New Bill to Create a Homeless Employee Tax Credit

On February 12, Senator Maria Elena Durazo (D-Los Angeles) introduced Senate Bill 424 to create a tax credit for homelessness. The bill would add and repeal Section 23628 of the Revenue and Taxation Code. Section One of the bill would specify two legislative findings and declarations discussing the plight of the homeless population in this state and that additional resources are needed to combat homelessness.

This bill would create California Homeless Hiring Tax Credit to encourage qualified employers that provide family-sustaining career pathways to hire and retain employees from the homeless population who have systematically faced barriers to employment. In addition, the Legislature would make certain findings and declarations related to the federal Equal Employment Opportunity Commission (EEOC) and the related federal Work Opportunity Tax Credit (WOTC). The Legislature would also find and declare that compliance with the Homeless Hiring Tax Credit questions and forms is necessary to ensure proper documentation and certification for employees eligible for the credit allowed by this measure.

Section Two of the bill would add Revenue and Taxation Code Section 23628. It would provide that, for each taxable year beginning on or after January 1, 2022 and before January 1, 2027, there would be allowed to a qualified taxpayer that employs an eligible individual a tax credit not to exceed $30,000 per taxable year. The credit would be one of the following:

  • $2,500 for each eligible individual that works 500 hours for the eligible employer during the taxable year in which the credit is claimed.
  • $5,000 for each eligible individual that works 1,000 hours for the eligible employer during the taxable year in which the credit is claimed.
  • $7,500 for each eligible individual that works 1,500 hours for the eligible employer during the taxable year in which the credit is claimed.
  • $10,000 for each eligible individual that works 2,000 hours for the eligible employer during the taxable year in which the credit is claimed.

An eligible employer is a taxpayer that has 500 employees or less, pays wages subject to withholding, and pays family-supporting wages at or exceeding the jurisdiction’s prevailing wage, as determined by the Employment Development Department. In addition, an eligible employer is one who is certified as a “high-road” employer by the Labor and Workforce Development Agency.

An eligible individual is a person who is homeless on the date of the hire or anytime during the 60-day period immediately before the hire, or someone who is receiving supportive services from a homeless services provider as designated by a local continuum of care or coordinated entry system. A person who is homeless is someone whose primary nighttime residence is:

A public or private place not used as a regular housing accommodation.

  • Sleeping accommodation for an individual, including a car, park, abandoned building, bus station, train station, airport, or camping ground.
  • A publicly or privately operated shelter
  • An individual who is fleeing, or is attempting to flee, domestic violence, has no other residence, and lacks the resources or support networks to obtain other permanent housing
  • An individual who will imminently lose their primary nighttime residence
  • An individual that has not had a lease, ownership interest, or occupancy agreement in permanent housing in the 60 days before receiving certification

An employer must submit to the Franchise Tax Board an eligible employer certification and submit an eligible individual certification in order to claim the tax credit. The certifications are to be filed with the Employment Development Department and the certifications expire after a designated time period.

The total aggregate amount of the credit is $30 million per calendar year and taxpayers have to claim the credit on a timely filed original return. The Franchise Tax Board would allocate credits to qualified taxpayers on a first-come-first-served basis. Any excess credit may be carried over for three years.

Section Three of the bill would make certain legislative findings and declarations that the goal of the credit is to encourage employers to hire and retain individuals from the homeless population which have been found to face systemic barriers to employment. It would specify how the effectiveness of the credit would be measures in an annual report.

The bill is expected to receive its first policy committee hearing in March.

Chris Micheli is a lobbyist with Aprea & Micheli, as well as an Adjunct Professor of Law at the University of the Pacific McGeorge School of Law.

This article was originally published by the California Globe.

Comments

  1. Gotta Gedada Displace says

    WHAT revenue, (IF ANY) even OFFSETS, let alone FUNDS, this credit ?

    INSANE spending HIKES (like additional $4 BILLION for HSR !) get proposed and passed by the Bolshevik Legislature while tax revenue craters due to COVID lockdown job losses, COVID bans on Tourism Travel and Entertainment, and further losses as employers and high tech earners FLEE THE STATE.

    MORE spending on a SHRINKING REVENUE BASE will only make the (remaining) middle class be designated MILLIONAIRES – ONLY because they will be TAXED AS MILLIONAIRES as the REAL MILLIONAIRES FLEE THE STATE

    LIBERALISM is a MENTAL DISEASE – the SANE don’t belong in the ASYLUM – FLEE while you can !

  2. It is an interesting concept to subsidize employers to employ the homeless, but it is ironic that much of the homeless and poverty population growth is directly related to all the efforts in the state continues to do to increase the costs of electricity and fuels, which are already among the highest in the country.

    Since energy costs drives up the cost of everything, it would seem logical that the solution is to do everything possible to DECREASE the cost of electricity and fuels to the consumer. If the State cannot reduce those energy costs, maybe the next bill should provide a subsidy to the consumer’s utility bills.

  3. I’m sick of liberal Democrats and their ideas.
    Hell! Put the homeless to work on the highspeed rail!
    If the state is going to waste revenue it doesn’t have, on a project the state is NOT READY FOR, they might just as well spend it on homeless wages.
    DA Democrats are reactive people, never preparing for the known inevitable.
    Best thing the state can do is get out of the way of business.
    Deregulate energy so the citizen can start using clean natural gas, build dams for enough water and hydroelectrical power to lower the cost of foods. Start working with power companies instead of telling them what to do and when it fails you can still blame them for doing what they were told by idiot politicians.
    I’m sick of it all, where’s the justice?

  4. So let me get this straight. The employer gets up to a $10,000 credit for hiring a homeless person, paying them at least $15/hr or enough that they can find a rental property so that they are no longer homeless. At the point the employee is no longer homeless, does the homeless credit for the employer end?

  5. They can make solar panels.

  6. Chris Renner says

    So an employer gets a $10,000 tax credit, meaning a reduction in taxes of $10,000, for employing a homeless person – how they prove they’re homeless is unknown – at $15 per hour for 1,000 hours. The homeless guy pays no taxes at $15,000, the employer does not pay $3,000 to the state, so the state makes retains $2,000 in tax revenue and uses that to fund some agency that will spend $20,000 per homeless person to administer the plan. What an idiotic plan!!!!! Why don’t you just change the minimum wage to $5.00 and everyone gets the same thing without more needless bureacracy?

  7. If the homeless continue to be a political football we may have to call in Tom Brady. Go long.

  8. Another government run assistance program. What a novel idea! What could possibly go wrong?

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