BILL ANALYSIS
AB 2538
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2538 (Niello)
As Amended June 30, 2010
Majority vote
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|ASSEMBLY: |63-0 |(May 28, 2010) |SENATE: |34-0 |(August 9, |
| | | | | |2010) |
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Original Committee Reference: INS.
SUMMARY : Allows the Employment Development Department (EDD) to
serve a notice of levy by electronic means and by first-class
mail in the event of delinquent payroll taxes, and provides EDD
with the authority to seek prosecution of violations of the
unemployment insurance laws in the county where the alleged
offense occurred.
The Senate amendments delete the provision of the bill that
would have removed the requirement that disability insurance
(DI) benefits be paid by check.
EXISTING LAW :
1)Authorizes the Director of EDD to collect delinquent tax
contributions or penalties from a person or an employing unit
no later than three years after these taxes or penalties
become delinquent by levy served personally or by certified
mail to any person who has possession of any personal property
belonging to the delinquent person or employing unit.
2)Specifies that if the levy is made on a deposit or personal
property in the possession or control of a bank or savings and
loan association, the notice of levy shall be delivered or
mailed to the branch or office of the bank or savings and loan
association at which the deposit or personal property is held.
3)Specifies that the place of trial for violations of the laws
governing the Unemployment Insurance (UI) Program and the DI
Program shall be the county of residence or principal place of
business of the defendant.
4)References obsolete provisions in two sections of law that
formerly established eligibility and benefit levels in the DI
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Program when a person completed a vocational rehabilitation
plan, received a maintenance allowance, or received permanent
disability indemnity under the workers' compensation system.
5)Requires the Director of EDD to deposit moneys from the
Disability Fund into a bank or public depository in order to
pay DI benefits by checks drawn on a disability benefit
payment account.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized the Director of EDD to collect delinquent tax
contributions or penalties from a person or an employing unit
no later than three years after these taxes or penalties
become delinquent by levy served personally or by first-class
mail to any person who has possession of any personal property
belonging to the delinquent person or employing unit.
2)Specified that if the levy is made on a deposit or personal
property in the possession or control of a bank or savings and
loan association, the notice of levy shall be delivered or
mailed to the centralized processing unit or location
designated by that bank or savings and loan association where
the credits or other property are held.
3)Authorized EDD to serve notice to an "address" for any bank or
savings and loan by means of magnetic media, electronic
transmission, or other electronic technology. "Address" is
defined as a telephone or modem number, facsimile machine, or
any other reference number designated by the bank or savings
and loan to receive data by electronic means.
4)Specified that the place of trial for violations of the laws
governing the Unemployment Insurance (UI) Program and the DI
Program shall be the county of residence or principal place of
business of the defendant, or in any county where the
defendant was transacting business that resulted in the
alleged violations.
5)Repealed obsolete references in two sections of law
(Unemployment Insurance Code Sections 2626 and 2629) that
formerly determined eligibility for, and the amount of, DI
benefits in connection with people who were covered under the
workers' compensation program.
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6)Repealed the requirement that the Director of EDD pay DI
benefits by checks drawn on a disability benefit payment
account.
FISCAL EFFECT : Savings of less than $100,000 (federal) to
convert from certified mail to first class mail for delinquency
notices.
COMMENTS :
1)The purposes of this bill are to:
a) Allow EDD to serve a notice of levy either by electronic
means and/or by first-class mail;
b) Provide EDD with the authority to prosecute criminal
violations in the county where the alleged offense
occurred; and,
c) Delete obsolete references to sections of law that have
been repealed.
2)According to the author and the sponsor of the bill, EDD, the
current process of serving the Notice of Levy (NOL) personally
or by certified mail is time consuming and expensive.
Certified mail costs $3.24 per NOL compared with 44 cents for
first-class mail, or minimal cost if sent electronically.
Current law only allows for the prosecution of violations of the
California Unemployment Insurance Code to take place in the
county where the defendant resides or conducts business.
According to EDD, in 2007 and 2008 prosecutors cited
limitations in current law as the cause for rejecting several
EDD criminal investigative cases. The suspects in these cases
were owners of construction and other businesses who were
suspected of payroll tax fraud. However, their actions took
place in counties other than the place of their business.
The Unemployment Insurance Code contains outdated references to
sections of the Labor Code that formerly determined
eligibility for, and the amount of, DI benefits to claimants
that had been eligible for benefits under the workers'
compensation system.
3)According to the author and the sponsor, this bill proposes to
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align the NOL with other state tax agencies such as the
Franchise Tax Board and the Board of Equalization which are
authorized to send NOLs to financial institutions by
first-class mail, or electronic transmission, instead of
certified mail. This bill would enhance EDD's ability to
increase collections and decrease costs. Each year, EDD
collects more than $42 billion in payroll taxes, including
nearly $35 billion in personal income taxes.
Amending current law to allow for greater flexibility in the
location for prosecuting cases would enhance EDD's ability to
help law enforcement agencies prosecute cases and recover tax
payments due the state. This bill would assist local district
attorneys as cases could be prosecuted in locations where the
crime occurred.
4)AB 2188 (Bradford and Niello) of this legislative session
proposes to remove the requirement to pay state DI benefits by
check and, thus, allow the electronic payment of these
benefits. AB 2188 contains an urgency clause.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0005654