Bills

AB 1347: Income taxes: credits: supplier diversity goals.

Session Year: 2017-2018
House: Assembly
Latest Version Date: 2017-02-17

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The Personal Income Tax Law and the Corporation Tax Law authorize various credits against the taxes imposed by those laws. Existing law requires any bill authorizing a new income tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill would require a taxpayer allowed a credit, which is enacted and becomes effective on or after January 1, 2018, against those taxes to meet supplier diversity goals by procuring supplies from business entities with certifications from certain entities, prior to claiming the credit in the first, 3rd, and 5th taxable years. The bill would exclude taxpayers who are individuals and specified small businesses from the supplier diversity goal requirement. Under the bill, for each taxable year that the supplier diversity goal is not fully met but the taxpayer has achieved a goal of at least 5% overall or at least 50% of its goal for the taxable year, whichever is greater, the percentage of the goal achieved would be the percentage of the tax credit awarded. The bill would require the Franchise Tax Board to audit compliance with these requirements and would require a taxpayer under audit to pay for the cost of the audit. The bill would also authorize the Franchise Tax Board to impose substantial penalties on taxpayers who are not compliant with these requirements.

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The people of the State of California do enact as follows:SECTION 1.Section 42 is added to the Revenue and Taxation Code, to read:42.

(a)Notwithstanding any other law, a taxpayer allowed a credit, which is enacted and becomes effective on or after January 1, 2018, against the net tax, as defined in Section 17039, or against the tax, as defined in Section 23036, shall also meet the following supplier diversity goals:

(1)Prior to the first taxable year in which the credit is claimed, meet a 5 percent supplier diversity goal.

(2)Prior to the third taxable year in which the credit is claimed, meet a 10 percent supplier diversity goal.

(3)Prior to the fifth taxable year in which the credit is claimed, meet a 20 percent supplier diversity goal.

(b)Supplier diversity is defined as procurement of supplies from business entities with certifications from either of the following entities:

(1)National Minority Supplier Development Council.

(2)United States Small Business Administrations 8(a) Business Development Program.

(c)For each taxable year that the supplier diversity goal is not fully met by the taxpayer but the taxpayer has achieved a supplier diversity goal of at least 5 percent or at least 50 percent of its goal, whichever is greater, the percentage of the goal achieved shall be the percentage of the tax credit awarded to the taxpayer.

(d)The Franchise Tax Board shall from time to time audit compliance with this section. The taxpayer under audit shall pay for the cost of the audit, not to exceed 1 percent of the tax credit initially awarded. The Franchise Tax Board may also impose substantial penalties on taxpayers found to be out of compliance with this section.

(e)This section does not apply to the following taxpayers:

(1)An individual.

(2)A small business. Small business is defined as a trade or business that has aggregate gross receipts, less returns and allowances reportable to this state, of less than two million dollars ($2,000,000) during the taxable year.

Date	Status
Feb 1, 2018	From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.
Jan 31, 2018	Died pursuant to Art. IV, Sec. 10(c) of the Constitution.
Apr 17, 2017	In committee: Set, first hearing. Hearing canceled at the request of author.
Mar 13, 2017	Referred to Com. on REV. & TAX.
Feb 19, 2017	From printer. May be heard in committee March 21.
Feb 17, 2017	Read first time. To print.

Authors shown for version:
Introduced (2/17/2017)