California Assembly Bill AB2640 Latest Draft

 BILL NUMBER: AB 2640AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 18, 2010 AMENDED IN ASSEMBLY APRIL 8, 2010 INTRODUCED BY Assembly Member Arambula FEBRUARY 19, 2010 An act to  amend Section 17149 of, and to add Sections 17053.49 and 23649 to,   add and repeal Sections 17053.49, 17148, and 23649 of  the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST AB 2640, as amended, Arambula. Income taxes:  subsidized parking:  credits:  sales tax on  qualified property  : exclusion: qualified parking  . The Personal Income Tax Law and the Corporation Tax Law authorize various credits against the taxes imposed by those laws. This bill would, under both laws, provide for a credit in a specified amount of the sales and use taxes paid by a qualified taxpayer for qualified property placed in service within this state, for taxable years beginning on or after January 1,  2010   2011, and before January 1, 2016  . The Personal Income Tax Law  provides   and the Corporation Tax Law, in conformity with federal income tax law, provide  an exclusion from gross income for  compensation or the fair market value of any benefit, except salary or wages, that is received by an employee from an employer for the use of various transportation methods or arrangements   specified transportation   benefits provided to employees by employers  , including  free or subsidized   qualified  parking. This bill would, for taxable years beginning on or after January 1,  2010   2011, and before January 1, 2016  , remove the exclusion from gross income for  free or subsidized   qualified  parking. 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 17053.49 is added to the Revenue and Taxation Code, to read: 17053.49. (a) (1) For each taxable year beginning on or after January 1,  2010   2011, and before January 1, 2016  , there shall be allowed to a qualified taxpayer as a credit against the "net tax," as defined in Section 17039, an amount as described in paragraph (2) for qualified property that is placed in service in this state. (2) The amount of credit allowed by this section shall be the  percentage   full amount  of the total sales tax reimbursement or use tax paid on a purchase or purchases of qualified property, the revenues of which are deposited in the General Fund. (b) For purposes of this section:  (1) "Primarily" means 50 percent or more of a taxpayer's business consists of any line of business as described in paragraph (3).   (1)   (2)  "Qualified property" means any property that is Section 1245 property, as defined in Section 1245(a)(3) of the Internal Revenue Code.  (2)   (3)  "Qualified taxpayer" means a  purchaser   taxpayer primarily  engaged in any of those lines of business  described in   properly classified under  Codes 311111 to 339999, inclusive, of the North American  Industrial   Industry  Classification System (NAICS) Manual published by the United States Office of Management and Budget, 2007 edition.  (c) No credit, no further credit in any subsequent year, and no credit carryover shall be allowed with respect to the qualified property to any qualified taxpayer beginning in the year in which that qualified property for which a credit was allowed under this section is disposed of or removed from this state within one year of the date of purchase.   (c) A qualified taxpayer shall notify the Franchise Tax Board within 30 days after the qualified property is removed from the state or is disposed of to an unrelated party in the same taxable year. No credit shall be allowed under this section if the qualified property is removed from the state or is disposed of to an unrelated party in the same taxable year or the first taxable year following the taxable year in which the qualified property is first placed in service in this state. If any qualified property for which a credit is allowed pursuant to this section is thereafter removed from this state or disposed of to an unrelated party within one year from the date the qualified property is first placed in service in this state, the amount of the credit allowed by this section for that qualified property shall be recaptured by adding that credit amount to the "net tax" of the qualified taxpayer for the taxable year in which the qualified property is disposed of or removed.  (d) 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 the succeeding  eight  years, until the credit is exhausted.  (e) (1) Credit under this section and Section 23649 shall be allowed on or before the cutoff date established by the Franchise Tax Board and shall be granted on a first-come-first-served basis.   (2) For the first taxable calendar year in which this credit is in effect, the cutoff date shall be the last day of the calendar quarter within which the Franchise Tax Board estimates that the aggregate revenue increase generated from the amendments made to Section 17149 by the act adding this section has reached the baseline amount. For purposes of this subparagraph, "baseline amount" means one hundred million dollars ($100,000,000).   (3) For each subsequent taxable year, the cutoff date shall be the last day of the calendar quarter within which the Franchise Tax Board estimates that the baseline amount has been reached, or that amount is adjusted each calendar year to reflect the rate of inflation or deflation from the previous date that the baseline amount was established, as measured by the Consumer Price Index or other method of measuring the rate of inflation or deflation which the Franchise Tax Board determines is reliable and generally accepted.   (e) The credit under this section shall be allowed only for the taxable year in which the qualified property is placed in service in this state.   (f) The credit allowed by this section shall be in lieu of any other credit or deduction that the taxpayer may otherwise claim pursuant to this part with respect to sales tax reimbursement or use tax paid on a purchase or purchases of qualified property.   (g) To reserve a credit allocation, the qualified taxpayer shall send an application to provide satisfactory substantiation in the form and manner proscribed by the Franchise Tax Board, that the taxpayer is eligible for a credit allocation pursuant this section. The taxpayer shall attach to the application the documents that the Franchise Tax Board determines to be necessary to substantiate the amount of sales and use taxes paid and the date that the qualified property was placed in service in this state. Upon the receipt of the application, the Franchise Tax Board shall notify the qualified taxpayer that the Franchise Tax Board has reserved the credit for the taxpayer, pending receipt of a timely filed tax return for the taxable year.   (h) (1) (A) The total amount of credit that may be allocated pursuant to this section and Section 23649 shall not exceed one hundred million dollars ($100,000,000), hereafter the "baseline amount."   (B) For each taxable year beginning on or after January 1, 2012, the Franchise Tax Board shall recompute the baseline amount. That computation shall be made as follows:   (i) The Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current calendar year, no later than August 1 of the current calendar year.   (ii) The Franchise Tax Board shall do both of the following:   (I) Compute an inflation adjustment factor by adding 100 percent to the percentage change figure that is furnished pursuant to clause (i) and dividing the result by 100.   (II) Multiply the preceding taxable year baseline amount by the inflation adjustment factor determined in subclause (I) and round off the resulting products to the nearest one dollar ($1).   (2) Once the credits allocated for qualified property exceed the limit established in paragraph (1), the Franchise Tax Board shall establish a wait list for subsequently received reservations, with an order of priority based on the date reservation was received by the Franchise Tax Board. The Franchise Tax Board shall notify taxpayers on the wait list no later than December 31 of the taxable year for which the credit was applied as to whether they have been allocated a credit and the amount allocated.   (i) (1) Upon receipt of the information described in subdivision (g), the Franchise Tax Board shall allocate the credit to the taxpayer on a first-come-first-served basis.   (2) (A) Except as provided in subparagraph (B), the qualified taxpayer shall claim the credit on a timely filed original return.   (B) Qualified taxpayers on the wait list, as described in paragraph (2) of subdivision (h), that are allocated a credit may claim the credit on an amended income tax return for that taxable year.   (3) The date the information described in subdivision (g) is received shall be determined by the Franchise Tax Board.   (j) The Franchise Tax Board may prescribe, by forms, instructions, published notices, or regulations, any requirements necessary for the efficient administration of this section.   (k) This section shall remain in effect until December 1, 2016, and as of that date is repealed.   SEC. 2.   Section 17148 is added to the   Revenue and Taxation Code   , to read:   17148. (a) For taxable years beginning on or after January 1, 2011, and before January 1, 2016, Section 132(f)(1)(C) of the Internal Revenue Code, relating to exclusion from income for qualified parking, shall not apply. (b) This section shall remain in effect until December 1, 2016, and as of that date is repealed.   SEC. 2.   Section 17149 of the Revenue and Taxation Code is amended to read: 17149. (a) Gross income does not include compensation or the fair market value of any other benefit, except salary or wages, received by an employee from an employer for participation in any ridesharing arrangement in California, including those specified in subdivision (b). (b) For purposes of this section, compensation or the fair market value of any other benefit received for participation in a ridesharing arrangement in California includes compensation or other benefit received for: (1) Commuting in a vanpool. (2) Commuting in a private commuter bus or buspool. (3) A transit pass for use by the employee or his or her dependents, other than transit passes for use by elementary and secondary school students who are dependents of the employee. (4) Commuting in a subscription taxipool. (5) Commuting in a carpool. (6) An employee's bicycling to or from his or her place of employment. (7) Commuting by ferry. (8) The use of an alternative transportation method, other than a method otherwise specified in this subdivision, that reduces the use of a motor vehicle by a single occupant to travel to or from that individual's place of employment. (9) Travel to or from a telecommuting facility. (c) For purposes of this section: (1) "Vanpool" means seven or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry 7 to 15 adults, including the driver, that is used to transport those persons who commute to and from work on a regular basis. (2) "Transit pass" means any purchase of transit rides that entitles the holder to any number of transit rides to and from the workplace, whether at a discount rate or the base fare rate. (3) "Transit" means transportation service for use by the general public that utilizes buses, railcars, or ferries with a seating capacity of 16 or more persons. (4) "Subscription taxipool" means a type of service in which employers or groups of employees contract with a public or private taxi operator to provide daily commuter service for a group of preassembled subscribers on a prepaid or daily fare basis following a relatively fixed route and schedule tailored to meet the needs of the subscribers. (5) "Ridesharing arrangement" means the transportation of persons in a motor vehicle where that transportation is incidental to another purpose of the driver. The term includes ridesharing arrangements known as carpools, vanpools, and buspools. (6) "Carpool" means two or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry less than seven adults, including the driver. (7) "Buspool" means 16 or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry more than 15 adult passengers. (8) "Private commuter bus" means a highway vehicle which meets all of the following criteria: (A) Has a seating capacity of at least seven adults, including the driver. (B) At least 50 percent of the mileage of which can be reasonably expected to be used for the purpose of transporting employees to and from work. (C) Is acquired by the taxpayer on or after the date of enactment of this section. (D) With respect to which the taxpayer makes an election under this paragraph on his or her return for the taxable year in which the vehicle is placed in service. (9) "Alternative commute program" means any alternative transportation method or program the purpose of which is to reduce the use of a motor vehicle by a single occupant to travel to and from that individual's place of employment. (d) The amendments made to this section by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 2010.  SEC. 3. Section 23649 is added to the Revenue and Taxation Code, to read: 23649. (a) (1) For each taxable year beginning on or after January 1,  2010   2011, and before January 1, 2016  , there shall be allowed to a qualified taxpayer as a credit against the "tax," as defined in Section 23036, an amount as described in paragraph (2) for qualified property that is placed in service in this state. (2) The amount of credit allowed by this section shall be the  percentage   full amount  of the total sales tax reimbursement or use tax paid on a purchase or purchases of qualified property, the revenues of which are deposited in the General Fund. (b) For purposes of this section:  (1) "Primarily" means 50 percent or more of a taxpayer's business consists of any line of business as described in paragraph (3).   (1)   (2)  "Qualified property" means any property that is Section 1245 property, as defined in Section 1245(a)(3) of the Internal Revenue Code.  (2)   (3)  "Qualified taxpayer" means a  purchaser   taxpayer primarily  engaged in any of those lines of business  described in   properly classified under  Codes 311111 to 339999, inclusive, of the North American  Industrial   Industry  Classification System (NAICS) Manual published by the United States Office of Management and Budget, 2007 edition.  (c) No credit, no further credit in any subsequent year, and no credit carryover shall be allowed with respect to the qualified property to any qualified taxpayer beginning in the year in which that qualified property for which a credit was allowed under this section is disposed of or removed from this state within one year of the date of purchase.   (c) A qualified taxpayer shall notify the Franchise Tax Board within 30 days after the qualified property is removed from the state or is disposed of to an unrelated party in the same taxable year. No credit shall be allowed under this section if the qualified property is removed from the state or is disposed of to an unrelated party in the same taxable year or the first taxable year following the taxable year in which the qualified property is first placed in service in this state. If any qualified property for which a credit is allowed pursuant to this section is thereafter removed from this state or disposed of to an unrelated party within one year from the date the qualified property is first placed in service in this state, the amount of the credit allowed by this section for that qualified property shall be recaptured by adding that credit amount to the "tax" of the qualified taxpayer for the taxable year in which the qualified property is disposed of or removed.  (d) 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 the succeeding  eight  years, until the credit is exhausted.  (e) (1) Credit under this section and Section 17053.49 shall be allowed on or before the cutoff date established by the Franchise Tax Board and shall be granted on a first-come-first-served basis.   (2) For the first taxable calendar year in which this credit is in effect, the cutoff date shall be the last day of the calendar quarter within which the Franchise Tax Board estimates that the aggregate revenue increase generated from the amendments made to Section 17149 by the act adding this section has reached the baseline amount. For purposes of this subparagraph, "baseline amount" means one hundred million dollars ($100,000,000).   (3) For each subsequent taxable year, the cutoff date shall be the last day of the calendar quarter within which the Franchise Tax Board estimates that the baseline amount has been reached, or that amount is adjusted each calendar year to reflect the rate of inflation or deflation from the previous date that the baseline amount was established, as measured by the Consumer Price Index or other method of measuring the rate of inflation or deflation which the Franchise Tax Board determines is reliable and generally accepted.   (e) The credit under this section shall be allowed only for the taxable year in which the qualified property is placed in service in this state.   (f) The credit allowed by this section shall be in lieu of any other credit or deduction that the taxpayer may otherwise claim pursuant to this part with respect to sales tax reimbursement or use tax paid on a purchase or purchases of qualified property.   (g) To reserve a credit allocation, the qualified taxpayer shall send an application to provide satisfactory substantiation in the form and manner proscribed by the Franchise Tax Board, that the taxpayer is eligible for a credit allocation pursuant this section. The taxpayer shall attach to the application the documents that the Franchise Tax Board determines to be necessary to substantiate the amount of sales and use taxes paid and the date that the qualified property was placed in service in this state. Upon the receipt of the application, the Franchise Tax Board shall notify the qualified taxpayer that the Franchise Tax Board has reserved the credit for the taxpayer, pending receipt of a timely filed tax return for the taxable year.   (h) (1) (A) The total amount of credit that may be allocated pursuant to this section and Section 17053.49 shall not exceed one hundred million dollars ($100,000,000), hereafter the "baseline amount."   (B) For each taxable year beginning on or after January 1, 2012, the Franchise Tax Board shall recompute the baseline amount. That computation shall be made as follows:   (i) The Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current calendar year, no later than August 1 of the current calendar year.   (ii) The Franchise Tax Board shall do both of the following:   (I) Compute an inflation adjustment factor by adding 100 percent to the percentage change figure that is furnished pursuant to clause (i) and dividing the result by 100.   (II) Multiply the preceding taxable year baseline amount by the inflation adjustment factor determined in subclause (I) and round off the resulting products to the nearest one dollar ($1).   (2) Once the credits allocated for qualified property exceed the limit established in paragraph (1), the Franchise Tax Board shall establish a wait list for subsequently received reservations, with an order of priority based on the date reservation was received by the Franchise Tax Board. The Franchise Tax Board shall notify taxpayers on the wait list no later than December 31 of the taxable year for which the credit was applied as to whether they have been allocated a credit and the amount allocated.   (i) (1) Upon receipt of the information described in subdivision (g), the Franchise Tax Board shall allocate the credit to the taxpayer on a first-come-first-served basis.   (2) (A) Except as provided in subparagraph (B), the qualified taxpayer shall claim the credit on a timely filed original return.   (B) Qualified taxpayers on the wait list, as described in paragraph (2) of subdivision (h), that are allocated a credit may claim the credit on an amended income tax return for that taxable year.   (3) The date the information described in subdivision (g) is received shall be determined by the Franchise Tax Board.  (j) The Franchise Tax Board may prescribe, by forms, instructions, published notices, or regulations, any requirements necessary for the efficient administration of this section.   (k) This section shall remain in effect until December 1, 2016, and as of that date is repealed.  SEC. 4. This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.