BILL NUMBER: AB 1404INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Grove FEBRUARY 27, 2015 An act to add Sections 17053.75 and 23675 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST AB 1404, as introduced, Grove. Income taxes: credit: employees with disabilities. The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill, for taxable years beginning January 1, 2016, would allow a credit under those laws to an employer who employs in this state, an individual with a disability who may be paid a special minimum wage, and pays the qualified employee a wage equal to or exceeding the minimum wage during the taxable year. The credit would be allowed in an amount equal to the difference between the special minimum wage and the minimum wage. 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 17053.75 is added to the Revenue and Taxation Code, to read: 17053.75. (a) For taxable years beginning on or after January 1, 2016, there shall be allowed a credit against the "net tax," as defined by Section 17039, to a qualified employer who employs a qualified employee and who pays the qualified employee a wage that equals or exceeds the minimum wage during the taxable year. (b) The credit shall be in an amount that is equal to the difference between the special minimum wage that may be paid to a qualified employee and the minimum wage. (c) For purposes of this section, the following definitions shall apply: (1) "Minimum wage" means the wage established by the Industrial Welfare Commission as provided for in Chapter 1 (commencing with Section 1171) of Part 4 of Division 2 of the Labor Code. (2) "Qualified employee" means an individual who may be paid a special minimum wage pursuant to Section 214(c) of Title 29 of the United States Code or Section 1191 or 1191.5 of the Labor Code. (3) (A) Qualified employer means a taxpayer that employs a qualified employee in this state. (B) In the case of any pass-thru entity, the determination of whether a taxpayer is a qualified employer under this section shall be made at the entity level and any credit under this section or Section 23675 shall be allowed to the pass-thru entity and passed through to the partners or shareholders in accordance with applicable provisions of this part or Part 11 (commencing with Section 23001). For purposes of this section, the term "pass-thru entity" means any partnership or S corporation. (d) A qualified employer shall do both of the following: (1) Obtain from the Industrial Welfare Commission a certification that a qualified employee meets the eligibility requirements of paragraph (2) of subdivision (c). (2) Retain the certification and provide a copy of it upon request to the Franchise Tax Board. SEC. 2. Section 23675 is added to the Revenue and Taxation Code, to read: 23675. (a) For taxable years beginning on or after January 1, 2016, there shall be allowed a credit against the "tax," as defined by Section 23036, to a qualified employer who employs a qualified employee and who pays the qualified employee a wage that equals or exceeds the minimum wage during the taxable year. (b) The credit shall be in an amount that is equal to the difference between the special minimum wage that may be paid to a qualified employee and the minimum wage. (c) For purposes of this section, the following definitions shall apply: (1) "Minimum wage" means the wage established by the Industrial Welfare Commission as provided for in Chapter 1 (commencing with Section 1171) of Part 4 of Division 2 of the Labor Code. (2) "Qualified employee" means an individual who may be paid a special minimum wage pursuant to Section 214(c) of Title 29 of the United States Code or Section 1191 or 1191.5 of the Labor Code. (3) (A) Qualified employer means a taxpayer that employs a qualified employee in this state. (B) In the case of any pass-thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section or Section 17053.75 shall be allowed to the pass-thru entity and passed through to the partners or shareholders in accordance with applicable provisions of this part or Part 10 (commencing with Section 17001). For purposes of this subparagraph, the term "pass-thru entity" means any partnership or "S" corporation. (d) A qualified employer shall do both of the following: (1) Obtain from the Industrial Welfare Commission a certification that a qualified employee meets the eligibility requirements of paragraph (2) of subdivision (c). (2) Retain the certification and provide a copy of it upon request to the Franchise Tax Board. SEC. 3. It is the intent of the Legislature to enact legislation to comply with the requirements of Section 41. SEC. 4. This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.