SECTIONS 12201-12210 - California Statutes

REVENUE AND TAXATION CODE

SECTION 12201-12210

12201. (a) Every insurer and Medi-Cal managed care plan doing
business in this state shall annually pay to the state a tax on the
bases, at the rates, and subject to the deductions from the tax
hereinafter specified. For purposes of the tax imposed by this
chapter, "insurer" shall be deemed to include a home protection
company as defined in Section 12740 of the Insurance Code.
(b) Notwithstanding Section 13340 of the Government Code, the
revenues derived from the imposition of the tax by this chapter on
Medi-Cal managed care plans are hereby continuously appropriated as
follows:
(1) A percentage of the revenues derived from the imposition of
the tax by this chapter on Medi-Cal managed care plans equal to the
difference between 100 percent and the applicable federal medical
assistance percentage (FMAP) to the department for purposes of the
Medi-Cal program.
(2) After deducting the revenues appropriated pursuant to
paragraph (1), any remaining revenue to the Managed Risk Medical
Insurance Board for purposes of the Healthy Families Program.
(c) The Insurance Commissioner shall report the amount of revenue
derived from the tax imposed on Medi-Cal managed care plans pursuant
to this section to the California Health and Human Services Agency,
the Joint Legislative Budget Committee, and the Department of
Finance.
(d) This section shall become operative on July 1, 2010.
(e) This section shall become inoperative on July 1, 2011, and, as
of January 1, 2012, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2012, deletes or
extends the dates on which it becomes inoperative and is repealed.

12201. (a) Every insurer doing business in this state shall
annually pay to the state a tax on the bases, at the rates, and
subject to the deductions from the tax hereinafter specified. For
purposes of the tax imposed by this chapter, "insurer" shall be
deemed to include a home protection company as defined in Section
12740 of the Insurance Code.
(b) This section shall become operative on July 1, 2011.

12202. The rate of tax to be applied to the basis of the annual tax
in respect to each year is 2.35 percent except the rate to be
applied to the basis in respect to the years 1982, 1983, 1984, and
1985 is 2.33 percent and except that as to gross premiums received
upon policies or contracts issued in connection with a pension plan
or profit-sharing plan exempt or qualified under Section 401(a), 403
(b), 404, 408(b), or 501(a) of the United States Internal Revenue
Code as they may be amended or renumbered from time to time, the rate
of tax shall be the percentage set forth below opposite each year:

Year Percentage
1960.................................. 2.15
1961.................................. 1.95
1962.................................. 1.75
1963.................................. 1.55
1964.................................. 1.35
1965 through 1968..................... 1.00
1969 and each year thereafter......... 0.50

12202.1. Notwithstanding the rate specified by Section 12202, the
gross premiums tax rate paid by insurers for any premiums collected
between November 8, 1988 and January 1, 1991 shall be adjusted by the
Board of Equalization in January of each year so that the gross
premium tax revenues collected for each prior calendar year shall be
sufficient to compensate for changes in such revenues, if any,
including changes in anticipated revenues, arising from this act. In
calculating the necessary adjustment, the Board of Equalization shall
consider the growth in premiums in the most recent three year
period, and the impact of general economic factors including, but not
limited to, the inflation and interest rates.

12203. The State Compensation Insurance Fund shall annually pay a
tax computed on the same bases, at the same rates, and subject to the
same deductions specified in this chapter, as those applicable to
private insurers.

12204. (a) The tax imposed on insurers by this chapter is in lieu
of all other taxes and licenses, state, county, and municipal, upon
those insurers and their property, except:
(1) Taxes upon their real estate.
(2) Any retaliatory exactions imposed by paragraph (3) of
subdivision (f) of Section 28 of Article XIII of the Constitution.
(3) The tax on ocean marine insurance.
(4) Motor vehicle and other vehicle registration license fees and
any other tax or license fee imposed by the state upon vehicles,
motor vehicles or the operation thereof.
(5) That each corporate or other attorney-in-fact of a reciprocal
or interinsurance exchange shall be subject to all taxes imposed upon
corporations or others doing business in the state, other than taxes
on income derived from its principal business as attorney-in-fact.
(b) This section shall not apply to any Medi-Cal managed care plan
and to any tax imposed on that plan by this chapter.
(c) This section shall become inoperative on July 1, 2011, and, as
of January 1, 2012, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2012, deletes or
extends the dates on which it becomes inoperative and is repealed.

12204. (a) The tax imposed on insurers by this chapter is in lieu
of all other taxes and licenses, state, county, and municipal, upon
those insurers and their property, except:
(1) Taxes upon their real estate.
(2) Any retaliatory exactions imposed by paragraph (3) of
subdivision (f) of Section 28 of Article XIII of the California
Constitution.
(3) The tax on ocean marine insurance.
(4) Motor vehicle and other vehicle registration license fees and
any other tax or license fee imposed by the state upon vehicles,
motor vehicles or the operation thereof.
(5) That each corporate or other attorney-in-fact of a reciprocal
or interinsurance exchange shall be subject to all taxes imposed upon
corporations or others doing business in the state, other than taxes
on income derived from its principal business as attorney-in-fact.
(b) This section shall become operative on July 1, 2011.

12205. It is the intent of the Legislature that the amount of the
state low-income housing tax credit allocated to a project pursuant
to Section 12206 shall not exceed an amount in addition to the
federal tax credit that is necessary for the financial feasibility of
the project and its viability throughout the extended use period.

12206. (a) (1) There shall be allowed as a credit against the "tax"
(as defined by Section 12201) a state low-income housing tax credit
in an amount equal to the amount determined in subdivision (c),
computed in accordance with Section 42 of the Internal Revenue Code,
except as otherwise provided in this section.
(2) "Taxpayer," for purposes of this section, means the sole owner
in the case of a "C" corporation, the partners in the case of a
partnership, and the shareholders in the case of an "S" corporation.
(3) "Housing sponsor," for purposes of this section, means the
sole owner in the case of a "C" corporation, the partnership in the
case of a partnership, and the "S" corporation in the case of an "S"
corporation.
(b) (1) The amount of the credit allocated to any housing sponsor
shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project's need for
the credit for economic feasibility in accordance with the
requirements of this section.
(A) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety Code,
that are allocated credits solely under the set-aside described in
subdivision (c) of Section 50199.20 of the Health and Safety Code,
the low-income housing project shall be located in California and
shall meet either of the following requirements:
(i) The project's housing sponsor shall have been allocated by the
California Tax Credit Allocation Committee a credit for federal
income tax purposes under Section 42 of the Internal Revenue Code.
(ii) It shall qualify for a credit under Section 42(h)(4)(B) of
the Internal Revenue Code.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code. The committee may require a fee if
the application for the credit under this section is submitted in a
calendar year after the year the application is submitted for the
federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2016, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b) of
the Internal Revenue Code.
(ii) This subparagraph shall not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(iii) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit on
or after January 1, 2016.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an "S" corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall attach a copy of the certification to any
return upon which a tax credit is claimed under this section.
(D) In the case of a failure to attach a copy of the certification
for the year to the return in which a tax credit is claimed under
this section, no credit under this section shall be allowed for that
year until a copy of that certification is provided.
(E) All elections made by the taxpayer pursuant to Section 42 of
the Internal Revenue Code shall apply to this section.
(F) No credit shall be allocated under this section to buildings
located in a difficult development area or a qualified census tract
as defined in Section 42 of the Internal Revenue Code for which the
eligible basis of a new building or the rehabilitation expenditure of
an existing building is 130 percent of that amount pursuant to
Section 42(d)(5)(C) of the Internal Revenue Code, unless the
committee reduces the amount of federal credit, with the approval of
the applicant, so that the combined amount of federal and state
credit shall not exceed the total credit allowable pursuant to this
section and Section 42(b) of the Internal Revenue Code, computed
without regard to Section 42(d)(5)(C) of the Internal Revenue Code.
(c) Section 42(b) of the Internal Revenue Code shall be modified
as follows:
(1) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term "applicable percentage" means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, in lieu of the percentage prescribed in Section 42(b)(1)(A) of
the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and the
sum of the applicable percentages for the first three years.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is
federally subsidized or that is an existing building that is "at risk
of conversion," the term "applicable percentage" means the
following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and the
sum of the applicable percentages for the first three years.
(3) For purposes of this section, the term "at risk of conversion,"
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development in
which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to Section
221(d)(3) of the National Housing Act, Sections 1715l(d)(3) and (5)
of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1 of
Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section 1701s
of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of 1949,
Section 1485 of Title 42 of the United States Code, as amended.
(vi) The low-income housing credit program set forth in Section 42
of the Internal Revenue Code.
(B) The restrictions on rent and income levels will terminate or
the federal insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code regarding rehabilitation expenditures,
except that the provisions of Section 42(e)(3)(A)(ii)(I) shall not
apply.
(d) The term "qualified low-income housing project" as defined in
Section 42(c)(2) of the Internal Revenue Code is modified by adding
the following requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
which, at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
(i) The owner equity which shall include the amount of the capital
contributions actually paid to the housing sponsor and shall not
include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the "floor space fraction," as defined in
Section 42 of the Internal Revenue Code.
(C) Any amount allowed to be distributed under subparagraph (A)
that is not available for distribution during the first five years of
the compliance period may accumulate and be distributed any time
during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return shall apply in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an "S" corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code.
(e) The provisions of Section 42(f) of the Internal Revenue Code
shall be modified as follows:
(1) The term "credit period" as defined in Section 42(f)(1) of the
Internal Revenue Code is modified by substituting "four taxable
years" for "10 taxable years."
(2) The special rule for the first taxable year of the credit
period under Section 42(f)(2) of the Internal Revenue Code shall not
apply to the tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code is modified to
read:
If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the
close of the first year of the credit period, the housing sponsor, to
the extent of its tax credit allocation, shall be eligible for a
credit on the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue Code
shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code shall not be
applicable and instead the following provisions shall be applicable:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which the
allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)
(I), (7), and (8) of Section 42(h) of the Internal Revenue Code shall
not be applicable.
(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation Committee
pursuant to this section, Section 17058, and Section 23610.5 shall be
an amount equal to the sum of all the following:
(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the 2001
calendar year. For the purposes of this paragraph, the term
"Consumer Price Index" means the last Consumer Price Index for all
urban consumers published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing credit
dollar amount previously allocated to any project that does not
become a qualified low-income housing project within the period
required by this section or to any project with respect to which an
allocation is canceled by mutual consent of the California Tax Credit
Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year for
projects to provide farmworker housing, as defined in subdivision
(h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under former
Sections 17053.14, 23608.2, and 23608.3, as those sections read
prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of Section
50199.7 of the Health and Safety Code.
(h) The term "compliance period" as defined in Section 42(i)(1) of
the Internal Revenue Code is modified to mean, with respect to any
building, the period of 30 consecutive taxable years beginning with
the first taxable year of the credit period with respect thereto.
(i) (1) Section 42(j) of the Internal Revenue Code shall not be
applicable and the provisions in paragraph (2) shall be substituted
in its place.
(2) The requirements of this section shall be set forth in a
regulatory agreement between the California Tax Credit Allocation
Committee and the housing sponsor, which agreement shall be
subordinated, when required, to any lien or encumbrance of any banks
or other institutional lenders to the project. The regulatory
agreement entered into pursuant to subdivision (f) of Section
50199.14 of the Health and Safety Code, shall apply, providing the
agreement includes all of the following provisions:
(A) A term not less than the compliance period.
(B) A requirement that the agreement be filed in the official
records of the county in which the qualified low-income housing
project is located.
(C) A provision stating which state and local agencies can enforce
the regulatory agreement in the event the housing sponsor fails to
satisfy any of the requirements of this section.
(D) A provision that the regulatory agreement shall be deemed a
contract enforceable by tenants as third-party beneficiaries thereto
and which allows individuals, whether prospective, present, or former
occupants of the building, who meet the income limitation applicable
to the building, the right to enforce the regulatory agreement in
any state court.
(E) A provision incorporating the requirements of Section 42 of
the Internal Revenue Code as modified by this section.
(F) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee and the local agency
that can enforce the regulatory agreement if there is a determination
by the Internal Revenue Service that the project is not in
compliance with Section 42(g) of the Internal Revenue Code.
(G) A requirement that the housing sponsor, as security for the
performance of the housing sponsor's obligations under the regulatory
agreement, assign the housing sponsor's interest in rents that it
receives from the project, provided that until there is a default
under the regulatory agreement, the housing sponsor is entitled to
collect and retain the rents.
(H) The remedies available in the event of a default under the
regulatory agreement that is not cured within a reasonable cure
period, include, but are not limited to, allowing any of the parties
designated to enforce the regulatory agreement to collect all rents
with respect to the project; taking possession of the project and
operating the project in accordance with the regulatory agreement
until the enforcer determines the housing sponsor is in a position to
operate the project in accordance with the regulatory agreement;
applying to any court for specific performance; securing the
appointment of a receiver to operate the project; or any other relief
as may be appropriate.
(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar year
during which applications may be filed and considered. The committee
shall establish application filing deadlines, the maximum percentage
of federal and state low-income housing tax credit ceiling which may
be allocated by the committee in that period, and the approximate
date on which allocations shall be made. If the enactment of federal
or state law, the adoption of rules or regulations, or other similar
events prevent the use of two allocation periods, the committee may
reduce the number of periods and adjust the filing deadlines, maximum
percentage of credit allocated, and the allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code. In
adopting this plan, the committee shall comply with the provisions of
Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code.
(3) Notwithstanding Section 42(m) of the Internal Revenue Code,
the California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate there is a need and
demand for low-income housing in the community or region for which it
is proposed.
(ii) The project's proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity to
ensure project completion and operation for the extended use period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies, and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A) if
both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units is comprised
of low-income units with three and more bedrooms.
(ii) Projects providing single room occupancy units serving very
low income tenants.
(iii) Existing projects that are "at risk of conversion," as
defined by paragraph (3) of subdivision (c).
(iv) Projects for which a public agency provides direct or
indirect long-term financial support for at least 15 percent of the
total project development costs or projects for which the owner's
equity constitutes at least 30 percent of the total project
development costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue of
the date of submission of its application except to break a tie when
two or more of the projects have an equal rating.
(k) Section 42(l) of the Internal Revenue Code shall be modified
as follows:
The term "secretary" shall be replaced by the term "California
Franchise Tax Board."
(l) In the case where the state credit allowed under this section
exceeds the "tax," the excess may be carried over to reduce the "tax"
in the following year, and succeeding years if necessary, until the
credit has been exhausted.
(m) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, shall apply to calendar years after 1993.
(n) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, shall not apply.
(o) This section shall remain in effect for as long as Section 42
of the Internal Revenue Code, relating to low-income housing credits,
remains in effect.

12207. (a) Notwithstanding any other provision of this part, no
credit shall be allowed under Section 12206, 12208, or 12209 against
the tax imposed on Medi-Cal managed care plans pursuant to Section
12201.
(b) This section shall become inoperative on July 1, 2011, and, as
of January 1, 2012, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2012, deletes or
extends the dates on which it becomes inoperative and is repealed.

12208. (a) There shall be allowed as a credit against the amount of
tax, as defined in Section 28 of Article XIII of the California
Constitution, an amount equal to the amount of the gross premiums tax
due from the insurer on account of pilot project insurance for
previously uninsured motorists.
(b) As used in this section "pilot project insurance for
previously uninsured motorists" means motor vehicle liability
insurance issued by an insurer under Article 5.5 (commencing with
Section 11629.7) or Article 5.6 (commencing with Section 11629.9) of
Chapter 1 of Part 3 of Division 2 of the Insurance Code, with respect
to an insured who, at the time of the issuance, owned or operated a
motor vehicle without proof of financial responsibility as defined in
Section 16020 of the Vehicle Code, and any renewal of that
insurance.

12209. (a) For each year beginning on or after January 1, 1999, and
before January 1, 2012, there shall be allowed as a credit against
the amount of tax, as defined in Section 28 of Article XIII of the
California Constitution, an amount equal to 20 percent of the amount
of each qualified investment made by a taxpayer during the taxable
year into a community development financial institution that is
certified by the Department of Insurance, California Organized
Investment Network, or any successor thereof.
(b) For purposes of determining any tax that may be imposed under
Section 685 of the Insurance Code on a taxpayer not organized under
the laws of this state, the amount of the credit allowed by
subdivision (a) shall be treated as a tax paid under Section 12201 or
Section 28 of Article XIII of the California Constitution.
(c) (1) Notwithstanding any other provision of this part, no
credit shall be allowed under this section unless the California
Organized Investment Network, or its successor within the Department
of Insurance, certifies that the investment described in subdivision
(a) qualifies for the credit under this section and certifies the
total amount of the credit allocated to the taxpayer pursuant to this
section.
(2) No credit shall be allowed by this section unless the
applicant and the taxpayer provide satisfactory substantiation to,
and in the form and manner requested by, the Department of Insurance,
California Organized Investment Network, or any successor thereof,
that the investment is a qualified investment as defined in paragraph
(1) of subdivision (g). In addition, on or after January 1, 2007,
the aggregate certified investments shall meet all of the following:
(A) Each year, until October 1, the total qualified investments
certified in any calendar year from any one community development
financial institution together with its affiliates, as defined in
Section 1215 of the Insurance Code, does not exceed the lesser of
either ten million dollars ($10,000,000) or 40 percent of the annual
aggregate amount of qualified investments authorized in the first
sentence of paragraph (3), or until a date or an amount determined in
regulations promulgated by the Insurance Commissioner.
(B) Each year, until July 1, the annual aggregate amount of
qualified investments specified in the first sentence of paragraph
(3) that is reserved for investments by admitted insurers is 25
percent, or until a date or an amount determined in regulations
promulgated by the Insurance Commissioner.
(C) Each year, until July 1, the annual aggregate amount of
qualified investments authorized in the first sentence of paragraph
(3) that is reserved for individual investment amounts of less than
or equal to three hundred thousand dollars ($300,000) is three
million dollars ($3,000,000), or until a date or amounts determined
in regulations promulgated by the Insurance Commissioner.
(3) The aggregate amount of qualified investments made by all
taxpayers pursuant to this section, Section 17053.57, and Section
23657 shall not exceed ten million dollars ($10,000,000) for each
calendar year. However, if the aggregate amount of qualified
investments made in any calendar year is less than ten million
dollars ($10,000,000), the difference may be carried over to the next
year, and any succeeding year during which this section remains in
effect, and added to the aggregate amount authorized for those years.
(d) The community development financial institution shall do all
of the following:
(1) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, for certification of its status
as a community development financial institution.
(2) Apply to the Department of Insurance, California Organized
Investment Network, or its successor, on behalf of the taxpayer for
certification of the amount of the investment and the credit amount
allocated to the taxpayer, obtain the certification, and retain a
copy of the certification.
(3) Obtain the taxpayer's California company identification number
for tax administration purposes and provide this information to the
Department of Insurance, California Organized Investment Network, or
its successor, with the application required in paragraph (2).
(4) Provide an annual listing to the State Board of Equalization,
in the form and manner agreed upon by the State Board of Equalization
and the Department of Insurance, California Organized Investment
Network, or its successor, of the names and taxpayer's California
company identification numbers of any taxpayer who makes any
withdrawal or partial withdrawal of a qualified investment before the
expiration of 60 months from the date of the qualified investment.
(5) Submit reports to the department, COIN, or any successor
thereof, as required pursuant to subdivision (a) of Section 12939.1
of the Insurance Code.
(e) The Insurance Commissioner may develop instructions,
procedures, and standards for applications, and for administering the
criteria for the evaluation of applications under this section. The
Insurance Commissioner may, from time to time, issue regulations to
implement the provisions of this section.
(f) The Department of Insurance, California Organized Investment
Network, or any successor thereof, shall do all of the following:
(1) Accept and evaluate applications for certification from
financial institutions and issue certificates that the applicant is a
community development financial institution qualified to receive
qualified investments. To receive a certificate, an applicant shall
satisfy the Department of Insurance, California Organized Investment
Network, or any successor thereof, that it meets the specific
requirements to be a community development financial institution for
this state program as defined in paragraph (2) of subdivision (g).
The certificate may be issued for a specified period of time, and may
include reasonable conditions to effectuate the intent of this
section. The Insurance Commissioner may suspend or revoke a
certification, after affording the institution notice and the
opportunity to be heard, if the commissioner finds that an
institution no longer meets the requirement for certification.
(2) Accept and evaluate applications for certification from any
community development financial institution on behalf of the taxpayer
and issue certificates to taxpayers in an aggregate amount that
shall not exceed the limit specified in subdivision (c). The
certificate shall include the amount eligible to be made as an
investment that qualifies for the credit and the total amount of the
credit to which the taxpayer is entitled for the year. Applications
for tax credits shall be accepted and evaluated throughout the year.
Certificates shall be issued in the order that complete applications
are received. If the aggregate amount of tax credit applications
exceeds the amount of tax credits available, tax credits shall be
approved for qualifying investments on a first-come-first-served
basis as determined by the order in which complete applications are
received. All applications received on the same business day are
deemed to be received at the same time. If the aggregate amount of
tax credit applications received on a single business day exceeds the
amount of tax credits available, tax credits shall be approved for
qualifying investments received on that day on a pro rata basis.
(3) Provide an annual listing to the State Board of Equalization,
in the form or manner agreed upon by the State Board of Equalization
and the Department of Insurance, California Organized Investment
Network, or its successor, of the taxpayers who were issued
certificates, their respective National Association of Insurance
Commissioners company number and employer's tax identification
number, the amount of the qualified investment made by each taxpayer,
and the total amount of qualified investments.
(4) Include information specified pursuant to subdivision (b) of
Section 12939.1 of the Insurance Code in the report required by
Section 12922 of the Insurance Code.
(g) For purposes of this section:
(1) "Qualified investment" means an investment that is a deposit
or loan that does not earn interest, or an equity investment, or an
equitylike debt instrument that conforms to the specifications for
these instruments as prescribed by the United States Department of
the Treasury, Community Development Financial Institutions Fund, or
its successor, or, in the absence of that prescription, as defined by
the Insurance Commissioner. The investment must be equal to or
greater than fifty thousand dollars ($50,000) and made for a minimum
duration of 60 months. During that 60-month period, the community
development financial institution shall have full use and control of
the proceeds of the entire amount of the investment as well as any
earnings on the investment for its community development purposes.
The entire amount of the investment shall be received by the
community development financial institution before the application
for the tax credit is submitted. The community development financial
institution shall use the proceeds of the investment for a purpose
that is consistent with its community development mission and for the
benefit of economically disadvantaged communities and low-income
people in California.
(2) "Community development financial institution" means a private
financial institution located in this state that is certified by the
Department of Insurance, California Organized Investment Network, or
its successor, that, consistent with the findings, declarations, and
intent set forth in Section 12939 of the Insurance Code, has
community development as its primary mission, and that lends in
urban, rural, or reservation-based communities in this state. A
community development financial institution may include a community
development bank, a community development loan fund, a community
development credit union, a microenterprise fund, a community
development corporation-based lender, or a community development
venture fund.
(h) (1) If a qualified investment is withdrawn before the end of
the 60th month and not reinvested in another community development
financial institution within 60 days, there shall be added to the
"tax," as defined in Section 28 of Article XIII of the California
Constitution, for the year in which the withdrawal occurs, the entire
amount of any credit previously allowed under this section.
(2) If a qualified investment is reduced before the end of the
60th month, but not below fifty thousand dollars ($50,000), there
shall be added to the "tax," as defined in Section 28 of Article XIII
of the California Constitution, for the taxable year in which the
reduction occurs, an amount equal to 20 percent of the total
reduction for the year.
(i) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" for the
next four years, or until the credit has been exhausted, whichever
occurs first.
(j) The State Board of Equalization shall, as requested by the
Department of Insurance, California Organized Investment Network, or
its successor, advise and assist in the administration of this
section.
(k) This section shall remain in effect only until December 31,
2012, and as of that date is repealed.

12210. (a) A life insurer or life insurance agent shall inform his
or her client of the tax imposed under this part.
(b) A life insurer or life insurance agent who quotes only one
price that includes the gross premiums tax is exempt from compliance
with the requirements of subdivision (a).