BILL ANALYSIS Ó
AB 1424
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1424 (Perea)
As Amended September 2, 2011
Majority vote
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|ASSEMBLY: | |(May 26, 2011) |SENATE: |21-15|(September 7, |
| | | | | |2011) |
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(vote not relevant)
Original Committee Reference: REV. & TAX.
SUMMARY : Requires a state governmental licensing entity (SGLE)
to suspend a state occupational, professional, or driver's
license of a tax debtor whose name appears on either the
Franchise Tax Board (FTB) or the State Board of Equalization
(BOE) list of the largest tax delinquencies on or after July 1,
2012, as specified.
The Senate amendments delete the Assembly version of this bill
and instead:
1)Increase the BOE and FTB public lists of the top 250 tax
delinquencies, in excess of $100,000, to 500 tax delinquencies
and require FTB to update its list at least twice in each
calendar year.
2)Require FTB to include additional information on its list of
the top 500 tax delinquencies, with respect to each
delinquency, including the type, status, and license number of
any professional or occupational license held by each person
liable for payment of the tax and the names and titles of the
principal officers of a limited liability company or
corporation liable for payment of the tax.
3)Authorize a SGLE, as defined, to suspend or refuse to issue or
renew a license to the licensee whose name is included on
either the FTB or BOE list of the 500 largest tax
delinquencies. Require a SGLE to collect the social security
number or federal taxpayer identification number of each
applicant for the purpose of matching those applicants to the
names on the lists of the 500 largest tax delinquencies.
4)Authorize the BOE and FTB to disclose to SGLEs the names,
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social security numbers or taxpayer identification numbers,
and the last known address of the persons identified on the
lists of the top 500 tax delinquencies.
5)Prescribe notice requirements, timeframes for compliance, and
a process for challenging the submission of a name on the FTB
and BOE lists.
6)Require BOE and FTB to create release forms that provide for
the removal of a person from the top 500 tax delinquency lists
upon payment of unpaid taxes or entry into an installment
agreement, or in cases of financial hardship.
7)Prohibit any state agency from entering into a contract for
goods and services with a tax debtor on the 500 largest
delinquencies lists, provided that the contract is executed on
or after July 1, 2012.
8)Allow the FTB and BOE to contract with the Internal Revenue
Service (IRS) or other states to collect delinquent tax debts
owed to the FTB or BOE. Authorize the FTB and BOE to offset
tax refunds for delinquent tax debts owed to the IRS or other
states, but only upon a reciprocal agreement in which the IRS
or other state's tax refunds are offset for delinquent tax
debts owed to California.
FISCAL EFFECT : The FTB staff estimates that this bill will
result in an annual gain of $19 million in the 2011-12 fiscal
year (FY), $24 million in FY 2012-13, $26 million in FY 2013-14,
$29 million in FY 2014-15, and $31 million in FY 2015-16. The
BOE staff estimates that this bill will generate an additional
$1.1 million in annual state and local sales and use tax (SUT)
collection, of which $528,000 will be attributable to the
General Fund.
AS PASSED BY THE ASSEMBLY, this bill:
1)Amended the Civil Code to allow the 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 was reacquired
by the manufacturer pursuant to California's "Lemon Law."
2)Amended the SUT Law to remove the requirement that retailers
and lenders file an election form with the BOE prior to
claiming a bad debt in the case of accounts held by a lender
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that have been found worthless and written off by the lender.
3)Amended the SUT Law to make a technical clarification to the
repair, retrofit, and modification exception related to the
12-month rebuttable presumption for vessels purchased outside
this state.
4)Amended the SUT Law to allow 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 the BOE.
5)Provided the BOE and the State Controller's Office with
express authority to collect orders of restitution awarded to
the BOE in criminal proceedings in the same manner as tax
liabilities.
EXISTING LAW:
1)Requires the BOE and FTB, respectively, to compile and make
available as public record a list that identifies the top 250
tax delinquencies in excess of $100,000. Prior to disclosing
a tax delinquency to the public, requires FTB and BOE to
provide a preliminary written notice by certified mail, return
receipt requested, to the person or persons liable for the
tax. Specifies that the tax debt must have been recorded as a
notice of state tax lien in any county recorder's office in
California and that a delinquency that is being litigated or
in bankruptcy may not be made public. Furthermore, it may not
be made public if the taxpayer is complying with an
installment payment agreement.
2)Provides that, if a taxpayer has delinquent tax amounts, a tax
lien automatically arises by operation of law for that amount,
known as a statutory tax lien. A statutory tax lien is a
claim upon real and personal property for the satisfaction of
a tax debt. A statutory tax lien arises automatically when
the debt becomes final and exists for 10 years, unless the
liability becomes satisfied or, if the debt remains unpaid, a
notice of state tax lien is recorded. The recording of the
notice provides notice to the world of the debt against all
real and personal property belonging to the taxpayer and
located in the California county where recorded.
3)Authorizes FTB to use several collection tools to collect
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delinquent tax liabilities, including an Order to Withhold
that is issued to third parties in possession of funds or
properties of the debtor, a warrant to seize property, which
is enforced by a marshal and an Earnings Withholding Order for
Taxes, which is continuing wage garnishment.
4)Authorizes the registrar of the Contractor's State License
Board (CSLB) to suspend an existing license or to refuse the
issuance, reinstatement, reactivation, or renewal of a
contractor's license if a licensee fails to resolve all
outstanding final liabilities, including taxes and fees
assessed by the CSLB, FTB, the Department of Industrial
Relations, or the Employment Development Department, and
permits the disclosure of certain information from the
licensing agency to FTB.
5)Authorizes professional license denial and suspension for
failure to pay court-ordered child support debts.
6)Authorizes the Department of Alcoholic Beverage Control and
the Department of Motor Vehicle, respectively, to suspend a
taxpayer's alcoholic beverage license or to cancel a dealer or
lessor-retail license under certain specified circumstances
for non-payment of BOE-related taxes.
7)Permits the disclosure of certain information on all licensees
from a SGLE to FTB.
8)Authorizes many SGLEs to impose fees on their licensees to
cover administrative costs.
9)Prohibits state departments and agencies from contracting with
a vendor, contractor, or their affiliates that does not
possess a seller's permit or a certificate of registration for
use tax. Exempts a state department or state agency from this
prohibition if the department or agency makes a written
finding that the contract is necessary to meet a compelling
state interest, as specified.
COMMENTS : This bill was substantially amended in the Senate
and the Assembly-approved version of this bill was deleted.
This bill, as amended in the Senate, is inconsistent with
Assembly actions and the provisions of this bill, as amended in
the Senate, have not been heard in an Assembly policy committee.
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Analysis Prepared by : Oksana G. Jaffe / REV. & TAX. / (916)
319-2098
FN: 0002749