Outreach, Education, and Free Tax Assistance Grant Program.

The Personal Income Tax Law imposes a tax on the entire taxable income of an individual taxpayer subject to that law, and provides for a specified treatment of the income of nonresidents. The Personal Income Tax Law, beginning on or after January 1, 2015, in modified conformity with federal income tax laws, allows an earned income tax credit against personal income tax and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability, to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law as determined by the earned income tax credit adjustment factor, as specified. For taxable years beginning on and after January 1, 2020, this tax credit is available to any eligible individuals using an individual taxpayer identification number (ITIN) . The Personal Income Tax Law additionally allows, for each taxable year beginning on or after January 1, 2019, a young child tax credit against the taxes imposed under that law and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability to a qualified taxpayer in a specified amount multiplied by the earned income tax credit adjustment factor, as provided. Existing federal income tax law allows a credit against federal income tax in an amount of $2,000 for each qualifying child, as defined, for each taxable year beginning before January 1, 2026, and in an amount of $1,000 for each qualifying child for each taxable year beginning on or after January 1, 2026, unless otherwise specified. This bill would enact the Free Tax Prep and Community Engagement Act, which would establish the Outreach, Education, and Free Tax Assistance Grant Program. Upon appropriation by the Legislature, the bill would require the Franchise Tax Board to allocate grants to qualified nonprofit community-based organizations or local government agencies with the goal of increasing the number of eligible households claiming the state and federal Earned Income Tax Credit, the federal Child Tax Credit, the Young Child Tax Credit, and the Foster Youth Tax Credit, and to increase awareness of ITIN tax status eligibility. The bill would authorize the Franchise Tax Board to administratively partner with the Department of Community Services and Development to administer the program. The bill would establish the Outreach, Education, and Free Tax Assistance Grant Fund in the State Treasury for these purposes.