17053.72.
(a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2025, there shall be allowed to a qualified employer as a credit against the “net tax,” as defined in Section 17039, a California WOTC in an amount equal to an amount determined in accordance with the requirements of the federal WOTC, as applicable for federal tax purposes for the taxable year, except as otherwise provided by this section.(b) For purposes of this section, the following terms have the following meanings:
(1) “California WOTC” means the California Work Opportunity Tax Credit allowed by this section.
(2) “Federal
WOTC” means the federal Work Opportunity Tax Credit allowed by Section 51 of the Internal Revenue Code, relating to amount of credit, as in effect on January 1, 2018.
(3) “Qualified employer” means a taxpayer that is an employer that is subject to, and is required to provide, unemployment insurance to the taxpayer’s employees pursuant to the Unemployment Insurance Code.
(4) “Qualified individual” means any person who is covered by unemployment insurance by his or her the person’s employer pursuant to the Unemployment Insurance Code.
(c) The federal WOTC is modified as follows:
(1) Section 51(a) of the Internal Revenue Code, relating to determination of amount, is modified to limit the amount of tax credit allowed so as not to exceed two thousand four hundred dollars ($2,400) per qualified individual.
(2) Section 51(b) of the Internal Revenue Code, relating to qualified wages defined, is modified as follows:
(A) The wages are required to be attributable to an employee from a targeted group, as defined by Section 51(d) of the Internal Revenue Code, relating to members of targeted groups, and as modified by this section, who has worked not less than 500 hours for the qualified employer.
(B) The first five thousand dollars ($5,000) of wages attributable to service rendered during that one-year period are excluded from the calculation of qualified wages.
(3) Section 51(c) of the Internal Revenue Code, relating to wages defined, is modified to exclusively apply to wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code.
(4) Sections 51(d)(1)(D), 51(d)(1)(F), 51(d)(3)(A)(iii), 51(d)(13)(D)(i)(II), and 51(d)(14) of the Internal Revenue Code shall not apply.
(5) Section 51(e) of the Internal Revenue Code, relating to qualified second-year wages, shall not apply.
(6) Section 51(g) of the Internal Revenue Code, relating to United States employment service to notify employers of availability of credit, is modified to substitute “Employment Development Department, in consultation with the Franchise Tax Board” in lieu of “United States Employment Service, in
consultation with the Internal Revenue Service.”
(7) Section 51(h) of the Internal Revenue Code, relating to special rules for agricultural labor and railway labor, shall not apply.
(8) Section 51(i)(3) of the Internal Revenue Code, relating to individuals not meeting minimum employment periods, shall not apply.
(9) Section 51(j) of the Internal Revenue Code, relating to election to have work opportunity not apply, is modified to substitute “last date prescribed by state law” in lieu of “last date prescribed by law.”
(d) (1) Notwithstanding the federal WOTC, the qualified employer shall be allowed the California WOTC in the taxable year in which the employer receives a certification or in the taxable year in which the qualified
employer paid or incurred the qualified first year wages.
(2) Consistent with the requirements of the federal WOTC, the Employment Development Department shall issue certification of qualified individuals, subject to the modifications provided by this section. individuals.
(e) Notwithstanding the federal WOTC, in the case where the California WOTC exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and succeeding nine years if necessary, until the California WOTC is exhausted.
(f) Any deduction otherwise allowed under this part for the qualified wages paid or incurred by
the taxpayer upon which the California WOTC is based shall be reduced by the amount of the California WOTC allowed by this section.
(g) (1) Upon the effective date of this section, the Department of Finance shall estimate the total dollar amount of credits that will be claimed under this section with respect to each tax year from 2019–20 fiscal year to the 2025–26 fiscal year, inclusive.
(2) The Franchise Tax Board shall annually provide to the Joint Legislative Budget Committee, by no later than March 1, a report, in accordance with Section 9795 of the Government Code, that includes all of the following:
(A) The total dollar amount of the credits claimed under this section with respect to the relevant fiscal year. The report shall compare the total dollar amount of credits claimed under this
section with respect to that fiscal year with the department’s estimate with respect to that same fiscal year.
(B) The number of tax returns claiming the credit.
(C) The number of qualified individuals represented on tax returns claiming the credit.
(h) No credit shall be allowed pursuant to this section for a qualified employee unless the qualified employer obtains a certification from the Employment Development Department for that qualified employee for the Work Opportunity Tax Credit allowed by Section 51 of the Internal Revenue Code.
(i) (1) This section
shall remain in effect only until December 1, 2035, and as of that date is repealed.
(2)Notwithstanding paragraph (1), this section shall continue to be operative for taxable years beginning on or after January 1, 2019, but only with respect to qualified individuals who commenced employment with a qualified taxpayer in a taxable year beginning before January 1, 2025.