BILL ANALYSIS Ó SB 1158 Page 1 Date of Hearing: August 8, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 1158 (Price) - As Amended: June 20, 2012 Policy Committee: Revenue and Taxation Vote: 8-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill 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 on any deficiency, a specified proposed deficiency or 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. FISCAL EFFECT Minor revenue losses of $50,000 annually, depending on the number and extent of declared disasters. COMMENTS 1)Purpose . The author notes SB 1158 is needed to provide equitable treatment to all taxpayers located in disaster areas as proclaimed by either the president or the governor. 2)Background . Federal law regarding disasters, to which California generally conforms, authorizes the postponement of certain tax-related deadlines for taxpayers affected by a federally declared disaster. SB 1158 would extend the SB 1158 Page 2 provisions of federal law to any taxpayer that the FTB determines is affected by a state of emergency declared by the Governor. Although FTB currently possesses the authority to grant a reasonable extension of time for filing a return, existing law does not authorize the FTB to extend the deadlines for filing an appeal, protest or claim for refund in the event of 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 disaster declared by either the president or governor. The FTB notes during disasters, the FTB routinely delays billings, notices and correspondence to affected individuals and business entities within the disaster area. As a result of the delayed mailings, taxpayers who are unaffected by the disaster, but engaged in the administrative audit, protest or appeal process, suffer delays in that process, which ultimately could result in additional interest being accrued. Under current law, the FTB lacks the authority to abate the interest in these instances. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081