BILL NUMBER: SB 506 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Simitian
(Principal coauthor: Assembly Member Campos)
FEBRUARY 17, 2011
An act to amend Section 17275 of, and to repeal and add Sections
17280.1 and 17280.2 of, the Government Code, relating to state
finance.
LEGISLATIVE COUNSEL'S DIGEST
SB 506, as introduced, Simitian. State finance: warrants.
Existing law authorizes a taxpayer who has a tax liability with
respect to personal income taxes or bank and corporation taxes, and
who is a payee named in a registered warrant to pay the tax liability
with the register warrant, as specified.
This bill would revise and recast these and applicable provisions.
The bill would also provide a procedure whereby a registered warrant
may be issued for the payment of principal or interest due on a
state bond, as specified, and authorize the Controller to promulgate
regulations to facilitate this use of a registered warrant. The bill
would exempt the Controller from the rulemaking provisions of the
Administrative Procedure Act in making these regulations.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17275 of the Government Code is amended to
read:
17275. Any interest paid on any registered warrant shall accrue
to the person holding the warrant on the date of redemption, except a
registered reimbursement warrant may provide otherwise. A registered
warrant ceases to bear interest on the first of the following dates:
(a) The maturity date indorsed on its face, if any, if on that
date unapplied money or the proceeds of refunding warrants are
available for its payment.
(b) The date of redemption, so long as the date is at least three
days following the first day of published notice pursuant to Section
17273.
(c) The date a check is submitted in payment of a tax
liability by a taxpayer, specified in subdivision (b) or
by a beneficial owner of a state bond, as specified in subdivision
(e), of Section 17280.1.
SEC. 2. Section 17280.1 of the Government Code is repealed.
17280.1. (a) A taxpayer who has a tax liability, including any
liability for periodic estimated tax payments, with respect to
personal income taxes or bank and corporation taxes, and who is a
payee named in a registered warrant as defined in Section 17221 which
is received in payment of an obligation of the State of California
to the taxpayer, may pay any tax liability specified above, in whole
or in part, by a check in an amount not to exceed the amount of the
registered warrant, exclusive of any interest thereon. That check
shall not be presented for payment by the state or paid by the bank
on which it is drawn until the registered warrant payable to the
taxpayer is payable upon its presentation to the Treasurer. The
provisions of this section shall be applicable only if the taxpayer's
check in payment of a tax liability pursuant to this section is
accompanied by a copy of the registered warrant, as specified above,
which clearly discloses the name of the payee, the amount to be paid,
the number of the warrant, and the completed and signed legend as
provided for in subdivision (d).
(b) Any taxpayer submitting a check for the payment of taxes
pursuant to subdivision (a) shall be precluded from receiving
interest on his or her registered warrant from the date the check for
the payment of taxes is submitted.
(c) In the event that a taxpayer who submits a check for the
payment of taxes pursuant to subdivision (a) presents his or her
registered warrant to a bank or other institution for payment, the
taxpayer shall make a declaration upon presentment that he or she is
ineligible pursuant to subdivision (b) to receive interest from the
date he or she submitted the check.
(d) To facilitate the taxpayer in making the declaration required
by subdivision (c), all registered warrants issued shall bear a
legend on the reverse side in substantially the following form:
""In endorsing this warrant, I declare that I
have ( ) or have not ( )
(check one) submitted a check on _________________
(date)
for the payment of tax liability in an amount not
to exceed the
amount of this warrant. I further declare that
by submitting that
check, I am ineligible for the receipt of
interest on this warrant after
the above date.''
SEC. 3. Section 17280.1 is added to the Government Code, to read:
17280.1. (a) A taxpayer who has a tax liability, including, but
not limited to, any liability for periodic estimated tax payments,
with respect to personal income taxes or bank and corporation taxes,
and who is a payee named in a registered warrant, as defined in
Section 17221, that is received in payment of an obligation of the
state to the taxpayer, may pay that tax liability, in whole or in
part, by submitting to the appropriate state agency responsible for
collection of that tax, a check in an amount not to exceed the
principal amount of the registered warrant, exclusive of any interest
thereon, together with a copy of the registered warrant that clearly
discloses the name of the taxpayer as payee, the amount to be paid,
the number of the warrant, and the completed, signed, and dated
endorsement on the reverse side of the registered warrant, as
described in subdivision (d). Upon submitting the check and a copy of
the registered warrant, the taxpayer may not thereafter assign or
transfer that registered warrant, except to a bank or financial
institution. The taxpayer's check, if submitted in conformance with
all the requirements in this subdivision, shall not be presented for
payment by the state or paid by the bank on which it is drawn until
the registered warrant payable to the taxpayer is payable upon its
presentation to the Treasurer.
(b) Any taxpayer who submits a check for the payment of taxes
pursuant to subdivision (a) shall not be entitled to receive any
interest accruing on the registered warrant after the date the
taxpayer submitted the check, as the date is certified in the
endorsement on the registered warrant described in subdivision (d).
This subdivision shall apply even if the principal amount of the
registered warrant exceeds the amount of the check submitted for
payment of taxes.
(c) If a taxpayer submits a check for the payment of taxes
pursuant to subdivision (a) and presents the registered warrant to a
bank or other financial institution for payment, the taxpayer shall
make a declaration upon presentment that he or she is ineligible to
receive interest accruing on the registered warrant after the date he
or she submitted the check, as that date is certified in the
endorsement on the registered warrant described in subdivision (d).
(d) All registered warrants, as defined in Section 17221, shall
include the following information on the reverse side in
substantially the following form:
"In endorsing this warrant, I declare that I have ( ) or have not
( ) (check one) submitted a check on ______ (date) for the payment of
tax liability in an amount not to exceed the amount of this warrant.
I further declare that by submitting that check, I am ineligible for
the receipt of interest on this warrant after the above date."
(e) If a registered warrant, as defined in Section 17221, is
issued for payment of any principal or interest due and payable on a
state bond that is held in book entry form by a securities settlement
system, the beneficial owner of the state bond is deemed exclusively
to be the taxpayer who is permitted to submit a check in payment of
an existing tax liability, as defined in subdivision (a),
notwithstanding that the securities settlement system, or its
nominee, is the registered owner of the state bond or the named payee
of the registered warrant. The beneficial owner may submit a check
to the state agency responsible for the collection of the tax in
payment of a tax liability, as defined in subdivision (a), but the
check shall not exceed the portion of the principal amount of the
registered warrant, exclusive of interest thereon, that is
attributable to the taxpayer's beneficial ownership of the state
bond. The check shall be accompanied by evidence of ownership of the
state bond and other information as shall be prescribed by the
Controller pursuant to subdivision (f). The beneficial owner's check,
if submitted in conformance with all the requirements in this
subdivision and as prescribed by the Controller pursuant to
subdivision (f), shall not be presented for payment by the state or
paid by the bank on which it is drawn until the registered warrant is
payable upon its presentation to the Treasurer. Any beneficial owner
who submits a check as set forth in this subdivision in payment of
an existing tax liability shall not be entitled to receive payment of
any interest accruing on the registered warrant after the date on
which the beneficial owner submits the check to the state, and the
beneficial owner shall be required to promptly repay to the state any
interest accruing on the registered warrant after the date of
submission that may be paid to or ultimately received by the
beneficial owner, if any. The preceding sentence shall apply even if
the portion of the principal amount of the registered warrant that is
attributable to the beneficial owner's ownership interest in the
state bond is larger than the amount of the check the beneficial
owner submitted for payment of taxes. Upon submitting such a check to
the state in payment of a tax liability pursuant to this
subdivision, the beneficial owner shall not be permitted to sell,
transfer, or assign its beneficial ownership of the state bond until
the registered warrant has been redeemed by the state and the
beneficial owner has repaid any interest received on its portion of
that registered warrant attributable to the period after submission
of a check to the state as provided in this subdivision. For purposes
of this subdivision and subdivision (f), "state bond" means any
general obligation bond or revenue anticipation note issued by the
state.
(f) (1) The Controller is authorized to promulgate regulations to
implement subdivision (e), including, but not limited to, all of the
following procedures:
(A) Specifying the information that the beneficial owner must
submit to the state with the check that is in payment of the
beneficial owner's tax liability, evidencing the beneficial owner's
ownership of the state bond, the amount of principal or interest due
and payable to the beneficial owner on the state bond, and the
issuance of a registered warrant in payment of that principal or
interest.
(B) Requiring the beneficial owner to acknowledge in writing that
the beneficial owner is not entitled to, and must return, any
interest that accrues upon the registered warrant after the date the
beneficial owner's check is submitted to the state, if any interest
is paid to, or ultimately received by, the beneficial owner.
(C) Requiring the beneficial owner to acknowledge, in writing,
that the beneficial owner may not sell, transfer, or assign its
interest in the state bonds until after the registered warrant for
the principal or interest on the state bonds has been redeemed by the
state and the beneficial owner has repaid any interest on the
registered warrant for the period after submission of the check to
the state for a tax liability that is paid to, or received by, the
beneficial owner.
(D) Specifying the procedure for repayment by the beneficial owner
to the state of any interest on the registered warrant, including,
but not limited to, provisions for notice to the beneficial owner of
amounts due and deadlines for repayment, methods of collection of
unpaid amounts, and penalties for failure to repay.
(2) Any regulations promulgated by the Controller pursuant to this
subdivision shall be exempt from the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3).
SEC. 4. Section 17280.2 of the Government Code is repealed.
17280.2. In the event a tax liability is paid, in whole or in
part, with a registered warrant which is redeemable at the time the
tax liability is paid, interest as specified in this article, shall
be credited to the taxpayer's account.
SEC. 5. Section 17280.2 is added to the Government Code, to read:
17280.2. (a) A taxpayer with a tax liability, as set forth in
subdivision (a) of Section 17280.1, and who is a payee named in a
registered warrant, as defined in Section 17221, that is currently
redeemable by the state upon presentation, may use the registered
warrant to pay the tax liability, in whole or in part, by endorsing
the registered warrant and delivering it to the appropriate state
agency responsible for collection of the tax, and the principal
amount of, and any interest accruing on, the registered warrant that
is payable to the taxpayer as specified in this article, shall be
credited to the taxpayer's account in payment of the tax liability.
(b) No state entity shall take any action that would materially
adversely impair, limit, or restrict the rights of a beneficial owner
of a state bond, as set forth in Section 17280.1, or any successor
provision, as that provision was in effect when the person or party
became a beneficial owner of the state bond, until the state bond is
fully paid and discharged.