BILL ANALYSIS Ó
AB 1307
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CONCURRENCE IN SENATE AMENDMENTS
AB 1307 (Skinner)
As Amended August 31, 2011
Majority vote
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|ASSEMBLY: | |(May 23, 2011) |SENATE: |22-16|(September 8, 2011) |
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|COMMITTEE VOTE: |5-3 |(September 8, 2011) |RECOMMENDATION: |Concur |
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Original Committee Reference: REV. & TAX.
SUMMARY : Contains various provisions designed to increase the State
Board of Equalization's (BOE's) ability to collect outstanding tax
and fee liabilities.
The Senate amendments :
1)Authorize the Registrar of Contractors to suspend (or refuse to
issue, reinstate, or renew) a license if the licensee has failed
to resolve all outstanding final liabilities, including taxes,
penalties, interest, and fees, assessed by the BOE. This
authorization shall not apply, however, if the licensee has
entered into an installment payment agreement with the BOE and is
in compliance with the agreement's terms.
2)Provide that information on newly hired employees collected by the
Employment Development Department (EDD) may be provided to the BOE
for tax and fee enforcement purposes.
3)Require the BOE to consider offers in compromise when determining
whether to issue a seller's permit.
EXISTING LAW :
1)Authorizes the Registrar of Contractors to suspend (or refuse to
issue, reinstate, or renew) a license if the licensee has failed
to resolve all outstanding final liabilities, including taxes,
penalties, interest, and fees, assessed by the Contractors' State
AB 1307
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License Board, the Department of Industrial Relations, the EDD, or
the Franchise Tax Board (FTB).
2)Requires any person desiring to engage in business as a seller in
California to apply for a seller's permit with the BOE.
3)Provides that information collected by the EDD pursuant to
Unemployment Insurance Code Section 1088.5 may be provided to the
FTB for tax enforcement purposes.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized the BOE to refuse to issue a seller's permit to any
applicant with an outstanding final liability with the BOE for any
amount due under the Sales and Use Tax (SUT) Law.
2)Authorized the BOE to refuse to issue a seller's permit to a
business entity applicant controlled by any person with an
outstanding final liability with the BOE, as specified.
3)Provided that a liability will not be deemed "outstanding" if the
person has entered into an installment payment agreement and is in
full compliance with the agreement's terms.
4)Required the BOE to give applicants written notice of any permit
denial.
5)Allowed denied applicants to submit a written request for
reconsideration of the BOE's decision.
FISCAL EFFECT : The following represents BOE's estimate of revenues
associated with each of this bill's provisions:
1)Denial or Suspension of a Contractor's License: Would increase
the BOE's ability to collect $51 million in outstanding state and
local SUT liabilities owed by construction contractors.
2)Refusal of Seller's Permits: Would result in minor increases in
the collection of state and local SUT liabilities due to taxpayers
entering into installment payment agreements.
3)New Employee Registry Data: Would result in a $500,000 increase
in collections of outstanding liabilities, primarily in the SUT
program.
COMMENTS : The author has provided the following statement in
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support of this bill:
California's tax system is in large part one based on the
Ýprinciple] of voluntary compliance, and most taxpayers
are honest and generally comply with the tax laws.
The ÝBOE] is charged with administering and collecting the
state and local sales and use taxes and other special
taxes and fees.
In recent years, however, BOE's number of overdue accounts
receivable, as well as the overall balance, has grown
dramatically with respect to the taxes and fees the BOE
administers. Within the last three-year period, the BOE's
accounts receivable balances for unpaid final liabilities
have nearly doubled. ÝAs] of the end of 2010, these
outstanding liabilities totaled over $1.5 billion. The
BOE requires a few statutory changes to assist them in
properly and effectively collecting the taxes and fees
already due to the State.
The BOE, which is sponsoring this bill, notes the following in its
staff analysis:
This bill would provide additional tools that would assist the
BOE in reducing its growing outstanding accounts receivable
balances from taxpayers' failure to remit the taxes that are
owed, and would assist in reducing the unfair competitive
advantage these tax debtors have over law-abiding taxpayers.
Committee staff notes that, as heard in the Assembly Revenue and
Taxation Committee, this bill contained only the provisions
authorizing the BOE to refuse to issue a seller's permit to
applicants with an outstanding final liability with the BOE.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098 FN:
0002871