BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 THIRD READING


          Bill No:  AB 2686
          Author:   Assembly Revenue and Taxation Committee
          Amended:  8/14/12 in Senate
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  8-0, 6/28/12
          AYES:  Wolk, Dutton, DeSaulnier, Fuller, Hernandez, La 
            Malfa, Liu, Yee
          NO VOTE RECORDED:  Kehoe

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 8/6/12
          AYES:  Kehoe, Walters, Alquist, Dutton, Lieu, Price, 
            Steinberg

           ASSEMBLY FLOOR  :  73-0, 5/10/12 (Consent) - See last page 
            for vote


           SUBJECT  :    Taxation: Taxpayers Rights Advocate

           SOURCE  :     Franchise Tax Board


           DIGEST  :    This bill reinstates, until January 1, 2016, the 
          authority for the Taxpayers Rights Advocate (Advocate) to 
          relieve taxpayers from penalties, interest, fees, and 
          additions to tax that are attributable to a Franchise Tax 
          Board (FTB) error.

           ANALYSIS  :    Existing law, enacted by the Katz-Harris 
          Taxpayers' Bill of Rights (AB 2788 (Harris), Chapter 1573, 
          Statutes of 1988), establishes the position of the 
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          Taxpayers' Rights Advocate to coordinate the resolution of 
          taxpayer complaints and problems.  Existing law in effect 
          from January 1, 2009 until January 1, 2012 provides the 
          Advocate with discretionary authority to abate penalties, 
          interest, fees, or additions to tax owed by a taxpayer as a 
          result of specified FTB errors or delays (AB 3078 (Assembly 
          Revenue and Taxation Committee), Chapter 305, Statutes of 
          2008).  The Advocate could only provide relief if no part 
          of the error or delay could be attributable to the 
          taxpayer, and when relief is not otherwise available. 

          This bill reinstates, until January 1, 2016, the 
          discretionary authority for FTB's Taxpayers' Rights 
          Advocate to abate penalties, interest, fees, and additions 
          to tax that are attributable to:  (1) erroneous action or 
          inaction by the FTB in processing documents or payments; 
          (2) unreasonable FTB delays; or (3) erroneous written 
          advice that does not otherwise qualify for relief.  

          The Advocate may only grant relief if no significant part 
          of the error or delay is attributable to the taxpayer and 
          relief is not available under existing law.  The maximum 
          amount of relief that may be provided in any given case is 
          $7,500, which may be adjusted annually for inflation, and 
          any relief exceeding $500 must be approved by FTB's 
          executive officer.  Whenever relief is granted, a public 
          record must be created in the executive officer's office 
          that documents the taxpayer's name, the total amount 
          involved, the amount payable or refundable due to the error 
          or delay, and a summary of why relief is warranted.  This 
          bill prohibits any other entity from participating in the 
          decision to provide relief, and specifies that any 
          determination by the Advocate that amounts owed by a 
          taxpayer are attributable to an FTB error or delay are not 
          subject to administrative or judicial review. 

           Comments
           
          This bill provides a process for taxpayers to receive 
          relief from penalties, interest, fees, or additional tax 
          liabilities when those amounts are a direct result of FTB 
          errors or delays, and if relief of those charges is not 
          available elsewhere under existing law.


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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Senate Appropriations Committee:

           FTB indicates that any impacts on the staff of the 
            Advocate would be minor and absorbable, and that the bill 
            is expected to ultimately result in minor administrative 
            savings related to avoided litigation and appeals costs.

           Unknown General Fund impacts; actual revenue impacts 
            would depend upon the frequency and value of any FTB 
            errors.  Based upon historical experience when the 
            authority provided by this bill was in effect, FTB 
            estimates minor revenue impacts.

           SUPPORT  :   (Verified  8/14/12)

          Franchise Tax Board (source)
          California Taxpayers' Association


           ASSEMBLY FLOOR  :  73-0, 5/10/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines, 
            Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman, 
            Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, 
            Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie 
            Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, 
            Monning, Morrell, Nestande, Nielsen, Pan, Perea, 
            Portantino, Silva, Skinner, Smyth, Solorio, Swanson, 
            Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, 
            John A. Pérez
          NO VOTE RECORDED:  Cook, Fletcher, Furutani, Jeffries, 
            Norby, Olsen, V. Manuel Pérez


          AGB:d  8/14/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE


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