California Assembly Bill AB2421 Latest Draft

 BILL NUMBER: AB 2421AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 4, 2014 AMENDED IN ASSEMBLY JUNE 17, 2014 AMENDED IN ASSEMBLY APRIL 22, 2014 AMENDED IN ASSEMBLY APRIL 1, 2014 INTRODUCED BY Assembly Member Nestande (Coauthors: Assembly Members Allen, Maienschein, and Olsen) (Coauthor: Senator Cannella) FEBRUARY 21, 2014 An act to add and repeal Section 23692 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST AB 2421, as amended, Nestande. Corporation Tax Law: credits: Homeless and Foster Youth Opportunities Investment Act. The Corporation Tax Law allows various credits against the taxes imposed by that law. This bill, for taxable years beginning on or after January 1, 2015, and before January 1, 2020, would allow a credit against the taxes imposed under that law for 50% of monetary contributions to qualified K-College education scholarship organizations, as defined, to fund qualified K-College education scholarships, as defined. 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-served basis, and that the credit would have an aggregate cap of $10,000,000 for each calendar year. The bill would require the Franchise Tax Board and the State Department of Education to administer the credit, as specified. 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. This act shall be known and may be cited as the Homeless and Foster Youth Opportunities Investment Act. SEC. 2. The Legislature finds and declares the following: (a) Providing tax incentives to encourage private investments for the common good is sound public policy. (b) Expanding educational opportunities and improving the quality of, and access to, educational services within the state are valid public purposes that the Legislature may promote using its sovereign power to determine tax policy. (c) Creative tax policy can inspire greater charitable contributions and public-private partnerships that ensure additional resources for the education of all children in California. (d) Encouraging voluntary support for education, without prejudice for or against any state-sanctioned educational enterprise promotes the state's interest and common good in providing the highest quality education to all children in the state. (e) At a time when fiscal realities challenging California's education system demand innovative ways to deliver vital education services to public and private pupils in kindergarten and grades 1 to 12, inclusive, and in college, charitable giving for educational purposes should be stimulated. (f) California benefits from ensuring the accessibility and viability of strong public, as well as, private school and college options in educating students, especially for those with the greatest needs: our homeless and foster youth. SEC. 3. Section 23692 is added to the Revenue and Taxation Code, to read: 23692. (a) For each taxable year beginning on or after January 1, 2015, and before January 1, 2020, there shall be allowed as a credit against the "tax," as defined in Section 23036,  not to exceed two hundred thousand dollars ($200,000),  an amount equal to 50 percent of  the   an approved  monetary contribution made by a taxpayer during the taxable  year, not to exceed two hundred thousand dollars ($200,000)   year  to a qualified K-College education scholarship organization to fund qualified K-College education  scholarships.   scholarships in accordance with this section.  (b) For purposes of this section:  (1) "Credit certificate" means the certificate issued by the State Department of Education pursuant to subdivision (c).   (1)   (2) "Qualified K-College education scholarship organization" or "ESO" means an organization in this state that  the State Department of Education has determined  meets the following requirements: (A) Is organized and operated with a purpose of providing qualified K-College education scholarships to specified pupils attending a public, charter, or private school in California. (B) (i) If the organization has three or more years of audited financial statements, distributes to specified pupils at least 80 percent of contributions for which a credit is claimed for qualified K-College education scholarships . (ii) If the organization has fewer than three years of audited financial statements, distributes at least 90 percent of contributions for which a credit is claimed for qualified K-College education scholarships . (C) Makes qualified K-College education scholarships available for specified pupils from more than one school. (D) Retains data on the progress of the specified pupils participating in qualified K-College education scholarships on nationally available norm-referenced tests to evaluate the program's efficacy. (E) Submits to the  Franchise Tax Board   State Department of Education  financial and compliance audit reports performed by a certified public accountant. (F) Submits to the State Department of Education quarterly reports on the number of qualified K-College education scholarship recipients and the schools that the recipients attend. (G) Applies to participate in this credit program with the State Department of Education. (H) Is formed as any of the following: (i) A nonprofit public benefit corporation described in Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code. (ii) A nonprofit religious corporation described in Part 4 (commencing with Section 9110) of Division 2 of Title 1 of the Corporations Code. (iii) A duly authorized foreign nonprofit corporation that has complied with the registration requirements under Section 6910 of, and Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of, the Corporations Code. (I) Is exempt from federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code.  (2)   (3)  "Qualified education-related expenses" means expenses paid or incurred for the purchase of books, services, and other materials that support academic success, including computers, software, tutoring, and other academic support.  (3)   (4)  "Qualified K-College education scholarship" means any of the following: (A) Financial assistance for a specified pupil to partially or fully pay for the fees associated with the general costs of transportation to attend a public, charter, or private school or to attend school-related activities and other educationally beneficial programs. (B) Financial assistance for a specified pupil to attend college courses after graduation from high school provided by any public college or independent, nonprofit college where the specified pupil has been admitted to attend. (C) Financial assistance for a specified pupil attending a public, charter, or private school for qualified education-related expenses, not provided by the McKinney-Vento Homeless Assistance Act of 1987 (Public Law 100-77).  (4)   (5)  "Specified pupil" means an individual who has applied for a K-College education scholarship and who is either within foster care, has been placed in a foster care system within the State of California, or has been placed with a relative caretaker through child protective services at any time prior to graduating high school, or who was at any time prior to graduating high school, or is currently a homeless youth as defined in Section 11139.3 of the Government Code or the McKinney-Vento Homeless Assistance Act of 1987 (Public Law 100-77). A specified pupil is not required to be previously enrolled in a public school or charter school to participate.  (5)   (6)  (A) "Private school" means a person, firm, association, partnership, limited liability company, or corporation offering or conducting private school instruction in the State of California on the elementary or high school level, that meets all of the following requirements: (i) Is accredited by the Western Association of Schools and Colleges or an affiliated organization. (ii) Has filed a current private school affidavit with the State Department of Education in accordance with Section 33190 of the Education Code. (iii) Complies with applicable provisions of the Health and Safety Code. (iv) Complies with applicable provisions of the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code). (v) Utilizes background checks in connection with hiring all school employees, consistent with the standards set forth in subdivision (a) of Section 44237 of the Education Code. (vi) Requires a specified pupil to take a nationally available norm-referenced test. (vii) Has obtained, if it has been in operation for less than three years, a surety bond or letter of credit in an amount equal to the value of the education scholarship payments for one quarter. (B) "Private school" also means an institution that meets the definition of a "qualifying institution" in paragraph (1) of subdivision (l) of Section 69432.7 of the Education Code. (C) "Private school" does not include a program of instruction offered by a tutor or a nonaccredited private school to a pupil who is exempt from compulsory full-time education under Article 3 (commencing with Section 48220) of Chapter 2 of Part 27 of Division 4 of Title 2 of the Education Code.  (c) The taxpayer shall receive a certification by the State Department of Education upon a determination that the contribution meets the requirements of this section.   (c) In a form and manner prescribed by the State Department of Education, a taxpayer seeking a credit under this section for a monetary contribution to a qualified K-College education scholarship organization shall request approval to make a specified contribution and tax credit amount from the State Department of Education. After receiving approval to make a contribution, the taxpayer may make the approved contribution. The State Department of Education and the qualified K-College education scholarship shall verify the amount and date of the contribution and issue a tax credit certificate to the taxpayer reflecting the approved amount of the tax credit, and notify the Franchise Tax Board of the contribution and approved credit amount. A taxpayer shall make a contribution within 30 calendar days of the date the contribution has been approved by the State Department of Education in order to claim the credit. The taxpayer shall provide a copy of the credit certificate upon request to the Franchise Tax Board.  (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 succeeding five years if necessary, until the credit is exhausted. (e) This credit shall be in lieu of any other credit or deduction that the taxpayer may otherwise claim pursuant to this part with respect to a monetary contribution described in subdivision (a).  (f) This credit shall be claimed on a timely filed original return.   (f) The credit allowed under this section shall be claimed on a timely filed original return and only with respect to contributions where the taxpayer has received a tax credit certificate from the State Department of Education.   (g) The State Department of Education may prescribe rules, guidelines, or procedures appropriate to carry out the purposes of this section, including any guidelines regarding the limitation on total credits allowable under this section.   (g)   (h)  (1) The aggregate amount of credits allowed under this section shall not exceed ten million dollars ($10,000,000) for each calendar year. (2) The allocation of credits shall be on a first-come, first-served basis. (3) The Legislature may increase the amount in paragraph (1).  (h)   (i)  The  Franchise Tax Board and the  State Department of Education shall  administer this credit.   do all of the following:   (1) Establish application forms and procedures to determine eligibility of an entity as a qualified K-College educational scholarship organization, including the following:   (A) Accept and evaluate applications received that an applicant meets the requirements of a qualified K-College education scholarship organization. The State Department of Education may suspend or revoke an organization's qualified K-College education scholarship organization status if the State Department of Education finds that the organization no longer meets the requirements of this section.   (B) Determine and designate organizations that meet the requirements of a qualified K-College education scholarship organization.   (C) Maintain and post a listing of qualified K-College education scholarship organizations on the State Department of Education's Internet Web site. The list shall be published annually by March 1.   (2) On or after January 1, 2015, and before January 1, 2020, allocate tax credits to taxpayers that make an approved monetary contribution.   (A) Establish a procedure for taxpayers to file with the State Department of Education a written application, on a form jointly prescribed by the State Department of Education and the Franchise Tax Board for the approval of a monetary contribution in accordance with this section. The application shall include, but not be limited to, the following information:   (i) The name and taxpayer identification number of the donor.   (ii) The name and taxpayer identification number of the qualified K-College education scholarship organization.   (iii) The proposed amount of monetary contribution.   (B) Establish criteria, consistent with the requirements of this section, for allocating tax credits.   (C) (i) Process and approve, or reject, all requests for approval of a monetary contribution on a first-come-first-served basis, based on the date the request for approval is received by the State Department of Education.   (ii) If requests for approval of a monetary contribution are received from two or more taxpayers on the same day, and the amount of credits of those requests exceeds the amount of credits available for allocation, the remaining available credits shall be allocated among those taxpayers on a pro rata basis.   (D) Subject to the annual cap established as provided in subdivision (h), allocate credits under this section.   (3) Certify and issue tax credit certificates to taxpayers for approved monetary contributions made.   (A) Establish a verification procedure for the amount of monetary contributions made to qualified K-College education scholarship organizations.   (B) Establish audit requirements that shall be satisfied before a credit certificate may be issued by the State Department of Education.   (4) Track aggregate amount of tax credits allocated to taxpayers.   (5) Provide the Franchise Tax Board with a list of taxpayers and the tax credit amounts allocated to each qualified taxpayer by the State Department of Education. The list shall include the names and taxpayer identification numbers, including taxpayer identification numbers of each partner or shareholder, as applicable, of the qualified taxpayer.   (1)   (j)  The Franchise Tax Board shall perform all of the following:  (A) Adopt rules and regulations as necessary or appropriate to implement this credit.   (B) Track credits claimed.   (C) Post aggregate totals of the credits claimed on the Internet Web site of the Franchise Tax Board.   (D) Determine when the aggregate total of the credits reaches ten million dollars ($10,000,000) for a calender year.   (2) The State Department of Education shall do the following:   (A) Adopt rules and regulations necessary to determine whether the following meet the requirements of this section:   (i) An ESO.   (ii) A contribution.   (B) Submit a list of eligible ESOs that comply with the requirements of this section to the Franchise Tax Board annually by March 15.   (C) Establish application forms and procedures.   (D) Certify that the contributions meet the requirements of this section.   (1) Assist the State Department of Education in creating a form for taxpayers to submit requesting approval of a monetary contribution to a qualified K-College education scholarship organization for the credit under this section and a certificate to be provided to taxpayers of the approved tax credit amount.   (2) Establish a procedure to verify that the amount of tax credit claimed on a tax return has been approved and certified by the State Department of Education.   (i)   (k)  Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to the guidelines or regulations adopted pursuant to this section.  (j)   (l)  This section shall remain in effect only until December 1, 2020, 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.