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Business Taxes Law Guide—Revision 2024

Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 7. Overpayments and Refunds

Article 1. Claim for Refund

Section 6902.7


6902.7. Small business hiring credit I. (a) For purposes of this section:

(1) "Qualified small business employer" means a person that is a qualified small business employer within the meaning of paragraph (3) of subdivision (b) of Section 17053.72 or paragraph (3) of subdivision (b) of Section 23627.

(2) "Credit amount" means an amount equal to the credit amount that would otherwise be allowed to a qualified small business employer pursuant to Section 17053.72 or 23627, but for the irrevocable election made pursuant to Section 6902.8.

(3) "Qualified sales or use taxes" means any sales and use taxes imposed by Part 1 (commencing with Section 6001) and Section 35 of Article XIII of the California Constitution, local sales and use taxes imposed in accordance with the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)), and local transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)).

(b) The department shall allow a qualified small business employer that received a tentative credit reservation pursuant to Section 6902.8 and that made an irrevocable election pursuant to Section 6902.8 to apply the small business hiring credit amount against qualified sales and use taxes imposed on the qualified small business employer, as follows:

(1) For monthly filers, the credit shall apply to amounts due and payable for the month commencing on March 1, 2021, ending on March 31, 2021, and due April 30, 2021.

(2) For quarterly filers, the credit shall apply to amounts due and payable for the quarter commencing on January 1, 2021, ending on March 31, 2021, and due April 30, 2021.

(3) For annual filers, fiscal year filers, or a qualified small business owner on any other reporting basis, the credit shall apply to amounts due and payable on the first return due on or after April 30, 2021.

(c) Any excess credit shall be carried over and shall not be refunded, as follows:

(1) In the case where the credit amount exceeds the sales and use taxes due and payable as described in subdivision (b), the department shall apply the excess credit against amounts due and payable for periods following those described in subdivision (b) on returns due and filed on or before April 30, 2026.

(2) Any remaining excess credit amount after April 30, 2026, shall not be refunded and shall be forfeited.

(d) No interest shall be paid on any amount credited pursuant to subdivisions (b) or (c).

(e) Section 6961 shall apply to any credit, or part thereof, that is erroneously allowed pursuant to this section.

(f) Notwithstanding Section 7056, the department shall provide information to the Franchise Tax Board, in a form and manner agreed upon by the department and the Franchise Tax Board, regarding the qualified small business employers that have been assigned a credit allowed under Sections 17053.72 and 23627, and have made an irrevocable election pursuant to Section 6902.8, and the credit amount claimed by each qualified small business employer.

(g) The department may prescribe, adopt, and enforce any emergency regulations as necessary to implement, administer, and enforce its duties under this section. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare. Notwithstanding any other law, the emergency regulations adopted by the department may remain in effect for two years from adoption.

(h) The Small Business Hiring Credit Fund is hereby created in the State Treasury for the sole purpose of applying the small business hiring credits allowed by this section and Section 6902.9. Any unused money remaining in the fund shall be transferred to the General Fund by June 1, 2027.

History—Added by Stats. 2020, Ch. 41 (SB 1447), in effect September 9, 2020, operative January 1, 2020. Amended by Stats. 2021, Ch. 82 (AB 105, in effect July 16, 2021, added "and Section 6902.9" after "allowed by this section" in the first sentence of subdivision (h); substituted "2027" for "2026" after "June 1," in subdivision (h).