Income taxation: credits: local news media: data extraction transactions.

(1) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill would, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, allow a credit against the taxes imposed by those laws for portions of the costs for qualified services paid or incurred by a qualified taxpayer. The bill would define "qualified taxpayer" for this purpose to mean an eligible local news organization or a qualified broadcast station, as those terms are defined. The bill would require a taxpayer to request a tentative credit reservation from the Franchise Tax Board in the form and manner prescribed by the Franchise Tax Board, and would limit the amount of credit allocated by the Franchise Tax Board per calendar year. The bill would require the Franchise Tax Board to prioritize reservations by qualified small publications, as defined and specified. The bill would allow a payment from the continuously appropriated Tax Relief and Refund Account for an allowable credit in excess of tax liability to a qualified renter, as provided. By authorizing new payments from the Tax Relief and Refund Account in excess of personal income tax liabilities, the bill would make an appropriation. (2) The Personal Income Tax Law and Corporation Tax Law impose taxes measured by income. Those taxes are administered by the Franchise Tax Board pursuant to specified law, the violation of which is a crime. This bill, for taxable years beginning on or after January 1, 2026, and in addition to the taxes imposed under the Personal Income Tax Law and the Corporation Tax Law, would impose a tax upon gross receipts derived from data extraction transactions at a rate of 7.25% of those gross receipts in excess of $2,500,000,000. The bill would define a "data extraction transaction" for these purposes to mean a transaction where a person sells user information or access to users to advertisers and the person engages in a barter by providing services to a user in full or partial exchange for the ability to display advertisements to the user or collect data about the user, except as provided. The bill would exclude a news media entity, as defined, from the provisions of this tax as either a taxpayer or a user. The bill would establish the Data Extraction Mitigation Fee Fund in the State Treasury, and would direct all revenues from the tax, less refunds and reimbursements, be deposited into the fund, as specified. The bill would appropriate $15,000,000 for journalism fellowships, as specified, and would require the remaining moneys in the fund, except as provided, to be used, upon appropriation, for grants to eligible nonprofit local news organizations administered by the Franchise Tax Board, as specified. The bill would require the Franchise Tax Board to administer this tax in accordance with existing franchise and income tax law provisions, the violation of which is a crime. By expanding the crimes related to the franchise and income tax laws, this bill would impose a state-mandated local program. (3) The Personal Income Tax Law and Corporation Tax Law, in modified conformity with federal income tax laws, generally allow various deductions in computing the income that is subject to tax imposed under those laws, including miscellaneous itemized deductions that are allowed only to the extent that the aggregate amount of those deductions exceeds 2% of adjusted gross income. This bill, for taxable years beginning on or after January 1, 2026, would allow a deduction in computing the income that is subject to those laws equal to the amount of taxes paid by the taxpayer under the above-described data extraction transaction tax. (4) Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. (5) This bill would make findings and declarations related to a gift of public funds. (6) The California Constitution requires the state to reimburse 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. (7) This bill would declare that it is to take effect immediately as an urgency statute.