BILL NUMBER: AB 1925 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 7, 2008
AMENDED IN ASSEMBLY MARCH 24, 2008
INTRODUCED BY Assembly Member Eng
FEBRUARY 12, 2008
An act to amend Sections 31 and 7145.5 of the Business and
Professions Code, and to add Sections 19265 and 19571 to the Revenue
and Taxation Code, relating to taxes.
LEGISLATIVE COUNSEL'S DIGEST
AB 1925, as amended, Eng. Franchise Tax Board: business
and professional or occupational licenses.
The Personal Income Tax Law and the Bank and Corporation Tax Law
impose taxes on, or measured by, income. Existing law allows a tax
return or return information filed under those laws to be disclosed
in a judicial or administrative proceeding pertaining to tax
administration under certain circumstances. Existing law requires
every board, as defined under the Business and Professions Code, and
the Department of Insurance to, upon request of the Franchise Tax
Board, furnish to the Franchise Tax Board certain information with
respect to every licensee.
This bill would require a state governmental licensing entity, as
defined, issuing professional or occupational licenses, certificates,
registrations, or permits to provide to the Franchise Tax Board the
name and social security number or federal taxpayer identification
number of each individual licensee of that entity. The bill
would require the Franchise Tax Board, if a
an individual licensee fails to pay taxes for which a notice of
state tax lien has been recorded, to send a notice of suspension to
the applicable state governmental licensing entity and to the
licensee. The bill would require the Franchise Tax Board to meet
certain requirements with regard to such a suspension, and would make
related changes. The bill would make implementation of its
provisions contingent upon appropriation of funds for that purpose in
the annual Budget Act.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 31 of the Business and Professions Code is
amended to read:
31. (a) As used in this section, "board" means any entity listed
in Section 101, the entities referred to in Sections 1000 and 3600,
the State Bar, the Department of Real Estate, and any other state
agency that issues a license, certificate, or registration
authorizing a person to engage in a business or profession.
(b) Each applicant for the issuance or renewal of a license,
certificate, registration, or other means to engage in a business or
profession regulated by a board who is not in compliance with a
judgment or order for support shall be subject to Section 17520 of
the Family Code.
(c) "Compliance with a judgment or order for support," has the
meaning given in paragraph (4) of subdivision (a) of Section 17520 of
the Family Code.
(d) Each licensee who has not paid any applicable state income
tax, including interest, penalties, and other fees, shall be subject
to Section 19265 of the Revenue and Taxation Code.
SEC. 2. Section 7145.5 of the Business and Professions Code is
amended to read:
7145.5. (a) The registrar may refuse to issue, reinstate,
reactivate, or renew a license or may suspend a license for the
failure of a licensee to resolve all outstanding final liabilities,
which include taxes, additions to tax, penalties, interest, and any
fees that may be assessed by the board, the Department of Industrial
Relations, the Employment Development Department, or the Franchise
Tax Board.
(1) Until the debts covered by this section are satisfied, the
qualifying person and any other personnel of record named on a
license that has been suspended under this section shall be
prohibited from serving in any capacity that is subject to licensure
under this chapter, but shall be permitted to act in the capacity of
a nonsupervising bona fide employee.
(2) The license of any other renewable licensed entity with any of
the same personnel of record that have been assessed an outstanding
liability covered by this section shall be suspended until the debt
has been satisfied or until the same personnel of record disassociate
themselves from the renewable licensed entity.
(b) The refusal to issue a license or the suspension of a license
as provided by this section shall be applicable only if the registrar
has mailed a notice preliminary to the refusal or suspension that
indicates that the license will be refused or suspended by a date
certain. This preliminary notice shall be mailed to the licensee at
least 60 days before the date certain.
(c) (1) In the case of outstanding final liabilities assessed by
the Franchise Tax Board, this section shall be operative within 60
days after the Contractors' State License Board has provided the
Franchise Tax Board with the information required under Section 30,
relating to licensing information that includes the federal employee
identification number or social security number.
(2) All versions of the application for contractors' licenses
shall include, as part of the application, an authorization by the
applicant, in the form and manner mutually agreeable to the Franchise
Tax Board and the board, for the Franchise Tax Board to disclose the
tax information that is required for the registrar to administer
this section. The Franchise Tax Board may from time to time audit
these authorizations.
(d) This section shall not be interpreted to conflict with the
suspension of a license by the Franchise Tax Board pursuant to
Section 19265 of the Revenue and Taxation Code.
SEC. 3. Section 19265 is added to the Revenue and Taxation Code,
to read:
19265. (a) (1) All state governmental licensing entities issuing
professional or occupational licenses, certificates, registrations,
or permits shall provide to the Franchise Tax Board the name and
social security number or federal taxpayer identification number, as
applicable, of each licensee of that state governmental licensing
entity. If any licensee has failed to pay taxes, including any
penalties, interest, and any applicable fees, imposed under Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part, for which a notice of state tax lien has been
recorded in any county recorder's office in this state, pursuant to
Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of
the Government Code, the Franchise Tax Board shall mail a notice of
suspension to the applicable state governmental licensing entity and
to the licensee. The rights, powers, and privileges of any licensee
whose professional or occupational license, certificate,
registration, or permit has been suspended pursuant to this section
shall be subject to the same prohibitions, limitations, and
restrictions as if the professional or occupational license,
certificate, registration, or permit were suspended by the state
governmental licensing entity that issued the professional or
occupational license, certificate, registration, or permit. The
suspension authorized by this section shall be applicable only if the
Franchise Tax Board has mailed a preliminary notice of the
suspension that indicates that the license will be suspended by a
date certain. This preliminary notice shall be mailed to the licensee
at least 60 days before that date certain.
(2) The Franchise Tax Board shall, within 10 business days of
compliance by the licensee with the tax obligation, notify both the
state governmental licensing entity and the licensee that the unpaid
taxes have been paid or that an installment payment agreement, as
described in Section 19008, has been entered into to satisfy the
unpaid taxes.
(3) State governmental licensing entities shall provide to the
Franchise Tax Board the information required by this subdivision at a
time that the Franchise Tax Board may require.
(b) (1) The Franchise Tax Board may defer or cancel any suspension
authorized by this section if a licensee would experience
substantial financial hardship. The Franchise Tax Board shall, if
requested by the licensee in writing, provide for an administrative
hearing to determine if the licensee will experience substantial
financial hardship from the suspension of the license, certificate,
registration, or permit.
(2) The request for a hearing specified in paragraph (1) shall be
made in writing within 30 days from the mailing date of the
preliminary notice described in subdivision (a).
(3) The Franchise Tax Board shall conduct a hearing within 30 days
after receipt of a request pursuant to paragraph (1).
(4) A licensee seeking relief under this subdivision shall only be
entitled to relief described in paragraph (1) if the licensee
provides the Franchise Tax Board with financial documents that
substantiate a substantial financial hardship, and agrees to an
acceptable payment arrangement.
(c) For purposes of this section and Section 19571, the following
definitions shall apply:
(1) "Hardship" means financial hardship, as determined by the
Franchise Tax Board, where the licensee is financially unable to pay
any part of the amount described in subdivision (a) and is unable to
qualify for an installment payment arrangement as provided for by
Section 19008. In order to establish the existence of a financial
hardship, the licensee shall submit any information requested by the
Franchise Tax Board for the purpose of making that determination.
(2) "License" includes a certificate, registration, or any other
authorization to engage in a profession or occupation issued by a
state governmental licensing entity.
(3) "Licensee" means any entity an
individual authorized by a license, certificate, registration,
or other authorization to engage in a profession or occupation issued
by a state governmental licensing entity.
(4) "State governmental licensing entity" means any entity listed
in Section 101, 1000, or 19420 of the Business and Professions Code,
the office of the Attorney General, the Department of Insurance, the
State Bar of California, the Department of Real Estate, and any other
state agency, board, or commission that issues a license,
certificate, or registration authorizing a person
an individual to engage in a profession or occupation.
"State governmental licensing entity" shall not include the
Department of Motor Vehicles.
(d) Implementation of this section shall be contingent on the
appropriation of funds for the purposes of this section in the annual
Budget Act.
(e) (1) For an assessment for which a notice of state tax lien has
been recorded in a county recorder's office in this state, pursuant
to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1
of the Government Code, prior to January 1, 2009, the Franchise Tax
Board shall mail a notice to any licensee who would be affected by
this section.
(2) The notice referred to in paragraph (1) shall advise a
licensee that he or she may request in writing, within 30 days of the
date of the notice, a hearing with respect to the possible
suspension of the license. The grounds for this hearing shall be
limited to whether the licensee has failed to pay the taxes,
including penalties, interest, and applicable fees, reflected in the
notice of state tax lien. The hearing may not review the validity of
the underlying tax liability, which has previously been made under
Section 19044, or financial hardship, which is provided for under
subdivision (b).
(3) If a hearing is requested by a licensee in accordance with
paragraph (2), the Franchise Tax Board shall provide for the hearing
within 30 days of receipt of the request.
(4) The Franchise Tax Board shall not suspend any license as
authorized by this subdivision if a licensee can substantiate that
the taxes, including penalties, interest, and applicable fees,
reflected in the notice of state tax lien, have been paid.
(5) If a licensee fails to request a hearing under this
subdivision or fails to substantiate at that hearing that the taxes,
including penalties, interest, and applicable fees, have been paid,
then the licensee shall be subject to suspension in accordance with
this section.
(6) Chapter 4.5 (commencing with Section 11400) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to a
hearing authorized by this subdivision.
(f) If this section or any portion of this section is held
invalid, or the application of this section to any person or
circumstance is held invalid, that invalidity shall not affect other
provisions of law or applications that can be given effect without
the invalid provision or application.
SEC. 4. Section 19571 is added to the Revenue and Taxation Code,
to read:
19571. (a) The Franchise Tax Board may disclose to state
governmental licensing entities information regarding suspension of
licensees pursuant to Section 19265.
(b) Neither the state governmental licensing entity, nor any
officer, employee, or agent, or former officer, employee, or agent of
a state governmental licensing entity, may disclose or use any
information obtained from the Franchise Tax Board, pursuant to this
section, except to inform the public of the suspension of a license
pursuant to Section 19265.
(c) For purposes of this section, the definitions in Section 19265
shall apply.
SEC. 5. The Legislature hereby finds and declares the following:
(a) It is the understanding and intent of the Legislature that,
consistent with the decision in Crum v. Vincent (8th Cir. 2007) 493
F.3d 988, the suspension of a professional or occupational license
for failure to file returns or pay delinquent taxes satisfies the due
process requirements of the California and federal constitutions if
a taxpayer is provided an opportunity for a hearing to challenge a
proposed tax assessment prior to it becoming final and collectable.
Because California law provides an opportunity for a hearing prior to
a proposed assessment becoming final, due process is satisfied
without an additional hearing prior to the suspension of a
professional or occupational license of a delinquent taxpayer.
(b) To prevent financial hardship, Section 19265 of the Revenue
and Taxation Code, as added by this act, grants a delinquent taxpayer
the opportunity for an additional hearing for financial hardship
prior to the suspension of a professional or occupational license. An
opportunity for a limited hearing is also provided to a delinquent
taxpayer if a suspension would be based on an assessment for which a
notice of a state tax lien was recorded prior to the effective date
of this act.