AB 656: Income taxes: credits: unemployment insurance tax.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2017-02-14
The Personal Income Tax Law and the Corporation Tax Law authorize various credits against the taxes imposed by those laws.
Unemployment compensation is a joint federal and state program funded by federal and state unemployment taxes paid by employers with benefits paid by the state. Tax is imposed under both laws on the first $7,000 annually paid by an employer to an employee.
Existing federal law, the Federal Unemployment Tax Act, provides a credit against this tax for contributions made to certified state unemployment compensation programs, but reduces this credit when a state has a debt to the Federal Unemployment Trust Account, thus requiring employers to pay more federal unemployment tax. California has a debt to the Federal Unemployment Trust Account.
This bill, under both laws, for taxable years beginning on or after January 1, 2017, would allow a credit to employers in an amount equal to the reduction in credit under the Federal Unemployment Tax Act due to the state borrowing from the Federal Unemployment Trust Account.
This bill would take effect immediately as a tax levy.
(a)For each taxable year beginning on or after January 1, 2017, there shall be allowed a credit against the net tax, as defined by Section 17039, to a taxpayer that is an employer paying the federal unemployment insurance tax in an amount equal to the reduction in the amount of state unemployment tax credit applied against federal unemployment insurance tax during the taxable year.
(b)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 seven years if necessary, until the credit is exhausted.
(c)A deduction otherwise allowed under this part for any amount paid or incurred by the qualified taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed by this section.
(d)A credit under this section shall be allowed only on a timely filed original return of the taxpayer.
(e)(1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section.
(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. 2.Section 23617 is added to the Revenue and Taxation Code, to read:23617.(a)For each taxable year beginning on or after January 1, 2017, there shall be allowed a credit against the tax, as defined by Section 23036, to a taxpayer that is an employer paying the federal unemployment insurance tax in an amount equal to the reduction in the amount of state unemployment tax credit applied against federal unemployment insurance tax during the taxable year.
(b)In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the net tax in the following year, and succeeding seven years if necessary, until the credit is exhausted.
(c)A deduction otherwise allowed under this part for any amount paid or incurred by the qualified taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed by this section.
(d)A credit under this section shall be allowed only on a timely filed original return of the taxpayer.
(e)(1) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section.
(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.It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code.
SEC. 4.This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
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Date
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Status
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| 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 3, 2017 | In committee: Set, second hearing. Hearing canceled at the request of author. |
| Mar 20, 2017 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| Mar 2, 2017 | Referred to Com. on REV. & TAX. |
| Feb 15, 2017 | From printer. May be heard in committee March 17. |
| Feb 14, 2017 | Read first time. To print. |
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