in California that are active grant recipients under the Comprehensive Statewide Domestic Violence Program.
3. Rename the Fund the "California Domestic Violence Victims Fund".
4. Delete superfluous provisions.

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 19 VCFs on the 2015 PIT return.
2. Provides a specific sunset date for each VCF, except for the California Seniors Special Fund and the State Parks Protection Fund.
3. Requires each VCF to meet an annual minimum contribution amount to remain in effect, except for the California Firefighters' Memorial Fund, the California Peace Officer Memorial Foundation Fund, and the California Seniors Special Fund.

AS PASSED BY THE ASSEMBLY, this bill:

1. Established the California Domestic Violence Fund in the State Treasury.
2. Provided that all money transferred to the Fund, upon appropriation by the Legislature, shall be allocated to the:
   1. Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF; and,
   2. OES for the distribution of grants to domestic violence programs in California that are in active status, as reflected on the Business Search page of the Secretary of State's Internet Web site, that are exempt from federal income taxation as an organization described in Internal Revenue Code Section 501(c)(3), and are grant recipients under the Comprehensive Statewide Domestic Violence Program within the OES.
3. Provided that the OES shall award grants and be responsible for overseeing the grant program.
4. Provided that domestic violence programs and the OES shall not use grant moneys awarded or funds for administrative costs.
5. Provided for the Fund provisions' automatic sunset on January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.
6. Required the Fund to meet a minimum contribution threshold of $250,000 indexed for inflation.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. The FTB estimates that, beginning in fiscal year 2017-18, this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers.
2. The OES would incur minor and absorbable costs to administer the program and provide grants.
3. The State Controller's Office and the FTB would be reimbursed for related administrative costs.

COMMENTS:

1. Author's Statement. The author has provided the following statement in support of this bill:

AB 1399 will increase available resources to victims of domestic violence by providing additional resources through a donations option on California tax returns to the California Domestic Violence [Victims] Fund. Specifically, this bill will allow an individual to designate on the tax return that a contribution in excess of the tax liability be made to the California Domestic Violence [Victims] Fund.

The cause for unmet critical needs are reduced government funding (37%,) cuts from private funding (25%,) lack of staff (23%,) and a reduction in individual donations (13%.) By providing additional opportunities for donations to domestic violence programs, we can better provide a safe haven for families.

1. Arguments in Support. According to Safe Alternatives to Violent Environments, "Domestic violence programs rely on a wide range of funding sources to support their programs, including government grants, foundations, corporate donations, and individual donations. Allowing individuals to easily donate to the California Domestic Violence [Victims] Fund through their individual tax filing will encourage Californians to support these essential programs and fund lifesaving services."
2. So many causes, so little space. There are countless worthy causes that would benefit from the inclusion of a VCF on the state's income tax returns. At the same time, space on the returns is limited. Thus, it could be argued that the current system for adding VCFs to the form is subjective and essentially rewards organizations and causes that can convince the Legislature to include their fund on the form.

Analysis Prepared by: M. David Ruff & Carlos Anguiano / REV. & TAX. / (916) 319-2098 FN: 0003561

 THIRD READING  

Bill No: AB 1399

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/8/16

AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley

SENATE APPROPRIATIONS COMMITTEE: 6-0, 6/27/16

AYES: Bates, Beall, Hill, McGuire, Mendoza, Nielsen

NO VOTE RECORDED: Lara

ASSEMBLY FLOOR: 78-0, 1/27/16 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill authorizes the addition of the California Domestic Violence Victims Fund check-off to the personal income tax return.

ANALYSIS:

Existing law:

1. Allows taxpayers to contribute money to voluntary contribution funds (VCFs) by checking a box on their state income tax returns. California law requires contributions made through so-called “check-offs” to be made from taxpayers’ own resources and not from their tax liability, as is possible on federal tax returns.
2. Allows contribution amounts to be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.
3. Requires that each VCF is individually added to the tax return by legislation. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year. The following check-offs do not have a minimum contribution requirement:
   1. California Firefighters’ Memorial Foundation Fund,
   2. California Peace Officer Memorial Foundation Fund, and
   3. California Seniors Special Fund.

This bill:

1. Adds the California Domestic Violence Victims Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning once an existing check-off for charitable fund contribution has been removed, or as soon as space is available.
2. Requires the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form, and the amount is indexed yearly for inflation.
3. Provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:
   1. To the Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF.
   2. To the Office of Emergency Services (OES) for distribution to domestic violence programs in California that are in active status, exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code, and are active grant recipients under the Comprehensive Statewide Domestic Violence Program within OES.
4. Prohibits funds to be used for administrative costs by both the grant recipients and OES.
5. Provides that the bill automatically sunsets on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax form.

Background

When a taxpayer contributes to VCFs, the FTB deposits the total of all contributions, less an administrative fee, into the fund created as part of the VCF’s legislative authorization. For some VCFs, such as the Protect Our Coast and Ocean Fund, taxpayers’ contributions are allocated to a state agency for use in a state administered grant program. Other VCFs’ authorizing statutes direct administrative agencies to allocate donations to a private organization. For example, OES passes VCF funds to the American Red Cross. Other funds require the Controller to send the funds directly to private organizations without passing through an administrative agency, such as the California Fire Foundation. The Controller and administrative agencies may deduct administrations fees from the amount of donations each VCF receives.

There are currently 19 check-offs listed on the tax return form. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• FTB estimates that, beginning in 2017- 18, this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers.
• OES would incur minor and absorbable costs to administer the program and provide grants.
• The Controller’s Office and FTB and would be reimbursed for related administrative costs.

SUPPORT: (Verified 6/28/16)

Alliance for Community Transformations

California Partnership to End Domestic Violence

Center for Community Solutions; Center for Domestic Peace

Contra Costa County Board of Supervisors

Contra Costa District Attorney’s Office

Safe Alternatives to Violent Environments

State Board of Equalization Member Fiona Ma

OPPOSITION: (Verified 6/28/16)

California Department of Finance

ARGUMENTS IN SUPPORT: According to the author, “On just one day in 2014, 5,784 victims and their children received services at domestic violence programs throughout the state. On that same day 1, 2016 request for services went unmet, of which 55% were for housing, largely due to lack of resources. That means 1,216, individuals, children, and families, could not secure a safe place to stay, or receive vital counseling or resources. Emergency shelter, transitional housing, and nonresidential services could not be provided because of a lack of resources. Of those unmet needs, approximately 49% of programs report that victims return to their abuser, 37% report that victims become homeless, and 16% report that families end up living in their car. The cause for these unmet needs are reduced government funding (37%) cuts from private funding (25%) lack of staff (23%) and a reduction in individual donations (13%.). By providing additional opportunities for donations to domestic violence programs in own communities, we can better provide a safe haven for families.”

ARGUMENTS IN OPPOSITION: Opponent argues that the bill is of limited value and results in a loss to the General Fund. Additionally, it is unclear why special preference should be given to one organization over the countless others that are not on the tax form.

ASSEMBLY FLOOR: 78-0, 1/27/16

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Mathis

Prepared by:

6/29/16 15:56:04

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1399 (Baker) - Income taxes: voluntary contributions: California Domestic Violence Victims Fund

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

AB 1399 would authorize the addition of the California Domestic Violence Victims Fund check-off to the personal income tax return.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that, beginning in 2017- 18, this bill would result in an annual revenue loss of $8,000 (General Fund) for every $250,000 contributed by itemizing taxpayers.
• The Office of Emergency Services (OES) would incur minor and absorbable costs to administer the program and provide grants.
• The State Controller’s Office (SCO) and FTB and would be reimbursed for related administrative costs.

Background:

Current law allows taxpayers to contribute money to one or more of 19 voluntary contribution funds during the process of filing their state income tax return (tax check-off). These contributions are made from taxpayers' own resources, not from their tax liability, as is the case with federal tax returns. Check-off amounts are deductible as charitable contributions on taxpayers' returns during the subsequent tax year. With some exceptions, each voluntary contribution fund has a sunset date and is required to meet a minimum contribution amount of $250,000, adjusted annually for inflation.

Proposed Law:

This bill would add the California Domestic Violence Victims Fund (Fund), and allow a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning once an existing check-off for charitable fund contribution has been removed, or as soon as space is available. The bill would require the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form, and the amount is indexed yearly for inflation.

Additionally, the bill would provide that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows: (1) to FTB and SCO for reimbursement of all costs incurred in administering the Fund, and (2) to OES for distribution to domestic violence programs in California, as specified.

The bill would prohibit funds to be used for administrative costs by both grant recipients and OES. It would automatically sunset on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax form.

Related Legislation:

SB 1476 (Committee on Governance and Finance) would establish general provisions for voluntary contribution funds. Specifically, the bill would (1) establish a seven-year sunset, (2) require a minimum contribution amount of $250,000 beginning in the fund’s second year, and each year thereafter, requires funds to be continuously appropriated, and (3) require administering agencies to post information online about the use of the funds. SB 1476 is currently awaiting action by the full Assembly.

Staff Comments:

FTB data indicate that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million via tax check-offs.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Income taxes: voluntary contributions: California Domestic Violence Fund

Authorizes the addition of the California Domestic Violence Fund (Fund) check-off to the personal income tax return.

Background

Existing state law allows taxpayers to contribute money to voluntary contribution funds (VCFs), by checking a box on their state income tax returns. California law requires contributions made through so-called “check-offs” to be made from taxpayers’ own resources and not from their tax liability, as is possible on federal tax returns. Check-off amounts may be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.

Each VCF is individually added to the tax return by legislation. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amount is $250,000, beginning in the fund’s second year, and is adjusted yearly for inflation thereafter. The following check-offs do not have a minimum contribution requirement:

• California Firefighters’ Memorial Foundation Fund,
• California Peace Officer Memorial Foundation Fund, and
• California Seniors Special Fund.

When a taxpayer contributes to VCFs, the Franchise Tax Board (FTB) deposits the total of all contributions, less an administrative fee, into the fund created as part of the VCF’s legislative authorization. For some VCFs, such as the Protect Our Coast and Ocean Fund, taxpayers’ contributions are allocated to a state agency for use in a state administered grant program. Other VCFs’ authorizing statutes direct administrative agencies to allocate donations to a private organization. For example, the Office of Emergency Services passes VCF funds to the American Red Cross. Other funds require the State Controller to send the funds directly to private organizations without passing through an administrative agency, such as the California Fire Foundation. The Controller and administrative agencies may deduct administrations fees from the amount of donations each VCF receives.

There are currently 19 check-offs listed on the tax return form. The tax check-off program typically collects $4-5 million in annual contributions for all VCFs.

Proposed Law

Assembly Bill 1399 adds the California Domestic Violence Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning once an existing check-off for charitable fund contribution has been removed, or as soon as space is available. The bill requires the Fund to meet a minimum contribution threshold of $250,000 in the second calendar year the Fund appears on the tax form, and the amount is indexed yearly for inflation.

Additionally, the bill provides that all money transferred to the Fund, upon appropriation by the Legislature, be allocated as follows:

• To FTB and the State Controller for reimbursement of all costs incurred in administering the VCF,
• To the Office of Emergency Services for distribution to domestic violence programs in California that are in active status, exempt from federal income taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code, and are active grant recipients under the Comprehensive Statewide Domestic Violence Program within the Office of Emergency Services.

The bill prohibits funds to be used for administrative costs by both the grant recipients and the Office of Emergency Services. AB 1399 provides that the bill automatically sunsets on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax form.

State Revenue Impact

FTB estimates annual revenue losses of roughly $8,000 for every $250,000 contributed to the Fund by taxpayers who itemize.

Comments

1. Purpose of the bill. According to the author, “On just one day in 2014, 5,784 victims and their children received services at domestic violence programs throughout the state. On that same day 1, 2016 request for services went unmet, of which 55% were for housing, largely due to lack of resources. That means 1,216, individuals, children, and families, could not secure a safe place to stay, or receive vital counseling or resources. Emergency shelter, transitional housing, and nonresidential services could not be provided because of a lack of resources. Of those unmet needs, approximately 49% of programs report that victims return to their abuser, 37% report that victims become homeless, and 16% report that families end up living in their car. The cause for these unmet needs are reduced government funding (37%) cuts from private funding (25%) lack of staff (23%) and a reduction in individual donations (13%.). By providing additional opportunities for donations to domestic violence programs in own communities, we can better provide a safe haven for families.”

2. Is there a better way? The current tax check-off program generates a relatively small share of statewide contributions to charitable causes. In 2008, Californians donated more than $17 billion to charities. However, less than 1% of Californians use the tax check-off program to make donations to charitable organizations. FTB reports that in 2012, 89,335 out of 15 million taxpayers contributed a total of $4.8 million. In 2014, SB 1207 (Wolk) attempted to address this issue and help grow charitable giving by establishing the California Voluntary Contribution Program to promote charitable giving and collect donations. This would have allowed many more charities to participate in the program, would have screened potential participants before adding them onto the form, and eliminated the need for each organization to go through the Legislative process. Under SB 1207, charities would instead apply to the office of California Volunteers for placement on the income tax form. However, SB 1207 (Wolk) was held on suspense in Assembly Appropriations.

3. Bills, bills, bills. Currently, tax check-offs must be added by the Legislature. In 2008, 11 VCFs appeared on the personal income tax return. Today, the return contains 19. With legislation introduced every year to add new VCFs, there is little reason to expect this number to stop growing. It is estimated that FTB can only handle 8 or 9 more check-offs before FTB has to create a separate tax schedule.

4. Similar Legislation. SB 1476 (Governance and Finance) establishes general provisions for voluntary contribution funds. Specifically, the bill establishes a seven year sunset, requires a minimum contribution amount of $250,000 beginning in the fund’s second year, and each year thereafter, requires funds to be continuously appropriated, and requires administering agencies to post information online about the use of the funds. SB 1476 is set to be heard in the Assembly Committee on Revenue and Taxation on June 13, 2016.

Assembly Actions

Assembly Revenue and Taxation 8-0

Assembly Appropriations 17-0

Assembly Floor 78-0

Support and Opposition

(6/2/16)

Support: Alliance for Community Transformations; California Partnership to End Domestic Violence; Center for Community Solutions; Center for Domestic Peace; Contra Costa County Board of Supervisors; Contra Costa District Attorney’s Office; Fiona Ma, State Board of Equalization Chairwoman; Safe Alternatives to Violent Environments-SAVE.

Opposition: California Department of Finance.

-- END --

Date of Hearing: January 21, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1399

Author:(Baker) – As Amended Ver:January 13, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes the addition of the California Domestic Violence Fund (Fund), and allows a taxpayer to make a voluntary contribution to the Fund on the state personal income tax return, beginning once an existing check-off for charitable fund contribution has been removed.

Funds raised would, upon appropriation by the Legislature, be allocated the Franchise Tax Board and the Controller for reimbursement of all costs and to the Office of Emergency Services (OES) for the distribution of grants to qualifying domestic violence programs in California.

The bill requires the Fund to meet the minimum annual contribution threshold of $250,000, indexed for inflation, and would require the Fund's provisions to automatically sunset on January 1 of the fifth taxable year following the Fund's first appearance on the personal income tax return.

FISCAL EFFECT:

1. Minor and absorbable costs to the (OES) to administer the program and the grants.
2. Estimated GF revenue decreases of approximately $8,000 in each year the voluntary contribution fund remains on the personal income tax form.

COMMENTS:

1. Purpose/Background. The goal of the new fund is to incentivize contributions to support domestic violence programs. Existing law allows taxpayers to contribute money to voluntary contribution funds (VCFs) by checking a box on their state income tax returns. California law requires contributions made through so-called “check-offs” to be made from taxpayers’ own resources and not from their tax liability, as is possible on federal tax returns. Check-off amounts may be claimed as charitable contributions on taxpayers’ tax returns in the subsequent year.

The legislature adds individual VCF’s yearly. With a few exceptions, VCFs remain on the return until they are repealed by a sunset date or fail to generate a minimum contribution amount. In general, the minimum contribution amounts are adjusted annually for inflation. For most VCFs, the minimum contribution amount is $250,000, beginning in the fund’s second year.

Analysis Prepared by: Pedro R. Reyes / APPR. / (916) 319-2081

Date of Hearing: January 11, 2016

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Philip Ting, Chair

ABPCA Bill Id:AB 1399 (

Author:Baker) – As Amended Ver:January 4, 2016

SUSPENSE

Majority vote. Fiscal committee.

SUBJECT: Income taxes: voluntary contributions: California Domestic Violence Fund

SUMMARY: Authorizes the addition of the California Domestic Violence Fund (Fund) checkoff to the personal income tax (PIT) return upon the removal of another voluntary contribution fund (VCF) from the return, or as soon as space is available. Specifically, this bill:

1. Establishes the Fund in the State Treasury.
2. Provides that all money transferred to the Fund, upon appropriation by the Legislature, shall be allocated to the:
   
   1. Franchise Tax Board (FTB) and the State Controller for reimbursement of all costs incurred in administering the VCF; and,
      
   2. Office of Emergency Services (OES) for the distribution of grants to domestic violence programs in California that are in active status, as reflected on the Business Search of the Secretary of State’s Internet Web site, and that are exempt from federal income taxation as an organization described in the Internal Revenue Code (IRC) Section 501(c)(3).
3. Provide that the OES shall award grants and be responsible for overseeing the grant program.
4. Provides that a domestic violence program and the OES shall not use grant moneys awarded or funds for administrative purposes and costs.
5. Provides for the Fund provisions' automatic sunset on January 1 of the fifth taxable year following the Fund's first appearance on the PIT return.
6. Requires the Fund to meet a minimum contribution threshold of $250,000 indexed for inflation.

EXISTING LAW:

1. Allows taxpayers to contribute to one or more of 18 VCFs.
   
2. Provides a specific sunset date for each VCF, except for the California Seniors Special Fund and the State Parks Protection Fund.
   
3. Requires each VCF to meet an annual minimum contribution amount to remain in effect, except for the California Firefighters' Memorial Fund, the California Peace Officer Memorial Foundation Fund, and the California Seniors Special Fund.

FISCAL EFFECT: Unknown

COMMENTS:

1. The author has provided the following statement in support of this bill:

AB 1399 will increase available resources to victims of domestic violence by providing additional resources through a donations option on California tax returns to the California Domestic Violence Fund. Specifically, this bill will allow an individual to designate on the tax return that a contribution in excess of the tax liability be made to the California Domestic Violence Fund.

The cause for unmet critical needs are reduced government funding (37%,) cuts from private funding (25%,) lack of staff (23%,) and a reduction in individual donations (13%.) By providing additional opportunities for donations to domestic violence programs, we can better provide a safe haven for families.

1. Arguments in Support. According to Safe Alternatives to Violent Environments, “Domestic violence programs rely on a wide range of funding sources to support their programs, including government grants, foundations, corporate donations, and individual donations. Allowing individuals to easily donate to the California Domestic Violence Fund through their individual tax filing will encourage Californians to support these essential programs and fund lifesaving services.”
2. So many causes, so little space. There are countless worthy causes that would benefit from the inclusion of a VCF on the state's income tax returns. At the same time, space on the returns is limited. Thus, it could be argued that the current system for adding VCFs to the form is subjective and essentially rewards organizations that can convince the Legislature to include their fund on the form.
3. VCF policy. This Committee's VCF policy provides that "[a]ll proponents seeking authorization for a new or reauthorized checkoff shall provide information justifying their expectation that the checkoff will meet its minimum contribution requirement." The author’s office has been clear about the need to fund domestic violence shelters but has provided no explanation as to why this fund will generate the required $250,000 minimum contribution requirement.
4. Administering the Fund. OES maintains a very large grant program, including a victims services program that provides grants for domestic violence. This bill, however, provides that OES shall distribute grants to domestic violence programs that are in active status as reflected on the Secretary of State’s Internet Web site. It is unclear if the domestic violence programs maintained on the Secretary of State’s Web site would be different than those currently maintained by OES. In order to provide greater guidance and in order to reduce administrative costs, the Committee may wish to amend this bill so that the grants are distributed to domestic violence programs that are part of one of OESs grant programs.
5. Funding the Administration of the Fund. This bill allows the FTB and the State Controller’s office to be reimbursed for costs incurred in administering the VCF but does not do the same for OES. Therefore, any additional staff, if needed, will have to come out of the OES’ existing budget. It is believed that cost will be absorbable bit OES has not confirmed this as yet.

REGISTERED SUPPORT / OPPOSITION:

Support

Alliance for Community Transformations

California Partnership to End Domestic Violence

Center for Community Solutions

Center for Domestic Peace

Contra Costa County, Office of District Attorney

Contra Costa County, Board of Supervisors

Safe Alternatives to Violent Environments

Opposition

None on File

Analysis Prepared by: Carlos Anguiano / REV. & TAX. / (916) 319-2098

Date of Hearing: April 13, 2015

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Philip Ting, Chair

ABPCA Bill Id:AB 1399

Author:(Baker) – As Introduced Ver:February 27, 2015

Majority vote. Fiscal committee. Tax levy.

SUBJECT: Corporation tax law: credits: domestic violence shelters

SUMMARY: Provides a credit under the Corporation Tax (CT) Law in the amount of 50% of the contributions made to a domestic violence shelter service provider or emergency shelter, not to exceed $200,000. Specifically, this bill:

1. Provides, beginning on or after January 1, 2016, and before January 1, 2021, a credit against the "tax," as defined under the CT Law, in the amount of 50% of contributions made to a domestic violence shelter service provider or emergency shelter.

2. Provides that the credit shall not exceed $200,000 per taxpayer, per taxable year.

3. Provides that the credit is in lieu of any other credit or deduction that the taxpayer may otherwise claim for contributions made to a domestic violence shelter service provider or emergency shelter.

4. Provides that the credit shall be claimed on a timely filed original return.

5. Requires the Franchise Tax Board (FTB), upon application by the taxpayer, to certify contributions meeting the requirements of this bill.

6. Provides that if the credit exceeds the taxpayer’s liability, the excess credit amount may be carried over to the following year, and succeeding five years, if necessary until the credit is exhausted.

7. Provides that the credits shall be awarded on a first-come-first-serve basis, and that the aggregate amount of credit shall not exceed $50 million for each calendar year.

8. Defines a "domestic violence shelter service provider" as having the same meaning as provided for under the Comprehensive Statewide Domestic Violence Program.

9. Defines an "emergency shelter" as having the same meaning, and eligible for financial or technical assistance pursuant to the Comprehensive Statewide Domestic Violence Program.

10. Defines a "program" as having the same meaning under the Comprehensive Statewide Domestic Violence Program.

11. Provides that the FTB and the Office of Emergency Services (OES) shall administer the credit provided for by this bill.

12. Provides that the FTB shall perform all of the following:

    1. Adopt rules and regulations as necessary or appropriate to implement this credit.

    2. Establish application forms and procedures.

    3. Track credits claimed.

    4. Post aggregate totals of the credits claimed on the Internet Web site of the FTB.

    5. Determine when the aggregate total of credits reaches $50,000,000 for a calendar year.

    6. Certify that a contribution meets the requirements as set forth in this bill based on the list provided by the OES.

13. Requires that the OES annually submit to the FTB a list of those domestic violence shelter service providers and emergency shelters eligible for a grant award or technical and financial assistance pursuant to the Comprehensive Statewide Domestic Violence Program.

14. Provides that the Administrative Procedures Act shall not apply to the rules or regulations adopted pursuant to this section.

15. Provides that this section shall remain in effect only until December 1, 2021, and as of that date is repealed.

16. Provides that it is the intent of the Legislature to make the findings required by the Revenue & Tax Code (RTC) Section 41.

17. Provides that, as a tax levy, this act go into effect immediately.

EXISTING LAW:

1. Provides various tax credits to encourage socially-beneficial behavior or to provide relief to taxpayers who incur specified expenses. Or to influence behavior, including business practices and decisions. These credits generally are designed to provide incentives for taxpayers to perform various actions or activities that they may not otherwise undertake.

2. Allows generally for, taxpayers engaged in a trade or business may deduct all expenses considered ordinary and necessary in conducting that trade or business.

3. Allows corporations that are members of the same unitary combined reporting group to assign “eligible” credits to other members of the group. An “eligible” credit is any credit earned by the taxpayers in a taxable year beginning on or after July 1, 2008, or any credit earned in any taxable year beginning before July 1, 2008, that was eligible to be carried forward to the first taxable year beginning on or after July 1, 2008. The credit assignment is made by an irrevocable election. The assignor and assignee taxpayers must be members of the same combined reporting for the taxable year in which the credit is earned and the taxable year the credit is assigned.

4. Applies performance measurement standards to any new tax credit under either the Personal Income Tax (PIT) or CT Law if enacted by a bill introduced on or after January 1, 2015.  Specifically, existing law requires the all of the following:

1. Specific goals, purposes, and objectives that the tax credit will achieve:

2. Detailed performance indicators for the Legislature to use when measuring whether the tax credit meets the goals, purposes, and objectives stated in the bill; and,

3. Data collection requirements to enable the Legislature to determine whether the tax credit is meeting, failing to meet, or exceeding those specific goals, purposes, and objectives, including a requirement to specify both of the following:

1. The baseline data, to be collected and remitted in each year the credit is effective, for the Legislature to measure the change in performance indicators; and,

2. The taxpayers, state agencies, or other entities required to collect and remit data

FISCAL EFFECT: The FTB estimates a revenue loss of $11 million in fiscal year (FY) 2015-16, $38 million in FY 2016-17, and $46 million in 2017-18.

COMMENTS:

1. Author’s Statement. The Author has provided the following statement in support of this bill:

On just one day in 2013, 5,263 victims and their children received services as domestic violence programs throughout the state. On that same day 872 requests for services went unmet, of which 80% were for housing, largely due to lack of resources. That means 872 individuals, children, and families, could not secure a safe place to stay, or receive vital counseling or resources. Emergency shelter, transitional housing, and nonresidential services could not be provided because of lack of resources. Of those unmet needs, approximately 40% of programs report that victims return to their abuser, 37% report that victims become homeless, and 16% report that families end up living in their car.

AB 1399 will increase available resources to victims of domestic violence by providing that local business and corporations who make charitable contributions to domestic violence programs can receive a 50% tax credit for that donation. The recipients of the contribution must be non-profit domestic violence organizations who are grant recipients under the OES Comprehensive Statewide Domestic Violence Program.

2. Arguments in Support. YWCA of Glendale states that, “Every day, domestic violence programs . . . struggle to meet the needs of domestic violence survivors, their children and communities with limited financial resources at their disposal. . . . Domestic violence programs rely on a wide range of funding sources to support their programs, including corporate donations. Allowing corporations to claim a tax credit for their donations would help to encourage these businesses to increase donations to the domestic violence programs serving their communities. This bill will benefit domestic violence programs and the businesses that choose to donate.”

3. Arguments in Opposition. The California Tax Reform Association (CTRA) notes that, “[t]his bill’s proposed way of accomplishing that end is, however, not as meritorious as its laudable aim.” CTRA continues on to say that, “given the magnitude of the contemplated expenditure, a more targeted and more accountable approach would be a bill that appropriates this money from the General Fund to those programs that the bill already identifies as legitimate recipients. Second, the bill would provide that the credit would not exceed $200,000 per corporate taxpayer. However, many corporations have already zeroed out their tax liability. Third, and relatedly, the loss of up to $50 million to the General Fund means that other worthy programs may not be as well funded. Fourth, the exemption from the Administrative Procedures Act for regulations promulgated under the legislation is confounding.

4. Domestic Violence Shelters (DVS). One in four women will experience domestic violence in their lifetime. (Tjaden, Patricia & Thoennes, Nancy. National Institute of Justice and the Centers of Disease Control and Prevention, Extent, Nature and Consequences of Intimate Partner Violence: Findings from the National Violence Against Women Survey, 2000.) DVSs are essential in supporting victims of domestic violence because they answer incoming calls, provide emergency shelters for women and children, and provide much needed counseling. (Safehorizon. Facts and Stats About Safehorizon. Web. April 1, 2015.) Moreover, according to a recent article in Forbes magazine, “Domestic violence costs $8.3 billion in expenses annually: a combination of higher medical costs ($5.8 billion) and lost productivity ($2.5 billion).” (Robert Pearl. Forbes. Domestic Violence: The Secret Killer That Costs $8.3 Billion Annually. December, 5, 2013. Web. April 1, 2015.)

5. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, United States Treasury officials began arguing that these features of the tax law should be referred to as "expenditures," since they are generally enacted to accomplish some governmental purpose and there is a determinable cost associated with each (in the form of foregone revenues). This bill would enact a new tax expenditure program, in the form of a tax credit for corporations who make contributions to qualified DVS.

6. How is a tax expenditure different from a direct expenditure? As the Department of Finance notes in its annual Tax Expenditure Report, there are several key differences between tax expenditures and direct expenditures. First, tax expenditures are reviewed less frequently than direct expenditures once they are put in place. Second, there is generally no control over the amount of revenue losses associated with any given tax expenditure. Finally, it should also be noted that, once enacted, it takes a two-thirds vote to rescind an existing tax expenditure absent a sunset date. This bill shall remain in effect until December 1, 2021.

7. Considerations. A tax credit for 50% of the monetary contributions to a DVS service provider or emergency shelter is relatively high as compared to other credits in existing law. Therefore, it is reasonable to assume that this would indeed incentivize corporations to continue/increase their contributions to DVSs; however, the incentive is only temporary and the increased available funding would also be highly volatile depending on the amount of contributions made throughout the year. This variability could eventually lead to planning complications and potential underfunding for shelters that have over-expanded their services in response to a temporary increase in funding.
   
   Moreover, simply creating a greater incentive for corporations to make donations does not necessarily address the issue regarding the lack of funding; this bill does not consider where funding is needed most or how an increase in funding would be most efficiently utilized. Larger DVS would most likely receive the lion’s share of the increased funding solely due to their notoriety. However, smaller and newer shelters (who may have a greater need for funding) may be entirely neglected and unable to meet their demands. Therefore, regardless of the aggregate increase in funding, if the funding is not distributed efficiently the intended purpose of the author could be met with frustration.

8. Compliance with Section 41 of the RTC. It is unclear as to whether the requirements under Section 41, have been met to the required extent. First, although the author states that the this bill's effect will be an increase in funding available to DVSs, this bill does not articulate any specific goal, purpose or objective of this bill. Second, although this bill requires the FTB’s to administer this credit, it does not provide for the required performance indicators or data collection necessary to measure the success of the tax credit.

9. Alternatives: The author states the effect of this bill is to increase the available funding to the DVS. Whereas this tax credit may incentivize corporations to that end, the revenue loss associated with this tax credit may be better justified and the assumed goal of the bill more efficiently achieved through a direct expenditure.

10. Implementation Considerations: The FTB noted the following:

This bill lacks [the] administrative details necessary to implement the bill and determine its impacts to the department’s systems, forms, and processes. The bill is silent on the following issues:

• When and what information would the OES report to the FTB?

• Would the first-come, first-served basis of allocating the credit be based on contribution date? Date the application was filed with the FTB?

• How and when would a taxpayer request and receive notification of an allocation?

• Would a reallocation of any unallocated amount or unused allocated amount for a fiscal year be allowed?

• A funding mechanism for the FTB’s start-up and on-going costs to administer the certification and reporting process provisions of this bill. Absence of a funding mechanism could delay implementation or require diversion of resources from existing revenue generating workloads.

REGISTERED SUPPORT / OPPOSITION:

Support

Alliance for Community Transformation

California Partnership to End Domestic Violence

California Communities United Institute

Family Services Supporting Tulare County

Los Angeles Center for Law and Justice

Member of Domestic Violence Services

Monarch Services

Mountain Crisis Services in Mariposa

Safe Alternatives to Violent Environments

Shepherd’s Door Domestic violence Resource Center

STAND! For Families Free of Violence

WEAVE, Inc

Wild Iris Family Counseling & Crisis Center

YWCA of Glendale

41 private individuals

Opposition

American Federation of State, County, and Municipal Employees

California Tax Reform Association

Analysis Prepared by: Carlos Anguiano / REV. & TAX. / (916) 319-2098