(a) For each taxable year beginning on or after January 1, 2020, and before January 1, 2021, there shall be allowed as a small business hiring credit against the “net tax,” as defined in Section 17039, to a qualified small business employer that receives a tentative credit reservation under Section 6902.8, an amount equal to one thousand dollars ($1,000) for each net increase in qualified employees, as specified in subdivision (c). The credit shall not exceed one hundred thousand dollars ($100,000) for any qualified small business employer.
(b) For purposes of this section:
(1) “Monthly full-time equivalent” means either of the following:
(A) In the case of a qualified employee paid hourly qualified wages, “monthly full-time equivalent” means the total number of hours worked per month for the qualified small business employer by the qualified employee, not to exceed 167 hours per month per qualified employee, divided by 167.
(B) In the case of a salaried qualified employee, “monthly full-time equivalent” means the total number of weeks worked per month for the qualified small business employer by the qualified employee divided by 4.33 multiplied by the time base the qualified employee worked.
(2) (A) “Qualified employee” means an employee who is paid qualified wages by a qualified small business employer.
(B) “Qualified employee” shall not include an employee whose wages are included in calculating any other credit allowed under this part.
(3) (A) “Qualified small business employer” means a taxpayer that meets both of the following requirements:
(i) As of December 31, 2019, employed a total of 100 or fewer employees.
(ii) Has a 50-percent decrease in gross receipts determined by comparing gross receipts for the three-month period beginning on April 1, 2020, and ending June 30, 2020, with the gross receipts for the three-month period beginning on April 1, 2019, and ending June 30, 2019, if it would have met the requirement of having a significant decline in gross receipts for that quarter as determined under Section 2301(c)(2)(B)(i) of Public Law 116-136.
(B) “Qualified small business employer” does not include a taxpayer required to be included in a combined report under Section 25101 or 25110, or authorized to be included in a combined report under Section 25101.15.
(4) “Qualified wages” means wages subject to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code.
(5) “Time base” means the fraction of full-time employment that the qualified employee works.
(c) The net increase in qualified employees of a qualified small business employer shall be determined by subtracting the amount determined in paragraph (1) from the amount determined in paragraph (2).
(1) The average monthly full-time equivalent qualified employees employed during the three-month period beginning April 1, 2020 and ending June 30, 2020, by the qualified small business employer. The average monthly full-time equivalent qualified employees is determined by adding the total monthly full-time equivalent qualified employees employed by the qualified small business employer for all three months and dividing the total by three.
(2) The average monthly full-time equivalent qualified employees employed during the five-month period beginning July 1, 2020 and ending November 30, 2020, by the qualified small business employer. The average monthly full-time equivalent qualified employees is determined by adding the total monthly full-time equivalent qualified employees employed by the qualified small business employer for all five months and dividing the total by five.
(d) In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and succeeding four years if necessary, until the credit is exhausted.
(e) Any deduction otherwise allowed under this part for qualified wages shall be reduced by the amount of the credit allowed under this section.
(f) For purposes of this section, all employees of the trades or businesses that are treated as related under Section 267, 318, or 707 of the Internal Revenue Code shall be treated as employed by a single qualified small business employer.
(g) (1) A credit under this section or Section 23627 shall be allowed only for credits claimed on timely filed original returns.
(2) The date a return is received shall be determined by the Franchise Tax Board.
(3) (A) The determinations of the Franchise Tax Board with respect to whether a return has been timely filed for purposes of this subdivision may not be reviewed in any administrative or judicial proceeding.
(B) Any disallowance of a credit claimed due to a determination under this subdivision or the application of the limitation specified in Section 6902.8 shall be treated as a mathematical error appearing on the return. Any amount of tax resulting from such disallowance may be assessed by the Franchise Tax Board in the same manner as provided by Section 19051.
(h) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.
(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any regulation, rule, guideline, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section.
(i) Notwithstanding Section 19542, the Franchise Tax Board may provide to the California Department of Tax and Fee Administration information related to the credit allowed by Section 6902.7, this section, and Section 23627, including, but not limited to, the qualified small business employer names, amounts of tax credits allowed under each section, and the net increase in qualified employees.
(j) This section shall remain in effect only until December 1, 2021, and as of that date is repealed.
(Added by Stats. 2020, Ch. 41, Sec. 3. (SB 1447) Effective September 9, 2020. Repealed as of December 1, 2021, by its own provisions.)