BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1307
                                                                  Page  1

          Date of Hearing:   May 11, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                AB 1307 (Skinner) - As Introduced:  February 18, 2011 

          Policy Committee:                              Revenue and 
          Taxation     Vote:                            6-3

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill allows the State Board of Equalization (BOE) to refuse 
          to issue a seller's permit to any person with an outstanding 
          final liability with BOE for any amount due under the Sales and 
          Use Tax Law.  Specifically, this bill:  

          1)Provides that a liability will not be deemed outstanding if 
            the person has entered into an installment payment agreement, 
            unless the person fails to comply with the installment 
            agreement.

          2)Specifies that the BOE shall provide written notice to any 
            person denied a seller's permit and that notice shall be 
            served personally, by mail or by other means deemed 
            appropriate by BOE, and provides that any person denied a 
            seller's permit may request in writing a reconsideration of 
            BOE's denial within 30 days.  

          3)Provides that a request for reconsideration timely filed will 
            afford the person a hearing conducted in a manner specified by 
            law.

           FISCAL EFFECT  

          The BOE estimates minor additional revenues from taxpayers 
          entering into installment payment agreements.

          COMMENTS  

              1)   Purpose.   According to the author, AB 1307 is meant to 
               help collect delinquent taxes and fees owed to the State.  








                                                                  AB 1307
                                                                  Page  2

               BOE is charged with administering a variety of taxes and 
               fees and has many collection tools to facilitate the BOE's 
               responsibilities under the law.  However, despite the tools 
               available to the BOE, some taxpayers simply refuse to remit 
               their tax and fee obligations due the state.  The BOE's 
               growing accounts receivable balance is $1.5 billion-an 
               amount that has nearly doubled over the past three years.  
               AB 1307 provides the BOE with additional tools to reduce 
               this balance and collect the taxes and fees that support 
               vital services in California.

              2)   Background  .  California's sales and use tax system is 
               one based on the principal of voluntary compliance. Most 
               retailers are honest and generally comply with the tax 
               laws. However, the BOE's number of overdue accounts 
               receivable, as well as the overall balance, continues to 
               increase, further complicating the state's budget woes.  
               Within the last three-year period, the BOE's accounts 
               receivable balances for unpaid final liabilities 
               (liabilities that are due and not under appeal) have nearly 
               doubled.  As of the end of 2010, these outstanding 
               liabilities totaled over $1.5 billion.  Recent economic 
               turmoil is one factor contributing to this increase.  
               However, according to BOE, other reasons include the fact 
               that some businesses purposefully fail to remit the tax, 
               such as when a taxpayer diverts the sales tax reimbursement 
               collected from a customer for his or her own purposes 
               instead of remitting the tax to the state.  
           

          Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081