AMENDED IN ASSEMBLY APRIL 6, 2022
california legislature—2021–22 regular session
ASSEMBLY BILL No. 2142
Introduced by Assembly Member Gabriel
February 15, 2022
An act to add and repeal Sections 17138.2 and 24308.9 of the Revenue and Taxation Code, relating to taxation, to tak e ef fect immediately, tax levy.
legislative counsel’s digest
AB 2142, as amended, Gabriel. Income tax es: e xclusion: turf replacement water conservation program.
The Personal Income Tax La w and the Corporation Tax La w, in conformity with federal income tax la w, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income. Existing law provides an exclusion from gross income for any amount received as a rebate or voucher from a local water or energy agency or supplier for the purchase or installation of a w ater conservation water closet, energy efficient clothes washers, and plumbing devices, as specified.
This bill w ould, for taxable years be ginning on or after January 1, 2022, and before January 1, 2027, under both of these laws, provide an exclusion from gross income for an y amount recei ved as a rebate, voucher, or other financial incentive issued by a local water agency or supplier public water system, as defined, local go vernment, or state agency for participation in a turf replacement w ater conserv ation program.
Existing law requires any bill authorizing a ne w tax expenditure to contain, among other things, specific goals, purposes, and objecti ves
98 that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. Existing law limits the collection and use of taxpayer information and mak es any unauthorized use of this information a misdemeanor.
This bill would include additional information required for any bill authorizing a new tax expenditure, and would require the Department of Finance to include an analysis of these expenditures in its annual tax expenditure report provided to the Legislature and further provides that taxpayer information collected pursuant to this requirement is subject to the limitation on the collection and use of that information. By expanding the scope of a crime, this bill would impose a state-mandated local program. Legislature.
The California Constitution requires the state to reimb urse local agencies and school districts for certain costs mandated by the state.
Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes no.
The people of the State of California do enact as follows:
line 1 SECTION 1. Section 17138.2 is added to the Revenue and line 2 Taxation Code, to read:
line 3 17138.2. (a) For taxable years beginning on or after January line 4 1, 2022, and before January 1, 2027, gross income does not include line 5 any amount recei ved as a rebate, v oucher, or other financial line 6 incentive issued by a local water agency or supplier public water line 7 system, local go vernment, or state a gency for participation in a line 8 turf replacement water conservation program.
line 9 (b) For the purposes of this section, “public water system” shall line 10 have the same meaning as in Section 116275 of the Health and line 11 Safety Code.
line 12 (b)
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line 1 (c) This section shall remain in ef fect only until December 1, line 2 2027, and as of that date is repealed.
line 3 SEC. 2. Section 24308.9 is added to the Revenue and Taxation line 4 Code, to read:
line 5 24308.9. (a) For taxable years beginning on or after January line 6 1, 2022, and before January 1, 2027, gross income does not include line 7 any amount recei ved as a rebate, v oucher, or other financial line 8 incentive issued by a local water agency or supplier public water line 9 system, local go vernment, or state a gency for participation in a line 10 turf replacement water conservation program.
line 11 (b) For the purposes of this section, “public water system” shall line 12 have the same meaning as in Section 116275 of the Health and line 13 Safety Code.
line 14 (b)
line 15 (c) This section shall remain in ef fect only until December 1, line 16 2027, and as of that date is repealed.
line 17 SEC. 3. (a) The For the purpose of complying with Section line 18 41 of the Re venue and Taxation Code, with r espect to Sections line 19 17138.2 and 24308.9 of the Revenue and Taxation Code, as added line 20 by this act, the Legislature finds and declares all of the following:
line 21 (a) The specific goals, purposes, and objectives that the line 22 exclusion will achieve are as follows:
line 23 (1) Utility-sponsored Public water system financial incentives, line 24 including consumer rebates, are among the most important and line 25 cost-effective tools a vailable to local w ater providers to achie ve line 26 water use efficiency objectives, particularly for turf replacement, line 27 irrigation controllers, leak detection devices, and other high-cost line 28 water sa ving options. Local public utilities are using incenti ve line 29 programs to encourage local property o wners to manage storm line 30 water onsite, thus reducing urban flooding, impro ving w ater line 31 quality, and increasing water supplies.
line 32 (2) Rebates, vouchers, or other financial incenti ves issued by line 33 local water agencies or suppliers public water systems have been line 34 an effective tool in adv ancing efficiency and water management line 35 objectives state wide, and indi vidual consumers and b usinesses line 36 should not be taxed for providing this statewide benefit. line 37 (3) Financial incenti ves issued by a local w ater agenc y or line 38 supplier public water systems as part of a w ater conservation or line 39 efficiency program, the primary purpose of which is to reduce line 40 consumption of w ater or to impro ve the management of w ater 98 AB 2142 — 3 —
line 1 demand, provide a significant public benefit. Financial incentives line 2 issued by a local water agency or supplier as part of a water runoff line 3 management improvement program, the primary purpose of which line 4 is to reduce the amount or manage the quality of storm w ater line 5 runoff, provide a significant public benefit.
line 6 (4) The income tax exclusions allowed by Sections 17138.2 and line 7 24308.9 of the Revenue and Taxation Code, as added by this act, line 8 have the objective of eliminating disincentives to participation in line 9 water conserv ation or efficienc y and storm w ater runof f line 10 management improvement programs aimed at increasing w ater line 11 conservation or efficienc y or impro ving storm w ater quality in line 12 California.
line 13 (b) (1) To enable the Legislature to determine whether the tax line 14 expenditures allowed by this act are meeting, f ailing to meet, or line 15 exceeding the objective of the act, the Department of Finance shall line 16 include an analysis of these tax expenditures in the annual report line 17 required pursuant to Section 13305 of the Government Code. line 18 (2) Taxpayer information collected pursuant to this subdivision line 19 is subject to Section 19542 of the Revenue and Taxation Code. line 20 (2) The disclosure provisions of this paragraph shall be treated line 21 as an e xception to Section 19542 under Article 2 (commencing line 22 with Section 19542) of Chapter 7 of Part 10.2 of Division 2 of the line 23 Revenue and Taxation Code.
line 24 SEC. 4. No reimbursement is required by this act pursuant to line 25 Section 6 of Article XIIIB of the California Constitution because line 26 the only costs that may be incurred by a local agenc y or school line 27 district will be incurred because this act creates a ne w crime or line 28 infraction, eliminates a crime or infraction, or changes the penalty line 29 for a crime or infraction, within the meaning of Section 17556 of line 30 the Government Code, or changes the definition of a crime within line 31 the meaning of Section 6 of Article XIII B of the California line 32 Constitution.
line 33 SEC. 5.
line 34 SEC. 4. This act provides for a tax levy within the meaning of line 35 Article IV of the California Constitution and shall go into line 36 immediate effect.
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