BILL NUMBER: AB 1260 CHAPTERED 07/16/04 CHAPTER 163 FILED WITH SECRETARY OF STATE JULY 16, 2004 APPROVED BY GOVERNOR JULY 15, 2004 PASSED THE SENATE JULY 1, 2004 PASSED THE ASSEMBLY JANUARY 26, 2004 AMENDED IN ASSEMBLY JANUARY 5, 2004 INTRODUCED BY Assembly Member Matthews FEBRUARY 21, 2003 An act to amend Sections 19720 and 19721 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 1260, Matthews. Personal income and business and corporation taxes: administration: violations: refunds. Existing law provides for the administration of income and corporation tax laws, and imposes various fines and penalties for violations of those laws. Under existing law an individual who procures or counsels another individual to procure a state-issued income tax refund warrant through the filing of a return knowing that the recipient is not entitled to the refund is, depending upon the circumstances, guilty of either a misdemeanor or a felony. This bill would extend these provisions to an individual who procures or counsels an individual to procure a state-issued income tax refund without regard to the form in which the refund is issued. By adding a new crime, this bill would create a state-mandated local program. 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. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 19720 of the Revenue and Taxation Code is amended to read: 19720. (a) Any person who does any of the following is liable for a penalty of not more than five thousand dollars ($5,000): (1) Utters, passes, or negotiates a state-issued income tax refund warrant generated as a result of the filing of a return knowing that the recipient is not entitled to the refund. (2) Procures a state-issued income tax refund, in any form, generated as a result of the filing of a return knowing that the recipient is not entitled to the refund. (3) Aids, abets, advises, encourages, or counsels any individual to utter, pass, or negotiate a state-issued income tax refund warrant, or to procure a state-issued income tax refund, in any form, generated as a result of the filing of a return, knowing that the recipient is not entitled to a refund. (b) The fact that an individual's name is endorsed to a state-issued refund warrant shall be prima facie evidence for all purposes that the refund warrant was actually signed by him or her. (c) The penalty shall be recovered in the name of the people in any court of competent jurisdiction. Counsel for the Franchise Tax Board may, upon request of the district attorney or other prosecuting attorney, assist the prosecuting attorney in presenting the law or facts to recover the penalty at the trial of a criminal proceeding for violation of this section. (d) The person is also guilty of a misdemeanor and upon conviction shall be punishable by a fine not to exceed ten thousand dollars ($10,000) or by imprisonment not to exceed one year, or both, at the discretion of the court, together with costs of investigation and prosecution. (e) Any individual guilty under this part shall be subject to Section 502.01 of the Penal Code. SEC. 2. Section 19721 of the Revenue and Taxation Code is amended to read: 19721. (a) Any person who, with intent to defraud, does any of the following is liable for a penalty of not more than ten thousand dollars ($10,000): (1) Willfully utters, passes, or negotiates a state-issued income tax refund warrant generated as a result of the filing of a return knowing that the recipient is not entitled to the refund. (2) Willfully procures a state-issued income tax refund, in any form, generated as a result of the filing of a return knowing that the recipient is not entitled to the refund. (3) Willfully aids, abets, advises, encourages, or counsels any individual to utter, pass, or negotiate a state-issued income tax refund warrant, or to procure a state-issued income tax refund, in any form, generated as a result of the filing of a return, knowing the recipient is not entitled to the refund. (b) The person is also punishable by imprisonment in a county jail not to exceed one year, or in the state prison, or by a fine not to exceed fifty thousand dollars ($50,000), or by both that fine and imprisonment, at the discretion of the court, together with the costs of investigation and prosecution. (c) The fact that an individual's name is endorsed to a state-issued refund warrant shall be prima facie evidence for all purposes that the refund warrant was actually signed by him or her. (d) The penalty shall be recovered in the name of the people in any court of competent jurisdiction. Counsel for the Franchise Tax Board may, upon request of the district attorney or other prosecuting attorney, assist the prosecuting attorney in presenting the law or facts to recover the penalty at the trial or a criminal proceeding for violation of this section. (e) Any individual guilty under this part shall be subject to Section 502.01 of the Penal Code. SEC. 3. 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.