Governor Davis signed Assembly Bill 110, by Assemblywoman Charlene Zettel, that prevents the Franchise Tax Board from penalizing a taxpayer for incorrectly claiming the teacher retention credit. According to Zettel, AB 110 is a fairness measure that is intended to address the concerns of numerous individuals throughout the state who misinterpreted their eligibility for the credit.
"The teacher retention tax credit, signed into law last year by Governor Davis, acknowledged how important educators are in the State of California," said Zettel. "Unfortunately, there has been a great deal of confusion regarding who is eligible for this tax credit. School educators across the state have received different interpretations of the tax code definition of `teacher.' As a result of this confusion, many individuals have filed in good faith for this tax credit."
Current state law authorizes a teacher retention tax credit for credentialed teachers who work in a public or private kindergarten through 12th grade schools. The amount of the credit varies from $250 up to $1,500 depending on the number of years of service.
AB 110 will provide immunity from the negligence penalty to those individuals who are found by the Franchise Tax Board to have mistakenly, but not fraudulently, claimed a teacher retention tax credit in the 2000 tax year. However, those individuals will be required to repay the full amount of the credit.
The Franchise Tax Board has now clarified the intent of the law. For more information on who is eligible for the teacher retention tax credit, visit www.ftb.ca.gov.