BILL ANALYSIS Ó
SB 1158
Page 1
Date of Hearing: July 2, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
SB 1158 (Price) - As Amended: June 20, 2012
VOTE ONLY
Majority vote. Fiscal committee.
SENATE VOTE : 37-0
SUBJECT : Income taxes: administration
SUMMARY : Allows the Franchise Tax Board (FTB), upon a
taxpayer's written request, to abate specified interest to the
extent the interest is attributable to the FTB's delay in
mailing a notice or other correspondence requiring a response,
"in connection with a presidentially declared disaster area," or
any county or city proclaimed by the Governor to be in a state
of emergency. Specifically, this bill :
1)Applies to interest:
a) On any deficiency;
b) Related to a proposed deficiency described in Revenue
and Taxation Code (R&TC) Section 19033; or,
c) On a payment of tax.
2)Provides that, if the FTB determines not to abate interest,
the taxpayer may appeal the FTB's decision to the State Board
of Equalization (BOE), as specified.
3)Provides that the BOE shall have jurisdiction over the appeal
to determine whether the FTB's failure to abate interest was
an abuse of discretion, and may order an abatement.
4)Provides that a request for abatement of interest related to a
proposed deficiency may be made with the written protest of
the underlying proposed deficiency filed with the FTB under
R&TC Section 19041 or with an appeal to the BOE under R&TC
Section 19045. The action of the FTB denying any portion of
the request for abatement of interest related to the proposed
SB 1158
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deficiency shall be considered as part of the appeal of the
action of the FTB on the protest of the proposed deficiency.
5)Provides that Internal Revenue Code (IRC) Section 7508A,
relating to the postponement of certain tax-related deadlines,
shall apply to any taxpayer determined by the FTB to be
affected by a state of emergency declared by the Governor.
6)Makes technical amendments to existing law.
EXISTING LAW :
1)Conforms generally to federal law (IRC Section 7508A) by
allowing the postponement of certain tax-related deadlines for
taxpayers affected by a federally declared disaster or a
terroristic or military action. (R&TC Section 18572).
2)Allows the FTB to grant a reasonable extension of time for
filing any return, declaration, statement or other document,
as specified. ÝR&TC Section 18567(a)].
3)Allows the FTB to grant a reasonable extension for payment of
tax, as specified. ÝR&TC Section 18567(c)].
4)Provides that, if the FTB extends the time period for filing a
return and paying taxes for any taxpayer located in a
presidentially declared disaster area or any area proclaimed
by the Governor to be in a state of disaster, the FTB shall
abate for that period the assessment of any interest. (R&TC
Section 19109).
5)Defines a "presidentially declared disaster area" as any area
that the President has determined warrants federal assistance
under the Disaster Relief and Emergency Assistance Act.
ÝId.].
FISCAL EFFECT : Unknown. The FTB notes that, due to the
unpredictable nature of disasters, it is unable to provide a
revenue estimate for this bill.
COMMENTS :
SB 1158
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1)The author notes that, "SB 1158 is needed to provide equitable
treatment to "all" taxpayers located in presidentially or
gubernatorially declared disaster areas."
2)Committee Staff Comments:
a) Providing parity for gubernatorially-declared states of
emergency : IRC Section 7508A, to which California
generally conforms, authorizes the postponement of certain
tax-related deadlines for taxpayers affected by a federally
declared disaster. Among other things, IRC Section 7508A
applies to the deadlines for filing a tax return, paying
taxes, or filing a credit or refund claim. Affected
taxpayers are also eligible for relief from interest,
penalties, additional amounts, and additions to tax. ÝIRC
Section 7508A(a)(2)]. This bill, in turn, would extend the
provisions of IRC Section 7508A to any taxpayer that the
FTB determines is affected by a gubernatorially declared
state of emergency.
It should be noted that the FTB currently possesses the
authority to grant a reasonable extension of time for
filing a return. ÝR&TC Section 18567(a)]. Such extensions
are generally limited to six months. Ý Id .]. Existing law
also allows the FTB to grant a reasonable extension for the
payment of tax whenever, in its judgment, good cause
exists. ÝR&TC Section 18567(c)]. Moreover, if the FTB
extends the deadline for filing a return and paying taxes
for any taxpayer impacted by a federal or state disaster,
the FTB is required to abate any interest for that period.
ÝR&TC Section 19109(a)].
Nevertheless, in the case of a gubernatorially declared
state of emergency, the FTB explains that existing law
(i.e., R&TC Section 18567) does not authorize the FTB to
extend the deadlines for filing an appeal, protest, or
claim for refund. This bill would grant the FTB this
authority.
b) Abatement of interest for taxpayers not directly
affected by a disaster : This bill's second provision would
allow the FTB to abate specified interest to the extent it
is attributable to the FTB's delay in mailing notices "in
connection with" a presidentially declared disaster or a
SB 1158
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gubernatorially declared state of emergency. The FTB notes
the following to explain its need for this additional
authority:
During a presidentially-declared disaster, the ÝFTB]
routinely delays billings, notices, and correspondence to
affected individuals and business entities in a disaster
area. An FTB public service bulletin is published to
inform the public of the period of the suspended notices
and the counties affected by the disaster. When the
taxpayers are identified by zip code, the ÝFTB] delays
all mailings until a specified time. As a result of the
delayed mailings to disaster areas, many taxpayers in the
area who are unaffected by the disaster, but who are
engaged in the administrative audit, protest, or appeal
process, suffer delays in that process, which ultimately
result in additional interest being accrued. Under
current law, the FTB lacks the authority in these
instances to abate the interest.
Thus, this bill would authorize the FTB, upon a taxpayer's
written request, to abate specified interest to the extent
the interest is attributable to the FTB's delay in mailing
a notice or other correspondence in connection with a
presidentially or gubernatorially declared disaster.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098