BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2686| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 2686 Page 2 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. CONTINUED AB 2686 Page 3 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 CONTINUED AB 2686 Page 4 **** END **** CONTINUED