BILL ANALYSIS Ó
SB 901
Page 1
SENATE THIRD READING
SB 901 (Steinberg)
As Amended August 29, 2012
Majority vote
SENATE VOTE :Vote not relevant
REVENUE & TAXATION 5-1 JUDICIARY 7-2
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|Ayes:|Fuentes, Beall, Cedillo, |Ayes:|Wieckowski, Alejo, |
| |Gordon, Perea | |Dickinson, Feuer, Huber, |
| | | |Monning, Cedillo |
|-----+--------------------------+-----+--------------------------|
|Nays:|Nestande |Nays:|Wagner, Gorell |
| | | | |
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SUMMARY : Enacts the California Opportunity and Prosperity Act
(COPA). Specifically, this bill :
1)Establishes a voluntary program (Program) to be administered
by the Department of Justice (DOJ) until January 1, 2018.
2)Provides that a "qualified person" may participate in the
Program, as specified. Specifically, on or after January 1,
2014, a "qualified person's" written application for Program
admission shall be made as prescribed by the DOJ. Upon
receiving an application, the DOJ shall determine whether the
applicant meets the definition of a "qualified person."
3)Requires applicants to electronically submit to DOJ
fingerprint images, and requires the DOJ to charge a fee
sufficient to cover the reasonable costs of processing the
fingerprint images.
4)Defines a "qualified person" as a natural person who:
a) Is not eligible to receive a social security number;
b) Filed a state income tax return, with a valid individual
taxpayer identification (ID) number, for the most recent
taxable year that a return was required;
c) Is not employed by a federal or state public entity, as
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defined;
d) Declares that he/she is able to speak and understand
English or is enrolled in, or has applied to enroll in, an
English-as-a-second-language class;
e) Has not been convicted of a felony;
f) Is not a public charge within the meaning of federal
law;
g) Declares that he/she has been a continuous resident of
California since at least January 1, 2008;
h) Consents to a fingerprint background check and the
disclosure of any information necessary to confirm Program
eligibility; and,
i) Consents to the disclosure of his/her name and federal
taxpayer ID to the Franchise Tax Board (FTB), as specified.
5)Provides that the language requirement specified above shall
not apply to any person who:
a) Is unable to speak or understand English because of a
physical or developmental disability or mental impairment;
b) Is over 50 years old and has been living in the United
States (U.S.) for at least 20 years; or,
c) Is over 55 years old and has been living in the U.S. for
at least 15 years.
6)Provides that if the DOJ determines that an applicant meets
the definition of a qualified person, the DOJ shall admit the
applicant into the Program and shall provide the applicant
with a confirmation of admission, which shall be valid for one
year.
7)Requires the DOJ to renew a person's Program admission
annually upon payment of a renewal application fee and a
demonstration that the person continues to meet the definition
of a qualified person.
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8)Requires the DOJ to charge each Program applicant a fee or
annual renewal fee sufficient to cover the agency's reasonable
administrative costs, including startup costs and costs
associated with confirming Program eligibility.
9)Provides that, on or before December 31, 2014, and on or
before December 31 of each successive year, until January 1,
2018, the DOJ shall provide the FTB with the name and federal
taxpayer ID number of each qualified person admitted into the
Program during that calendar year. The FTB, in turn, shall
use this information solely to prepare a mandated report, and
shall not disclose the information for any purpose, unless
expressly provided by this bill.
10)Provides that, on or before December 31, 2015, and on or
before December 31 of each successive year, until January 1,
2019, the FTB shall submit a report to the Legislature that
details the tax receipts collected with respect to the
immediately preceding taxable year from qualified persons who
participated in the Program. This report shall not contain
any information that identifies any specific qualified person.
11)Provides that any information disclosed by a Program
applicant or participant shall be used solely to administer
the Program and for no other purpose.
12)Specifies that any record containing any identifying
information of a Program applicant or participant shall not be
disclosed for any purpose, except as provided, to the extent
necessary to enforce a liability under the Revenue and
Taxation Code or the Family Code, or as otherwise required by
federal or state law. Provides that if identifying
information is disclosed for an authorized purpose, the
recipient "shall use the information solely for that purpose
and shall not disseminate the information any further."
13)Provides that all identifying information shall be
confidential and exempt from disclosure under the California
Public Records Act.
14)Authorizes both the DOJ and FTB to adopt regulations
necessary to implement the Program.
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15)Provides that, on January 1, 2019, or as soon thereafter as
practicable, all Program records containing any identifying
information shall be destroyed, including Program applications
and records provided to the FTB. This provision, however,
shall not obligate the FTB to destroy any tax returns or other
records necessary to conduct an audit or appeal or to process
any taxpayer claim for refund.
16)Specifies that the above provisions shall automatically
sunset on January 1, 2020.
17)Provides that, on or after July 1, 2013, the Governor is
"authorized and directed" to submit, as a ministerial act on
behalf of the state, a request to the President asking the
President to direct the Department of Homeland Security
(DHS), the U.S. Immigration and Customs Enforcement (ICE), and
other relevant federal agencies not to expend resources during
the Program's operation on either of the following:
a) The apprehension, detention, or removal of a qualified
person in the Program or the qualified person's spouse or
eligible dependent, unless the qualified person, spouse or
eligible dependent meets one of the priority enforcement
criteria set forth in the then-existing ICE policy on civil
immigration enforcement; or,
b) The prosecution of a person, for employing a qualified
person, pursuant to 8 U.S. Code Section 1324a.
18)Provides that, on or after July 1, 2013, the Governor is
further authorized and directed, as a ministerial act on
behalf of the state, to request that the President provide any
available waivers, exemptions, or authorizations necessary to
provide a safe harbor for individuals and businesses from
federal civil and criminal liability arising out of a
qualified person's participation in the Program or the
employment of a qualified person.
19)Specifies that this bill's provisions are severable. If any
provision or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be
given effect.
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EXISTING FEDERAL LAW :
1)Regulates immigration pursuant to the Immigration and
Nationality Act (INA), which governs the rights, duties, and
obligations associated with being an alien in the U.S. The
INA also governs issues such as length of stay, and specifies
which aliens may become legal citizens.
2)Provides, per Presidential directive, that individuals who
demonstrate that they meet specified criteria will be
eligible, on a case by case basis, for deferred action with
respect to deportation.
3)Deems inadmissible any alien who, in the opinion of the
consular officer at the time of application for a visa, or in
the opinion of the Attorney General (AG) at the time of
application for admission or adjustment of status, is likely
at any time to become a public charge.
EXISTING STATE LAW :
1)Creates within state government the DOJ, under the direction
and control of the AG.
2)Requires the FTB to, among other things, administer personal
and corporation income tax laws and certain other nontax
programs, including the collection of specified delinquent
debt.
FISCAL EFFECT : Unknown. According to the FTB, this measure
would not impact state revenues, and would likely result in
minor fiscal costs. According to the Legislative Analyst's
Office analysis of a similar ballot initiative, the measure
would result in an unknown net change in annual state tax
revenues through fiscal year (FY) 2017-18, but probably without
a significant impact on overall General Fund (GF) revenues, and
annual state administrative costs through FY 2017-18 in the
hundreds of thousands or low millions of dollars, supported by
required participant fees.
COMMENTS :
Author's statement : The author has provided the following
statement in support of this bill:
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"SB 901 gives qualified unauthorized residents who pay state
income taxes the option to enter a program whose participants
may gain relief from federal enforcement and whose labor may be
decriminalized. In these difficult economic times, this program
will also generate $325 million in new revenue as more
undocumented workers start filing taxes in hopes of enrolling in
the program."
Arguments in support : Proponents of this measure argue that "SB
901 is a common sense policy that benefits responsible
immigrants and the state of California by potentially generating
over $300 million in new state taxes for the general fund."
Proponents also state that this measure "establishes a framework
for long-term law-abiding California resident undocumented
taxpayers that will bring them out of the shadows and allow them
to contribute to our state." Finally, proponents believe that
more than one million hard working immigrants and business
owners "would finally be able to pay hundreds of millions of
dollars in taxes that can be used to invest in education, law
enforcement, and health services and upon federal agreement
receive exemption from federal enforcement and sanctions."
The COPA : SB 901 proposes an innovative approach to increase
tax compliance by encouraging undocumented immigrants to file
their California income tax returns and pay their corresponding
tax liability. It creates a way for those law-abiding
undocumented immigrants, who pay their state taxes and are
certified as eligible by the DOJ, to potentially be shielded
from federal enforcement actions. Specifically, SB 901
establishes a voluntary pilot program, until January 1, 2018, to
be administered by the DOJ, and allows eligible undocumented
immigrants to participate in this program. If certified as
eligible, the applicant will receive a confirmation of
admission, which will be valid for one year. The benefits of
participating in the Program include potential relief from
federal enforcement action for the participants, their families,
and participants' employers, provided the Governor petitions the
President, as directed by SB 901, and the President agrees to
grant relief. The Program is intended to help long-term
California residents who have not been convicted of a felony.
The eligibility criteria set forth by this measure are similar
to those outlined by J. Morton, Director of ICE, in his letter
addressing the factors that should be considered by ICE
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personnel in exercising prosecutorial discretion (ICE letter).
According to its Director, ICE is confronted with more
administrative violations than its resources can address, and
thus, must regularly exercise prosecutorial discretion in the
ordinary course of enforcement. "Prosecutorial discretion" is
"the authority of an agency charged with enforcing a law to
decide to what degree to enforce the law against a particular
individual." (ICE letter, p.2). Thus, on June 15, 2012,
President Obama issued an executive order that deferred
deportation action against certain young undocumented
immigrants, 30 years or younger. Deferred action is a
discretionary determination to defer removal of an individual as
an act of prosecutorial discretion, and does not confer lawful
status upon an individual. Janet Napolitano, Secretary of the
DHS, issued a statement explaining the exercise of the agency's
prosecutorial discretion in the case of certain young people who
were brought to the U.S. as children. Under the program,
eligible immigrants, who came to the U.S. before they were 16
and have graduated from high school or served in the U.S.
military, are allowed to request permission to stay in the
country and simultaneously apply for a work permit for two
years. The DHS describes steps that immigrants will need to take
- including a $465 paperwork fee designed to offset the
program's cost - and explains that those immigrants will not be
granted citizenship. It is estimated that at least 700,000
young undocumented immigrants will be eligible for this deferred
federal action.
According to the Pew Hispanic Center, the estimated number of
undocumented immigrants in the U.S. was 11.5 million in 2011,
with 24% of those immigrants residing in California. The power
to regulate national immigration policy rests with the federal
government. Nevertheless, states have attempted to impact
immigration policy in different ways over the years, both
legislatively and through ballot initiatives. For example, the
State of California has, in the past, attempted to deny public
services to undocumented immigrants, while expanding
responsibilities for persons to investigate or report
individuals with an unclear or uncertain immigration status
(Proposition 187, 1994).
This bill does not seek to change federal immigration law per
se, nor does it provide a pathway to citizenship or any other
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benefits. Instead, it is intended to influence the federal
government's exercise of "prosecutorial discretion." An
initiative establishing a similar program - the COPA - was
introduced last December. According to the author's office,
after the introduction of the initiative, legal counsel informed
the initiative committee that legislation was also an
appropriate means by which to pursue this policy. Consequently,
the committee decided not to pursue the initiative.
What is a Taxpayer Identification Number ?: A Taxpayer
Identification Number (TIN) is a federal identification number
issued by either the Social Security Administration (SSA) or the
Internal Revenue Service (IRS), and is used in the
administration of tax laws. While Social Security numbers
(SSNs) are issued by the SSA, all other TINs are issued by the
IRS. A TIN must be provided on returns, statements, and other
tax-related documents.
To obtain a SSN, an individual must complete Form SS-5 and
submit evidence of identity, age, and U.S. citizenship or lawful
alien status. Generally, only noncitizens authorized to work in
the U.S. by the DHS can get a SSN.
The individual TIN (or ITIN), on the other hand, was established
so that taxpayers who do not qualify for a SSN can still file
taxes. An ITIN is only available for certain nonresident and
resident aliens, their spouses, and dependents who cannot obtain
a SSN. To obtain an ITIN, an individual must complete and
submit IRS Form W-7, which requires documentation substantiating
the applicant's true identity and foreign or alien status. Each
ITIN applicant must also attach a federal income tax return to
the Form W-7 or present evidence to substantiate an exception to
the filing requirement. The IRS notes that ITINs are issued
regardless of immigration status because both resident and
nonresident aliens may have a U.S. filing or reporting
obligation under the Internal Revenue Code. As such, an ITIN
does not authorize work in the U.S. or provide eligibility for
either Social Security benefits or the federal Earned Income Tax
Credit.
Increased tax compliance : Since undocumented immigrants are not
eligible to receive a SSN, many of them are forced to work
"under the table." Advocates of this bill believe that this
measure will incentivize many undocumented immigrants who may
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not currently pay their taxes to come into compliance with the
state's income tax laws, thereby increasing revenues to the GF.
According to the author's office, this measure may potentially
generate up to $325 million in GF revenues annually. Assembly
Revenue and Taxation Committee staff notes that, since there is
no guarantee that participants will be relieved from federal
enforcement efforts, it is unclear how many immigrants will
decide to participate in the Program.
Implementation consideration : This bill would require the FTB
to destroy documents related to Program participants, unless the
documents are necessary to conduct an audit or appeal, or to
process any taxpayer claim for refund. FTB staff notes that
this bill's language fails to address whether the information
could be maintained for purposes of collection. FTB staff
recommends, in order to avoid possible conflicts between the FTB
and taxpayers, to amend this measure to allow FTB to utilize the
participant information for purposes of tax collection.
Analysis Prepared by : Oksana Jaffe and M. David Ruff / REV. &
TAX. / (916) 319-2098
FN: 0005780