BILL ANALYSIS �
AB 833
Page A
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 833 (Harkey) - As Amended: March 21, 2013
Majority vote. Fiscal committee.
SUBJECT : Tax information: administration.
SUMMARY : Requires the Franchise Tax Board (FTB), the State
Board of Equalization (BOE), and the Employment Development
Department (EDD) to create a single Internet website portal that
virtually consolidates the three agencies. Specifically, this
bill :
1)Requires the FTB, BOE and EDD to do all of the following:
a) Collaborate and focus their current and future
information technology efforts on developing a single
Internet web-based portal that virtually consolidates the
agencies.
b) Consolidate tax forms, applications, and other documents
to reduce or eliminate multiple submissions of the same
information by taxpayers.
2)Provides that the Internet web-based portal shall allow
online, self-service access through a single logon for
taxpayers to do all of the following:
a) Electronically file returns, submit forms or other
information,
b) Remit amounts due, determine account balances and due
dates of taxes; and,
c) Identify the status of any appeal, claim for refund,
request for relief of interest or penalty, and any other
information the agencies deem helpful to the taxpayer in
order to assist the taxpayer in compliance with the state's
tax laws.
3)Includes legislative findings and declarations relating to the
AB 833
Page B
state tax administration and the development of a
taxpayer-focused system that virtually consolidates the BOE,
FTB, and EDD.
EXISTING LAW requires:
1)The BOE, a constitutional body, to administer sales and use
taxes (SUT), special taxes, and fees, to oversee the
administration of the local property tax by county assessors,
and assess certain statewide utility and railroad property.
In addition, the five-member BOE is authorized to
administratively review determinations made by the BOE staff
with respect to tax programs that the BOE administers and hear
taxpayer appeals of the FTB action on Personal Income Tax
(PIT), Corporation Tax (CT) and homeowner's and renter's
assistance matters.
2)The FTB, a department within the State and Consumer Services
Agency, to administer the PIT and CT Laws. The FTB is also
required to administer non-income tax related programs,
including Political Reform Audit, the Non-Admitted Insurer Tax
Program, and collections of court-ordered debt, vehicle
registration debts, and interagency intercepts. The three
member FTB is comprised of the State Controller, the Director
of the Department of Finance, and the Chair of the BOE.
3)The EDD to administer the collection, accounting, and audit
functions of California's payroll tax program, which consists
of Unemployment Insurance, Employment Training Tax, and
Disability Insurance. The EDD is also required to collect PIT
withholding on wages and salaries. The EDD is a department
within the Labor and Workforce Development Agency.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Author's Statement . The author has provided the following
statement in support of this bill:
AB 833
Page C
This bill would authorize a study of an enhanced 'one-stop
shop' portal at www.taxes.ca.gov to allow taxpayers an easy
and up-to-date integrated access to their accounts with all
three tax agencies.
Once implemented[,] this website would allow taxpayers to
file tax returns, claim refunds, and request relief of
interest and penalties with one login. Taxpayers will no
longer need to navigate through three separate tax agencies
to access forms and information. This will save taxpayers
time and increase voluntary compliance.
2)Arguments in Support . The sponsor of this bill states that AB
833 would lay the foundation for a single taxpayer portal
combining the activities of the BOE, FTB, and EDD. The
sponsor argue that it is in the best interest of all parties
involved to make the tax process as simple and efficient as
possible. He asserts that, by "bringing together the three
major tax agencies on a single website, we will save
taxpayers' time and improve inter-organization collaboration
efforts."
3)Virtual vs. Actual Consolidation . The Legislative Analyst's
Office (LAO) and departments have consistently argued that tax
agency and function consolidation would require the state to
incur significant implementation costs, with only possible
long-term savings. Whether long-term savings will offset
those immediate costs is largely unknown. The LAO, in its
report<1>, concluded that "consolidation of the tax agencies'
payment and documentation processing activities could in the
medium to long term generate some annual cost savings and
interest earnings through elimination of duplicative functions
and increased efficiencies." However, the state would have "to
incur significant net costs in the short term to achieve these
savings." Recognizing that having three separate agencies
creates confusion for some taxpayers, the LAO report suggested
that the state expand electronic filing and processing. In
addition, the LAO recommended using electronic filing and
---------------------------
<1> Tax Agency Consolidation: Remittance and Return Processing,
LAO, January 2005.
AB 833
Page D
processing to achieve a "virtual consolidation" of remittance
and document processing. The report explained that, under
this type of system, "taxpayers could log onto a single Web
site and through a series of menus, be directed to the proper
form which would allow them to file their taxes or remit a
payment." The form, in turn, would be automatically directed
to the appropriate agency.
4)The California Tax Service Center (CTSC) Website . A few years
later, the LAO "virtual" consolidation proposal was partly
implemented through the development of the CTSC website,
www.taxes.ca.gov . It was established to simplify taxpayers'
experience in complying with state and federal tax laws. The
website is a result of the "California Fed State Partnership,"
which consists of the BOE, the EDD, the FTB, and the Internal
Revenue Service (IRS). It includes information on income,
payroll, SUT, as well as other taxes and fees. Although the
website provides links to the appropriate forms, information,
requirements, and payment options located on the BOE's, FTB's,
EDD's, and the IRS' individual websites, it does not currently
allow a taxpayer to access the taxpayer's records at the BOE,
EDD, or FTB with one single logon.
AB 833 declares the intent of the Legislature for the CTSC to be
used virtual consolidation of the three agencies' operations.
However, the codified portion of this bill does not specify
whether the three agencies, in developing a single Web-based
portal, should use the existing CTSC website or create a new
one. Nor does this bill outline the scope, roles or duties of
each participating agency. The author may wish to consider
amending this bill to specify the scope of the proposed
virtual consolidation and to provide more direction to the
agencies.
5)Cost Versus Convenience : This bill differs significantly from
consolidation efforts attempted in previous years to eliminate
or consolidate tax agencies. Instead, the measure aims at
making tax filing more convenient for taxpayers by combining
specified functions on a single website. However, this bill
would require improvements to the existing website or a
development of a new website, and may necessitate discarding
existing systems and forms in place of new ones. For example,
the BOE staff notes that the BOE's current information
AB 833
Page E
technology is not taxpayer-focused and its ability to fully
embrace new technologies is severely limited. Similarly, the
FTB staff believes that the "virtual consolidation" will add
complexities and "pose risks to current revenue generating
technology efforts." As such, the proposed "virtual
consolidation" may require significant upfront investment to
upgrade or replace information technology systems and to
create new forms.
6)Related Legislation :
SB 582 (Knight), introduced in the current legislative
session, requires the FTB, BOE, and EDD to conduct a
feasibility study on the development of a single Internet Web
site portal that virtually consolidates the agencies, as
provided. SB 582 is pending in the Senate Governance and
Finance Committee.
SB 1326 (Harman), introduced in the 2011-12 legislative
session, is similar to this bill. SB 1326 was held under
submission in the Senate Appropriations Committee.
AB 77 (Gorell), introduced in the 2011-12 legislative session,
would have consolidated the FTB, EDD, and the California
Department of Insurance into the BOE. This bill was never
heard in committee.
SB 1133 (Runner), introduced in the 2009-10 legislative
session, was similar to AB 77. SB 1133 was held under
submission in the Senate Revenue and Taxation Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Board of Equalization Member George Runner
Opposition
AB 833
Page F
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098