BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 672
Author: Harkey (R)
Amended: 6/11/13 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 6/5/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 04/18/13 (Consent) - See last page for
vote
SUBJECT : Tax administration: tax clearance certificates
SOURCE : Franchise Tax Board
DIGEST : This bill eliminates the requirement for the
representative of specified estates to obtain a tax clearance
certificate from the Franchise Tax Board (FTB) prior to the
probate court accepting the final accounting of the estate.
This bill also eliminates, until December 1, 2018, the tax
clearance certificate requirement related to nonresident
beneficiaries deduction for taxable years beginning January 1,
2014.
ANALYSIS :
Existing law:
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1. Prohibits a probate court from accepting a final accounting
from a fiduciary of an estate, unless the fiduciary obtains a
tax clearance certificate from the FTB, if the estate has
more than $1 million in assets at the date of the decedent's
death and the fair market value of the assets distributable
to one or more nonresident beneficiaries exceeds $250,000.
2. Authorizes the FTB to prescribe regulations setting the
minimum value of the assets of the estate at the death of the
decedent and the minimum value of the assets distributable to
one or more nonresidents, which requires the estate to obtain
a tax clearance certificate from the FTB.
3. Provides that, within 30 days after receiving a request for a
certificate, the FTB must either issue the certificate or
notify the person requesting the certificate of the amount of
tax, interest, and/or penalties that shall be paid or the
amount of bond, deposit, or other security that shall be
furnished as a condition of issuance of the certificate.
4. Specifies that the certificate does not relieve the estate or
the fiduciary for any amounts of tax, interest and/or
penalties that are due and unpaid at the time the certificate
is issued or which may become due from the decedent or estate
after the issuance of the certificate.
5. Provides that a claim by a public entity against an estate
must be filed within the time provided or is barred.
6. Requires notice of administration of decedent's estate be
provided to the FTB. Specifically, requires a general
personal representative or attorney of a decedent's estate to
give notice of the administration of the estate to the FTB
not later than 90 days after the date letters of
administration are first issued.
7. Requires the FTB to mail notice assessing taxes and commence
any proceeding in court within 18 months after written
request is filed (after the tax return is made) by the
fiduciary of the estate or trust.
This bill deletes the following requirements regarding tax
clearance certificates related to the final account of the
fiduciary in probate cases:
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1.Disallowing a trust's income distributed deduction claimed for
a distribution made to a nonresident beneficiary when the
fiduciary hasn't obtained the certificate.
2.Removing the prohibition against a Probate Court allowing the
fiduciary's final account without a tax clearance certificate.
3.Requiring FTB to issue a tax clearance certificate, or provide
the amount due, within 30 days of request.
4.Clarifying language that FTB's issuing the tax clearance
certificate does not erase the decedent's tax due.
5.Erasing FTB's authority to charge specialized tax service fees
for processing tax clearance certificates.
This bill also eliminates, until December 1, 2018, the tax
clearance certificate requirement related to the nonresident
beneficiaries' deduction for taxable years beginning January 1,
2014.
Comments
According to the author's office, probate is already a
challenging and lengthy ordeal. This bill eliminates a
burdensome process that is part of probate that is not necessary
to prevent assets under probate control from being distributed
to nonresident beneficiaries before state income tax liabilities
are paid.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/25/13)
Franchise Tax Board (source)
California Taxpayers Association
ASSEMBLY FLOOR : 76-0, 4/18/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
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Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,
Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,
Medina, Melendez, Morrell, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,
Torres, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Holden, Lowenthal, Mitchell, Vacancy
AB:d 6/26/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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