BILL ANALYSIS Ó
AB 1424
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1424 (Committee on Revenue and Taxation) - As Amended: May
4, 2011
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill implements various technical, non-controversial tax
proposals sponsored by the State Board of Equalization (BOE).
Specifically, this bill:
1)Allows BOE to reimburse a manufacturer of a new motor vehicle
for the use tax refunded to a buyer or lessee when the new
motor vehicle is reacquired by the manufacturer pursuant to
California's "Lemon Law."
2)Removes the requirement that retailers and lenders file an
election form with BOE prior to claiming a bad debt in the
case of accounts held by a lender that have been found
worthless and written off by the lender.
3)Makes a technical clarification to the repair, retrofit and
modification exception related to the 12-month rebuttable
presumption for vessels purchased outside this state.
4)Allows a taxpayer to file a claim for reimbursement of bank
charges and third party check charges incurred by the taxpayer
as a result of an erroneous processing action or collection
action by BOE.
5)Provides BOE and the State Controller's Office (SCO) with
express authority to collect orders of restitution awarded to
BOE in criminal proceedings in the same manner as tax
liabilities.
FISCAL EFFECT
AB 1424
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BOE estimates that, with the exception of the order of
restitution provisions, this measure would have a negligible
impact on state and local revenues. For the orders of
restitution, BOE estimates that it will incur one-time costs of
$106,000, but will collect $1,136,435 per year in additional
restitution.
COMMENTS
1)Purpose . This bill is sponsored by BOE and the rationale for
each element is as follows::
a) Lemon Law: Use Tax Reimbursement: These provisions
change California's Lemon Law in light of applicable case
law.
b) Bad Debt Election Form Requirement Repeal : BOE state
that they have been administering these provisions for
approximately 10 years, and these signed election forms
have not been of any assistance in verifying the validity
of the claims for bad debt losses, nor provided any
valuable benefit to the BOE's audit program.
c) Vessels Purchased Outside this State : These provisions
eliminates situations where a purchaser is inadvertently
subject to use tax when the purchaser brings a vessel
bought outside the state back into California within the
first 12 months of ownership and uses a repair facility.
d) Claim for Bank Charge Reimbursement : Occasionally, an
erroneous BOE action has resulted in the imposition of bank
or third party check charges and this would allow BOE to
reimburse taxpayers for bank and third party check charges
when those charges are directly attributable to a BOE
error, and not because of any fault of the taxpayer.
e) Orders of Restitution : BOE states that this would
streamline and accelerate the BOE's collection process on
orders of restitution and utilize the efficient collection
tools available to both the BOE and SCO for tax
administration.
2. There is no registered opposition to this bill.
AB 1424
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Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081