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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2025-03-13</ns0:ActionDate>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Committee on Revenue and Taxation</ns0:AuthorText>
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<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Committee on Revenue and Taxation</ns0:Name>
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<ns0:Title> An act to amend Sections 19852, 19853, and 19854 of the Revenue and Taxation Code, relating to taxation. </ns0:Title>
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<ns0:Subject>Direct File: employment: notice.</ns0:Subject>
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<html:p>Existing law, the Earned Income Tax Credit Information Act, requires an employer, as defined, to notify all employees that they may be eligible for specified income tax filing assistance programs and state and federal antipoverty tax credits. Pursuant to existing federal income tax law, the Internal Revenue Service allows taxpayers to complete and electronically file their federal taxes directly with the Internal Revenue Service using their free online tax tool called Direct File. </html:p>
<html:p>This bill, on and after January 1, 2026, would require employer notifications to all employees relating to specified income tax filing assistance programs to include information regarding Direct File. The bill would also make conforming and nonsubstantive changes to the Earned Income Tax Credit Information Act.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 19852 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
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<ns0:Num>19852.</ns0:Num>
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<html:p>For purposes of this part, the following terms have the following meanings:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Employer” means any California employer who is subject to, and is required to provide, unemployment insurance to their employees, under the Unemployment Insurance Code.
</html:p>
<html:p>
(b)
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“Employee” means any person who is covered by unemployment insurance by their employer, pursuant to the Unemployment Insurance Code.
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<html:p>
(c)
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“Federal EITC” means the federal earned income tax credit, as defined in Section 32 of the Internal Revenue Code.
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<html:p>
(d)
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“California EITC” means the California earned income tax credit, as defined in Section
17052.
</html:p>
<html:p>
(e)
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“State departments and agencies that serve those who may qualify for Voluntary Income Tax Assistance or state and federal antipoverty tax credits, including the federal and the California EITC” means the following departments and agencies:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The State Department of Education with respect to information from the free or reduced-price meal program and National School Lunch Program.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Employment Development Department with respect to information from the California Unemployment Insurance program.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The State Department of Health Care Services with respect to information from the Medi-Cal program.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The State Department of Social Services with respect to information from
the CalFresh and CalWORKS programs.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“State and federal antipoverty tax credits” means state and federal tax credits that are designed to alleviate poverty and tax burdens for low-income households.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Voluntary Income Tax Assistance” or “(VITA)” means the free basic income tax return preparation program, for federal and state personal income tax returns, managed by the Internal Revenue Service and operated by Internal Revenue Service partners and trained volunteers.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“CalFile” means the Franchise Tax Board’s free, direct, online program for taxpayers to complete and e-file their state personal income tax returns.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Direct File” means the Internal Revenue
Service’s free online tax tool, for taxpayers to complete and electronically file their federal taxes directly with the Internal Revenue Service.
</html:p>
<html:p>
(j)
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The amendments made to this section by Section 2 of Chapter 294 of the Statutes of 2016 shall apply to notices required pursuant to Section 19853 furnished on or after January 1, 2017.
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<html:p>
(k)
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The amendments made to this section by Section 9 of Chapter 55 of the Statutes of 2023 shall apply to notices required pursuant to Section 19853 furnished on or after January 1, 2024.
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<html:p>
(l)
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The amendments made to this section by the act adding this subdivision shall apply to notices required pursuant to Section 19853 furnished on or after January 1, 2026.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 19853 of the
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, as amended by Section 1 of Chapter 277 of the Statutes of 2023, is amended to read:
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<ns0:Num>19853.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
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An employer shall notify all employees that they may be eligible for VITA, CalFile, Direct File, and state and federal antipoverty tax credits, including the federal and the California EITC, within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee.
</html:p>
<html:p>
(2)
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An employer shall send a second notification to all employees during the month of March of the same year in which the employer notified employees pursuant to paragraph (1).
</html:p>
<html:p>
(b)
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(1)
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The state departments and agencies that serve those who may qualify for VITA or state and federal antipoverty tax credits, including the federal and the California EITC, as defined in subdivision (e) of Section 19852, shall notify their program recipients that they may be eligible for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, at least once per year during the months of January through March, or, alternatively, shall provide this annual notification during a regularly scheduled contact with a recipient by telephone, mail, or electronic communication, or by an in-person communication.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
State departments or agencies that serve those who may qualify for
VITA or state and federal antipoverty tax credits, including the federal and the California EITC, as defined in subdivision (e) of Section 19852, and that do not directly communicate with persons or households with persons who may qualify for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, may communicate indirectly through agencies, districts, or regulated entities that serve eligible persons or households with eligible persons.
</html:p>
<html:p>
(3)
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State departments or agencies that serve those who may qualify for VITA or state and federal antipoverty tax credits, including the federal EITC and the California EITC, as defined in subdivision (e) of Section 19852, are encouraged to develop the most effective method to provide notice to recipients of eligibility for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, as long as the notice
contains substantially the same language as the notice described in Section 19854.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
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The employer shall provide the notifications required by subdivision (a) by handing them directly to the employee or mailing them to the employee’s last known address.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any notice created by the employer shall include substantially the same language as the notice described in Section 19854.
</html:p>
<html:p>
(3)
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The notification required by paragraph (2) of subdivision (a) may be sent electronically.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The employer shall not satisfy the notification required by subdivision (a) by posting a notice on an employee bulletin board or sending it through office mail. However, these methods of notification are encouraged to help inform all employees of VITA,
CalFile, Direct File, and state and federal antipoverty tax credit eligibility, including the federal and the California EITC.
</html:p>
<html:p>
(e)
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(1)
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Notwithstanding subdivisions (c) and (d), the employer may provide the notification required by paragraph (1) of subdivision (a) via email to an email account of the employee’s choosing in PDF, JPEG, or other digital image file type format, if an employee affirmatively, and in writing or by electronic acknowledgment, opts into receipt of electronic statements or materials.
</html:p>
<html:p>
(2)
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An employer may not discharge an employee or in any manner discriminate, retaliate, or take any adverse action against an employee who does not affirmatively, in writing or by electronic acknowledgment, opt into receipt of electronic statements or
materials.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The amendments made to this section by Section 3 of Chapter 294 of the Statutes of 2016 shall apply to notices furnished on or after January 1, 2017.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The amendments made to this section by Section 10 of Chapter 55 of the Statutes of 2023 shall apply to notices furnished on or after January 1, 2024.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The amendments made to this section by Section 1 of Chapter 277 of the Statutes of 2023 shall apply to notices furnished on or after January 1, 2024.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The amendments made to this section by the act adding this subdivision shall apply to notices furnished on or after January 1, 2026.
</html:p>
<html:p>
(j)
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This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 19853 of the
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, as added by Section 2 of Chapter 277 of the Statutes of 2023, is amended to read:
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<ns0:Num>19853.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
An employer shall notify all employees that they may be eligible for VITA, CalFile, Direct File, and state and federal antipoverty tax credits, including the federal and the California EITC, within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee.
</html:p>
<html:p>
(2)
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An employer shall send a second notification to all employees during the month of March of the same year in which the employer notified employees pursuant to paragraph (1).
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
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The state departments and agencies that serve those who may qualify for VITA or state and federal antipoverty tax credits, including the federal and the California EITC, as defined in subdivision (e) of Section 19852, shall notify their program recipients that they may be eligible for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, at least once per year during the months of January through March, or, alternatively, shall provide this annual notification during a regularly scheduled contact with a recipient by telephone, mail, or electronic communication, or by an in-person communication.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
State departments or agencies that serve those who may qualify for
VITA or state and federal antipoverty tax credits, including the federal and the California EITC, as defined in subdivision (e) of Section 19852, and that do not directly communicate with persons or households with persons who may qualify for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, may communicate indirectly through agencies, districts, or regulated entities that serve eligible persons or households with eligible persons.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
State departments or agencies that serve those who may qualify for VITA or state and federal antipoverty tax credits, including the federal EITC and the California EITC, as defined in subdivision (e) of Section 19852, are encouraged to develop the most effective method to provide notice to recipients of eligibility for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, as long as the notice
contains substantially the same language as the notice described in Section 19854.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The employer shall provide the notifications required by subdivision (a) by handing them directly to the employee or mailing them to the employee’s last known address.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any notice created by the employer shall include substantially the same language as the notice described in Section 19854.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The notification required by paragraph (2) of subdivision (a) may be sent electronically.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The employer shall not satisfy the notification required by subdivision (a) by posting a notice on an employee bulletin board or sending it through office mail. However, these methods of notification are encouraged to help inform all employees of VITA,
CalFile, Direct File, and state and federal antipoverty tax credit eligibility, including the federal and the California EITC.
</html:p>
<html:p>
(e)
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This section shall become operative on January 1, 2029.
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 19854 of the
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is amended to read:
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<ns0:Num>19854.</ns0:Num>
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(a)
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The notice required under Section 19853 to be furnished to employees and public assistance program recipients regarding the availability of the federal and the California EITC shall state substantially as follows:
</html:p>
<html:br/>
<html:p>Based on your annual earning, you may be eligible for the following assistance:</html:p>
<html:p>Voluntary Income Tax Assistance (VITA) Program – VITA is a free basic income tax return preparation program, for federal and state personal income tax returns, managed by the Internal Revenue Service and operated by Internal Revenue Service partners and trained volunteers.</html:p>
<html:p>Federal Earned Income Tax Credit (federal EITC) – The federal EITC is a refundable credit for
low-income working individuals and families. The federal EITC will not impact certain public assistance benefits. In addition, federal EITC payments are typically NOT used to determine eligibility for the following:</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Medicaid.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Supplemental Security Income.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Supplemental Nutrition Assistance Program.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Low-income housing.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Temporary Assistance for Needy Families payments.
</html:p>
<html:p>To receive the federal EITC, you must file a federal tax return and fill out the EITC form, which can be found in the Federal Income Tax Return Booklet. For additional information on your eligibility to receive the federal EITC and other federal antipoverty tax
credits, visit www.irs.gov.</html:p>
<html:p>California Earned Income Tax Credit (California EITC) and Young Child Tax Credit (YCTC) – The California EITC and YCTC are refundable credits for low-income working individuals and families. The California EITC and YCTC are similar to the federal EITC and will not impact certain public assistance benefits.</html:p>
<html:p>Foster Youth Tax Credit (FYTC) – The FYTC is a refundable credit for former and current foster youth between 18 and 25 years of age who were in foster care while 13 years of age or older. The FYTC will not impact certain public assistance benefits.</html:p>
<html:p>To claim the California EITC, you must file a California Income Tax Return and fill out the California EITC form (Form FTB 3514) and attach it to your tax return. For additional information on the availability of the credit, including eligibility requirements, or form questions, visit www.ftb.ca.gov and
enter “CalEITC” in the search box.</html:p>
<html:p>You may also be eligible to have both your federal and state tax returns prepared and filed for free using VITA services. For additional information on the free tax filing service, and location and hours of operation, visit www.ftb.ca.gov and enter “VITA” in the search box.</html:p>
<html:p>Additionally, you may be eligible to use Direct File, the Internal Revenue Service’s (IRS) free online tax tool, which would allow you to file your federal income tax return directly with the IRS. For additional information on Direct File, visit www.irs.gov and enter “Direct File” in the search box.</html:p>
<html:p>You
may also be eligible to e-file your California return directly with the Franchise Tax Board for free using CalFile. For additional information on CalFile, visit www.ftb.ca.gov and enter “CalFile” in the search box.</html:p>
<html:br/>
<html:p>
(b)
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The amendments made to this section by Chapter 294 of the Statutes of 2016 apply to notices furnished on or after January 1, 2017.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The amendments made to this section by
Section 11 of Chapter 55 of the Statutes of 2023 shall apply to notices furnished on or after January 1, 2024.
</html:p>
<html:p>
(d)
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The amendments made to this section by the act adding this subdivision shall apply to notices furnished on or after January 1, 2026.
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