BILL ANALYSIS Ó
AB 2686
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2686 (Committee on Revenue and Taxation) - As Introduced:
March 12, 2012
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill re-enacts authorization for the Taxpayers' Rights
Advocate to grant taxpayers relief from penalties, fees,
additions to tax and interest attributable to the Franchise Tax
Board's (FTB) erroneous actions, as specified. (The Tax Payer's
Rights Advocate Sunset Jan. 2012) Specifically, this bill:
1)Permanently authorizes the advocate to review a taxpayer's
application for relief, as specified, and to abate any
penalties, fees, additions to tax or interest assessed on a
taxpayer, provided that the penalties, fees, additions to tax
or interest are attributable to erroneous action or inaction
by the FTB, unreasonable delay caused by the FTB or erroneous
written advice that does not qualify for relief under existing
law. States that a determination made by the advocate is not
subject to administrative or judicial review.
2)Specifies that relief may be granted if no significant aspect
of the error or delay is attributable to the taxpayer involved
and relief is not available under any other provision of tax
law, including any relief granted under any regulation or
other FTB administrative pronouncement.
3)Requires any relief in excess of $500 to be submitted to FTB's
Chief Counsel for concurrence. Requires the Chief Counsel to
notify the FTB if the total amount of the relief granted
exceeds $7,500. Authorizes the FTB to adjust the $7,500 for
inflation.
4)Provides that a public record with respect to a relief granted
AB 2686
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shall be placed on file in the office of the FTB's executive
officer.
FISCAL EFFECT
This bill will result in minor administrative savings to FTB by
avoiding litigation and appeals costs. FTB states the workload
for the staff of the advocate is minor and absorbable.
According to FTB, the powers granted in this bill were used on
two separate occasions by the Taxpayer Rights Advocate. One
resulted in relief to a single taxpayer of $3000. In another
incident, 50 taxpayers were affected and the total relief was
$50,000.
COMMENTS
1)The Purpose of this Bill . AB 2686, which is sponsored by the
FTB, is intended to help individual and corporate taxpayers
seeking relief from FTB errors. FTB argues that the advocate
has prudently applied the discretionary authority and it is
time to re-enact the law without the sunset provision. FTB
notes that the advocate's authority to grant relief is the
only remedy for the abatement of penalties, fees, additions to
tax or interest that had a sunset provision
2)Background . In 1988, the Katz-Harris Taxpayers' Bill of
Rights Act (Chapter 1573, Statutes of 1988) established the
position of a Taxpayers' Rights Advocate to provide specified
protections for taxpayers, including a resolution of taxpayer
complaints and problems. The Taxpayers' Rights Advocate
reports directly to the FTB's Executive Officer. The advocate
coordinates the resolution of taxpayer complaints and
problems, and can postpone enforcement action while the case
is under review. In 2008, the Legislature provided the
advocate with the discretionary authority to grant relief to
taxpayers under limited circumstances and only from January 1,
2009 until January 1, 2012 when the provisions became
inoperative. (Chapter 305, Statutes of 2008).
FTB notes eligible taxpayers do have other avenues for
obtaining relief from penalties, fees, additions to tax or
interest. For example, those taxpayers may appeal to the
State Board of Equalization (BOE), file a lawsuit for refund
of taxes with a court or file a claim with the Victim
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Compensation and Government Claims Board for refund of tax or
losses caused by the action or inaction of a state agency.
However, in those cases, the taxpayers most likely will have
to incur additional costs, which may exceed the amount of
penalties, interest or other additions to tax.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081