BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                  AB 1530|
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                                 THIRD READING

          Bill No:  AB 1530
          Author:   Skinner (D)
          Amended:  6/30/10 in Senate
          Vote:     21

           SENATE REVENUE & TAXATION COMMITTEE  :  3-0, 6/23/10
          AYES:  Wolk, Alquist, Padilla
          NO VOTE RECORDED:  Walters, Ashburn

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  Not relevant

           SUBJECT  :    Franchise Tax Board:  administration of taxes

           SOURCE  :     Franchise Tax Board

           DIGEST  :    This bill allows the Franchise Tax Board to  
          collect restitution orders in the same way that it collects  
          tax liabilities.

           ANALYSIS  :    Existing law authorizes the Franchise Tax  
          Board (FTB) to administer the Personal Income Tax Law and  
          Corporation Tax Law.  FTB may refer cases for criminal  
          prosecution for certain offenses, and the court may require  
          the restitution, for the following crimes:

           Failure to file returns.
           Forging a spouse's signature.
           False, fraudulent, or deceptive conduct.


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           Tax evasion.
           Conversion of a taxpayer refund by a tax preparer.
           Employer's failure to collect or deposit tax.

          Existing law further authorizes FTB to file an action in  
          civil court for a civil judgment under the Code of a Civil  

          Existing law allows FTB to collect criminal restitution  
          fines under the Court Ordered Debt (COD) program, in  
          addition to fines, state or local penalties, forfeitures,  
          in amounts that exceed $100 in the aggregate and are more  
          than 90 days delinquent to FTB (AB 3343 [Hannigan], Chapter  
          1242, Statutes of 1994), and subsequently expanded and  
          extended (SB 246 [Escutia], Chapter 380, Statutes of 2004).  
           Restitution orders must be imposed by a governmental  
          entity that:

          1. Is authorized to collect on behalf of the state or  

          2. Is responsible for distributing the restitution order  

          3. Ensures that it coordinates with any other related  
             collection activities that may occur during that debt.

          Existing law allows FTB to collect these amounts using wage  
          garnishments, bank levies, and Notices of State Tax Liens  
          when an amount is due and payable, and the taxpayer has not  
          paid.  Garnishments and levies are treated like warrants  
          issued as part of the civil process.

          Existing law establishes a priority for payment of debts  
          when multiple debts are owed by the same taxpayer and are  
          collected by FTB.  In order:

          1. Child support delinquencies.

          2. Payment of taxes, additions to tax, penalties and  

          3. Delinquent wages.



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          4. Delinquent vehicle license fees

          5. Amounts due under the COD program

          6. Amounts referred for collection under the Cal-OSHA  
             targeted inspection program.

          7. Delinquent penalties collected for the Department of  
             Industrial Relations.

          8. Delinquent fees collected for the Department of  
             Industrial Relations.

          9. Delinquencies referred by the California Student Aid  

          This bill allows FTB to collect restitution orders, fines,  
          penalties, or any other amounts awarded to FTB by a court  
          of competent jurisdiction in criminal proceedings in the  
          same way that it collects tax liabilities, although the  
          inclusion of fines, penalties, or any other amounts awarded  
          to FTB by the courts was erroneously included in the draft,  
          and will be removed to conform with the author's intent.   
          This bill specifies that the provisions to the Personal  
          Income Tax Law, the Administration of the Franchise and  
          Income Tax Law, the Taxpayers' Bill of Rights, and the  
          Corporation Tax Law shall apply to amounts collected under  
          this bill, unless a conflict exists.

          This bill allows taxpayers to designate voluntary  
          restitution payments as the taxpayer designates, but no  
          refund or credit is allowed.  

          This bill provides that for all amounts authorized to be  
          collected before, on, or after January 1, 2011:

          1. Interest accrues for the above collections at the  
             greater rate of restitution orders (10 percent per year)  
             or tax penalties, which are computed according to a  
             statutory formula.  

          2. Collection amounts are not bound by statutes of  



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          3. FTB may file Notices of State Tax Lien at any time until  
             the amount is paid in full.  

          4. FTB may retain an amount to compensate for its  
             investigatory costs out of the restitution amount. 


          According to the author, "This bill would provide the FTB  
          express authority to collect orders of restitution awarded  
          to the department in criminal proceedings in the same  
          manner as tax debts.  Authorizing the FTB to use its  
          efficient electronic tax collection tools would improve the  
          process of collecting orders of restitution awarded to the  
          FTB and ensure prompt follow up on debts by allowing the  
          tax collection system to monitor accounts for assets that  
          could lead to satisfaction of the debt.  Orders of  
          restitution consist primarily of the taxes, penalties, and  
          interest owed to the FTB and should be collected as such."

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/4/10)

          Franchise Tax Board (source)

          DLW:mw  8/4/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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