The Legislature passed and Governor Newsom signed Assembly Bill 150 on July 16, the Trailer Act for the Tax Budget, the budget committee, which deals with sales and consumption tax law, income tax law and corporate tax law.
FROM 150 [Chapter 82], changes sections 38.10, 6363.9, 6363.10, 6902.7, 17053.88.5, 17053.91, 17055, 17059.2, 23688.5, 23689 and 23691 from, adds sections 6902.9, 6902.10 and 19551.3, adds sections 17052.10, 17053.71, 17028. 53.80, 23628, and 23629 of and adds and cancels Part 10.4 (beginning with Section 19900) of Division 2 of the Revenue and Taxation Code.
AB 150 extends the sales tax exemption for the purchase of diapers for infants, toddlers and children and for menstrual hygiene products indefinitely. The bill also approves a tax credit for the 2021 tax year only for a qualified small business employer of $ 1,000 for each net increase in qualified employees that cannot exceed $ 150,000 per employer. An employer would also be empowered to irrevocably offset the credit against the qualified sales and use taxes imposed on the qualified small business employer in reporting periods beginning January 1, 2022 and through April 30, 2027.
AB 150 grants a qualified taxpayer who employs a qualifying person during the tax year a tax credit of between $ 2,500 and $ 10,000 per qualifying person, up to a maximum of $ 30,000 per taxpayer per tax year, from January 1, 2022 through 2026. The limit depends on the number of hours worked by the authorized person.
AB 150 extends the expiration date from January 1, 2022 to January 1, 2027 for the tax credit of 15% of the Qualifying Value of Fresh Fruits or Vegetables and Certain Raw Farm Products or Processed Foods donated to a chalkboard.
AB 150 extends the expiration date from January 1, 2026 to January 1, 2027 for the tax credit for the renovation of certified historic structures and for a qualified residence.
AB 150 increases the total CalCompetes tax credit for fiscal 2021-22 to $ 290 million.
AB 150 enacts the Small Business Relief Act for tax years beginning on or after January 1, 2021 and before January 1, 2026 to authorize a partnership or “S” company that meets certain other requirements to be eligible for an election tax to be paid to a calculated on the basis of his net income for the tax year.
AB 150 requires the State Department of Health Care Services to exchange data with the Franchise Tax Board upon request, including sufficient identifying information so that the department and board can assess the extent to which the department and board can identify individuals who work at Medi-Cal , who may be eligible for the CalEITC and state income tax credit.
Section One of the Bill amends Section 38.10 of the Tax Code to extend the expiration date to January 1, 2027 for the Legislative Analyst’s annual review of the effectiveness of the Certified Historic Buildings Tax Credit. Section 2 of the bill amends Section 6363.9 of the Tax Code to remove the July 1, 2023 expiration date for the diaper sales / use tax exemption. Section 3 of the bill amends Section 6363.10 of the Tax Code to eliminate the July 1, 2023 expiration date for menstrual hygiene products. Section 4 of the Bill amends Section 6902.7 of the Tax Act to extend the Small Business Hiring Loan Fund through June 1, 2027.
Section 5 of the Bill adds Section 6902.9 of the Taxes Act to allow a qualified small business employer to make an irrevocable choice to apply the small business employment loan to the imposed qualified sales / use taxes. This section defines the terms “converted business”, “loan amount”, “qualified sales or use taxes” and “qualified small business employer”. It specifies how the credit is to be applied to amounts due.
Section Six of the Bill adds Section 6902.10 of the Tax Code to allow a qualified small business employer to apply for a loan provisional and what the application must include. There are also detailed rules for the preliminary loan reservation and the amount available per employer.
Section Seven of the Bill adds Section 17052.10 of the Tax Code to provide a tax credit for small business tax relief from January 1, 2021 through January 1, 2026. This section defines the terms “select a Qualifying Entity”, “Qualifying Amount” and “Qualified Taxpayer”.
Section 8 of the Bill adds Section 17053.71 of the Tax Act to provide a small business hire loan for the 2021 tax year. The amount is $ 1,000 for each net increase in qualified employees up to a maximum of $ 150,000. This section defines the terms “full-time monthly equivalent”, “skilled worker”, “skilled small business employer”, “qualified wage”, “time base” and “employment weeks”. There are detailed rules for setting the loan amount.
Section 9 of the Bill adds Section 17053.80 of the Taxes Act to provide a qualifying taxpayer employing a Qualified Person with a maximum credit of $ 30,000 from January 1, 2022 through January 1, 2027. Credit ranges from $ 2,500 to $ 10,000 for each Eligible Person based on the number of hours worked annually. This section defines the terms “continuum of care”, “coordinated entry system”, “eligible employer”, “eligible person”, “homeless management information system”, “person is homeless”, “minimum wage” and “qualified taxpayer”. ”
Section 10 of the Bill amends Section 17053.88.5 of the Tax Code to extend the 15% tax credit expiration date for qualified donations to a blackboard. Section 11 of the bill amends Section 17053.91 of the Tax Code to extend the expiration date for qualified remediation expenses in relation to a certified historical structure. Section twelve of the bill amends Section 17055 of the Tax Act to make technical changes.
Section 13 of the Bill amends Section 17059.2 of the Tax Act to increase the amount of CalCompetes tax credits for Fiscal Year 2020-21 by $ 290 million and $ 180 million for Fiscal year 2022-23. It also overrides provisions related to the annual Legislative Analyst Report.
Section 14 of the bill adds Section 19551.3 of the Revenue and Taxation Code to require the Department of Health Care Services to exchange data with the Franchise Tax Board to identify individuals enrolled with Medical and potentially eligible for California Earned Income Tax Credit have as a federal EITC.
Section 15 of the bill adds Part 10.4 of Division 2 of the Revenue and Taxation Code to enact the Small Business Relief Act. This section enables a qualified legal person doing business in that state to determine annual taxation based on their qualified net income. “Qualified Net Income” and “Qualified Unit” are defined. This section states that it will remain in effect until December 1, 2026, but will be repealed sooner if Congress repeals the Internal Revenue Code relating to the restriction on individual deductions for the 2018-2025 tax years.
Section 16 of the bill adds Section 23628 of the Tax Code to create a small business hiring loan for the 2021 tax year. The amount is $ 1,000 for each net increase in qualified employees up to a maximum of $ 150,000. This section defines the terms “full-time monthly equivalent”, “skilled worker”, “skilled small business employer”, “qualified wage”, “time base” and “employment weeks”. There are detailed rules for setting the loan amount.
Section 17 of the Bill adds Section 23629 of the Taxes Act to provide a qualifying taxpayer employing a Qualified Person with a maximum credit of $ 30,000 from January 1, 2022 through January 1, 2027. Credit ranges from $ 2,500 to $ 10,000 for each Eligible Person based on the number of hours worked annually. This section defines the terms “continuum of care”, “coordinated entry system”, “eligible employer”, “eligible person”, “homeless management information system”, “person is homeless”, “minimum wage” and “qualified taxpayer”. ”
Section eighteen of the bill amends Section 23688.5 of the Tax Code to extend the expiration date for the 15% tax credit for qualifying donation items on a blackboard to January 1, 2027. Section nineteen of the bill amends Section 23689 of the Tax Act to increase the amount of CalCompetes tax credits by $ 290 million for Fiscal Year 2020-21 and $ 180 million for Fiscal Year 2022-23. It also overrides provisions related to the annual Legislative Analyst Report.
Section 20 of the bill amends Section 23691 of the Tax Code to extend the expiration date for the qualifying renovation expenses of 20% in relation to a certified historical structure.
Section twenty-one of the bill repealed Section 23 of Chapter 8 of the 2020 Bylaws. Section twenty-two of the bill states that the state will not reimburse local authorities for lost sales and use tax revenues. Section 23 of the draft law contains legislative findings and explanations regarding the loans for small businesses, which are intended to provide financial relief from economic disruptions as a result of COVID-19.
Section twenty-four of the bill contains legal determinations and explanations regarding the conservation tax credits and their impact on construction in the state. Section twenty-five of the bill contains legislative determinations and statements relating to CalCompetes’ tax credits and their intent to promote business in that state.
Section 26 of the Bill contains legal determinations and explanations for the homeless tax credit under Section 41 of the Revenue and Taxation Code. Section 27 of the bill states that the government mandate commission will determine whether this bill includes costs prescribed by the state and that reimbursement is to be made to local authorities and school districts. Section 28 of the bill provides that it is a budget-related bill that will take effect immediately.
This and the entire Budget Act 2021 can be found at ebudget.ca.gov.