AB 1606

AB1606:v98#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 1606

An act to add and repeal Sections 17053.76 and 23688 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 1606, as amended, Nguyen. Personal Income Tax Law: Corporation Tax Law: credits: cleanup costs.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would allow a credit against those taxes to a qualified taxpayer, as defined, for 30% of the qualified cleanup expenses. expenses paid or incurred during the taxable year, and would limit the credit to $20,000 per taxable year. The bill would define qualified cleanup expenses for this purpose to mean costs directly related to the one-time removal and disposal of unauthorized encampments, illegal dumping, and abandoned property, as provided. The bill would require a taxpayer to certify, under penalty of perjury, that the costs reflected in documentation are directly related to qualified cleanup expenses. The bill would make related findings. By expanding the crime of perjury, this bill would impose a state-mandated local program.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill also would include additional information required for any bill authorizing a new tax expenditure.

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.

This bill would take effect immediately as a tax levy.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

The Legislature finds and declares as follows:

(a) The United States Supreme Court decision in City of Grants Pass, Oregon v. Johnson (2024) 603 U.S. 520 has enabled public entities to enforce no-camping ordinances on public property, resulting in the displacement of unhoused individuals.

(b) As a consequence, many individuals experiencing homelessness have moved from public property to private property, leading to an increase in unauthorized encampments on business premises across California.

(c) Unauthorized encampments and illegal dumping on private property have significantly increased, placing a financial burden on property owners and businesses statewide.

(d) Although businesses are currently able to deduct cleanup expenses as a business expense, the persistent costs associated with addressing unauthorized encampments continue to create financial challenges. Additional relief through a targeted tax credit would help mitigate these ongoing expenses and support businesses in maintaining safe and accessible properties.

(e) Providing a tax credit for cleanup expenses will directly support businesses, encourage timely action, and ensure properties remain safe and accessible, offering a more meaningful financial relief compared to standard deductions.

SEC. 2.

Section 17053.76 is added to the Revenue and Taxation Code, to read:

17053.76.

(a) (1) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, to a qualified taxpayer an amount equal to 30 percent of the qualified cleanup expenses paid or incurred during the taxable year, not to exceed twenty thousand dollars ($20,000). year.

(2) The credit allowed to a taxpayer by this section shall not exceed twenty thousand dollars ($20,000) per taxable year.

(b) For purposes of this section, the following definitions shall apply:

(1) “Abandoned property” means personal property that has been left on private property without the consent of the property owner and without intent to return.(2) “Illegal dumping” means the disposal of waste on private property in violation of state or local law.

(1)

(3) (A) “Qualified cleanup expenses” means costs directly related to the one-time removal and disposal of unauthorized encampments, illegal dumping, and abandoned property in the state, provided those costs are paid or incurred within 60 days of discovery. Those costs shall be limited to the following:

(i) Waste removal and disposal services.

(ii) Sanitization and restoration of property as necessary to restore the property to its pre-encampment condition.

(iii) Security measures installed as a temporary and nonpermanent measure directly related to the immediate cleanup, such as temporary fencing or temporary security gates. Ongoing monitoring, surveillance equipment, or security service contracts shall not qualify.

(iv) Repairs to property caused by damage from encampments or illegal dumping, excluding property improvements or upgrades.

(v) Installation of passive deterrent measures to prevent reencampments, such as riprap or other material, excluding permanent construction or new structures.

(B) “Qualified cleanup expenses” shall not include either any of the following:

(i) Ongoing or unrelated maintenance, permanent security systems, construction of new structures, and other capital improvements.

(ii) Compensation paid to the taxpayer’s employees, independent contractors, or other personnel for services performed in the normal course of employment or lease obligations.

(iii) Costs that are reimbursed, in whole or in part, by insurance, grants, or other sources.(iv) Costs that are recurring.

(2)

(4) “Qualified taxpayer” means a business entity, including an individual operating as a sole proprietorship, owning or leasing with gross revenue of five million dollars ($5,000,000) or less during the taxable year that owns or leases real property used for commercial purposes in the state impacted by unauthorized encampments, illegal dumping, or abandoned property.

(5) “Unauthorized encampment” means a temporary shelter or campsite located on private property without the consent of the property owner.

(c) Upon request of the Franchise Tax Board, a qualified taxpayer shall provide documentation of both of the following:

(1) The condition of the real property prior to cleanup.

(2) Detailed invoices or receipts from contractors or service providers performing the cleanup.

(d) A qualified taxpayer shall certify, under penalty of perjury, that the expenses were paid or incurred as a direct result of unauthorized encampments, illegal dumping, or abandoned property on the taxpayer’s real property were not caused or contributed to by the taxpayer or related parties; the real property address associated with the claimed expenses; whether the taxpayer is the property owner or a lessee; and that such expenses meet all of the qualifications under this section. all of the following:

(1) That the expenses were paid or incurred as a direct result of unauthorized encampments, illegal dumping, or abandoned property on the taxpayer’s real property and were not caused or contributed to by the taxpayer or any related party.

(2) The real property address associated with the claimed expenses.(3) Whether the taxpayer is the property owner or a lessee.(4) That such expenses meet all of the qualifications under this section.

(e) The adoption of any regulations necessary to carry out the purposes of this section may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

(f) 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 taxable year, and succeeding four years, if necessary, until the credit is exhausted.

(f)

(g) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.

(g)

(h) A qualified taxpayer may not claim a credit under this section for any qualified cleanup expenses for which another taxpayer has also claimed a credit under this section. If two or more taxpayers are eligible for the same qualified cleanup expenses, the credit shall only be allowable to the taxpayer who directly incurred and paid for the expenses and retains documentary evidence demonstrating payment.

(h)

(i) (1) For purposes of complying with Section 41, as it pertains to the credit allowed under this section and Section 23688, the Legislature finds and declares as follows:

(A) The specific goal of the credit is to support businesses, encourage timely action, and ensure properties remain safe and accessible.

(B) The performance indicators for the Legislature to use to determine if the credit is achieving its stated goal are the number of taxpayers allowed a credit and the total dollar amount of credits allowed.

(2) (A) The Franchise Tax Board, on or before July 1, 2029, and annually thereafter, shall submit to the Legislature, in compliance with Section 9795 of the Government Code, a report detailing the number of taxpayers allowed a credit pursuant to this section and Section 23688, and the total dollar value of credits allowed.

(B) The disclosure requirements of this paragraph shall be treated as an exception to Section 19542.

(i)

(j) This section shall remain operative only until December 1, 2032, and as of that date is repealed.

SEC. 3.

Section 23688 is added to the Revenue and Taxation Code, to read:

23688.

(a) (1) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, there shall be allowed as a credit against the “tax,” as defined in Section 23036, to a qualified taxpayer an amount equal to 30 percent of the qualified cleanup expenses paid or incurred during the taxable year.

(2) The credit allowed to a taxpayer by this section shall not exceed twenty thousand dollars ($20,000) per taxable year.

(b) For purposes of this section, the following definitions shall apply:

(1) “Abandoned property” means personal property that has been left on private property without the consent of the property owner and without intent to return.(2) “Illegal dumping” means the disposal of waste on private property in violation of state or local law.

(1)

(3) (A) “Qualified cleanup expenses” means costs directly related to the one-time removal and disposal of unauthorized encampments, illegal dumping, and abandoned property in the state, provided those costs are paid or incurred within 60 days of discovery. Those costs shall be limited to the following:

(i) Waste removal and disposal services.

(ii) Sanitization and restoration of property as necessary to restore the property to its pre-encampment condition.

(iii) Security measures installed as a temporary and nonpermanent measure directly related to the immediate cleanup, such as temporary fencing or temporary security gates. Ongoing monitoring, surveillance equipment, or security service contracts shall not qualify.

(iv) Repairs to property caused by damage from encampments or illegal dumping, excluding property improvements or upgrades.

(v) Installation of measures to prevent reencampments, such as riprap or other material, excluding permanent construction or new structures.

(B) “Qualified cleanup expenses” shall not include either any of the following:

(i) Ongoing or unrelated maintenance, permanent security systems, construction of new structures, and other capital improvements.

(ii) Compensation paid to the taxpayer’s employees, independent contractors, or other personnel for services performed in the normal course of employment or lease obligations.

(iii) Costs that are reimbursed, in whole or in part, by insurance, grants, or other sources.(iv) Costs that are recurring.

(2)

(4) “Qualified taxpayer” means a taxpayer owning or leasing with gross revenue of five million dollars ($5,000,000) or less during the taxable year that owns or leases real property used for commercial purposes in the state impacted by unauthorized encampments, illegal dumping, or abandoned property.

(5) “Unauthorized encampment” means a temporary shelter or campsite located on private property without the consent of the property owner.

(c) Upon request of the Franchise Tax Board, a qualified taxpayer shall provide documentation of both of the following:

(1) The condition of the real property prior to cleanup.

(2) Detailed invoices or receipts from contractors or service providers performing the cleanup.

(d) A qualified taxpayer shall certify, under penalty of perjury, that the expenses were paid or incurred as a direct result of unauthorized encampments, illegal dumping, or abandoned property on the taxpayer’s real property not caused or contributed to by the taxpayer or related parties; the real property address associated with the claimed expenses; whether the taxpayer is the property owner or a lessee; and that such expenses meet all of the qualifications under this section. all of the following:

(1) That the expenses were paid or incurred as a direct result of unauthorized encampments, illegal dumping, or abandoned property on the taxpayer’s real property and were not caused or contributed to by the taxpayer or any related party.(2) The real property address associated with the claimed expenses.(3) Whether the taxpayer is the property owner or a lessee.(4) That such expenses meet all of the qualifications under this section.

(e) The adoption of any regulations necessary to carry out the purposes of this section may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

(f) 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 taxable year, and succeeding four years, if necessary, until the credit is exhausted.

(f)

(g) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.

(g)

(h) A qualified taxpayer may not claim a credit under this section for any qualified cleanup expenses for which another taxpayer has also claimed a credit under this section. If two or more taxpayers are eligible for the same qualified cleanup expenses, the credit shall only be allowable to the taxpayer who directly incurred and paid for the expenses and retains documentary evidence demonstrating payment.

(h)

(i) This section shall remain operative only until December 1, 2032, and as of that date is repealed.

SEC. 4.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 5.

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.