California Legislature—2013–14 Regular Session

Assembly BillNo. 1411


Introduced by Committee on Revenue and Taxation (Bocanegra (Chair), Gordon, Mullin, Pan, V. Manuel Pérez, and Ting)

March 19, 2013


An act to amend Section 19266 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 1411, as introduced, Committee on Revenue and Taxation. Tax administration: Financial Institution Record Match: addresses.

Existing law requires the Franchise Tax Board to administer specified taxes and collect those taxes from delinquent tax debtors. Existing law requires the Franchise Tax Board, in coordination with financial institutions doing business in this state, to operate a Financial Institution Record Match System utilizing automated data exchanges to the maximum extent feasible in order to allow the Franchise Tax Board to match its list of delinquent tax debtors, as defined, with the lists provided by the financial institutions. Information provided by financial institutions relating to tax debtors includes the name, record address, other addresses, and other identifying information for each delinquent tax debtor, as identified by the Franchise Tax Board. Existing law prohibits the use of tax debtor information by the Franchise Tax Board for purposes other than tax collection, and punishes the unauthorized use of certain data as a misdemeanor.

This bill would remove the prohibition on the Franchise Tax Board on using Financial Institution Record Match tax debtor address information for purposes other than tax collection.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 19266 of the Revenue and Taxation Code
2 is amended to read:

3

19266.  

(a) (1) The Franchise Tax Board, in coordination with
4financial institutions doing business in this state, shall operate a
5Financial Institution Record Match System utilizing automated
6data exchanges to the maximum extent feasible.

7(2) The Franchise Tax Board shall prescribe any rules and
8regulations that may be necessary or appropriate to implement this
9section. These rules and regulations shall include all of the
10following:

11(A) A structure by which financial institutions, or their
12designated data-processing agents, shall receive from the Franchise
13Tax Board the file or files of delinquent debtors that the institution
14shall match with its own list of accountholders to identify
15 delinquent tax debtor accountholders at the institution.

16(B) An option by which financial institutions without the
17technical ability to process the data exchange, or without the ability
18to employ a third-party data processor to process the data exchange,
19may forward to the Franchise Tax Board a list of all accountholders
20and their social security numbers or other taxpayer identification
21numbers, so that the Franchise Tax Board shall match that list with
22the file or files of delinquent tax debtors.

23(C) Authority for the Franchise Tax Board to exempt a financial
24institution from the requirements of this section if the Franchise
25Tax Board determines that the financial institution participation
26would not generate sufficient revenue to be cost effective for the
27Franchise Tax Board.

28(D) Authority for the Franchise Tax Board to temporarily
29suspend the requirements of this section for a financial institution
30if the financial institution provides the Franchise Tax Board with
31a written notice from its supervisory banking authority that it is
32determined to be undercapitalized, significantly undercapitalized,
33or critically undercapitalized as defined by FDIC Regulation
34325.103(b)(3), (4), and (5) or NCUA Regulation 702.102. The
P3    1notice provided pursuant to this subparagraph shall be subject to
2the protections of Section 19542.

3(b) The Financial Institution Record Match System shall not be
4subject to any limitation set forth in Chapter 20 (commencing with
5Section 7460) of Division 7 of Title 1 of the Government Code.
6However, any use of the informationbegin insert, other than information
7relating to an individual’s address,end insert
provided pursuant to this
8section for any purpose other than the collection of amounts
9identified in paragraphs (1), (2), and (3) shall be a violation of
10Section 19542.

11(1) Delinquent amounts due the board, as imposed under Part
121 (commencing with Section 6001), Part 1.5 (commencing with
13Section 7200), Part 1.6 (commencing with Section 7251), Part 1.7
14(commencing with Section 7280), Part 3 (commencing with Section
158601), Part 3.5 (commencing with Section 9401), Part 6
16(commencing with Section 11201), Part 13 (commencing with
17Section 30001), Part 14 (commencing with Section 32001), Part
1818.5 (commencing with Section 38101), Part 19 (commencing
19with Section 40001), Part 20 (commencing with Section 41001),
20Part 22 (commencing with Section 43001), Part 22.5 (commencing
21with Section 44000), Part 23 (commencing with Section 45001),
22Part 24 (commencing with Section 46001), Part 26 (commencing
23with Section 50101), Part 30 (commencing with Section 55001),
24or Part 31 (commencing with Section 60001).

25(2) Delinquent amounts due the Employment Development
26Department, as imposed under the Unemployment Insurance Code,
27or other debts or penalty assessments referred to the Employment
28Development Department for collection.

29(3) Delinquent franchise or income tax or other debts referred
30to the Franchise Tax Board for collection, as imposed under Part
315 (commencing with Section 10701), Part 10 (commencing with
32Section 17001),begin delete Part 10.2 (commencing with Section 18401)end deletebegin insert this
33partend insert
, or Part 11 (commencing with Section 23001).

34(c) (1) To effectuate the Financial Institution Record Match
35System, financial institutions subject to this section shall provide
36to the Franchise Tax Board on a quarterly basis the name, record
37address, and other addresses, social security number or other
38taxpayer identification number, and other identifying information
39for each delinquent tax debtor, as identified by the Franchise Tax
P4    1Board by name and social security number or other taxpayer
2identification number, who maintains an account at the institution.

3(2) The first data file created by the Franchise Tax Board for
4purposes of matching tax debtor records to financial institution
5accountholder records shall be limited to 600,000 tax debtor
6records. The number of tax debtor records included in a subsequent
7data file created by the Franchise Tax Board may be increased by
8no more than 600,000 tax debtor records greater than the number
9of tax debtor records included in the immediately preceding data
10file until all eligible tax debtor records are included in the data
11 match file.

12(d) Unless otherwise required by law, a financial institution
13furnishing a report or providing information to the Franchise Tax
14Board pursuant to this section shall not disclose to a depositor or
15an accountholder, or a codepositor or coaccountholder, that the
16name, address, social security number or other taxpayer
17identification number, or other identifying information of that
18delinquent tax debtor has been received from or furnished to the
19Franchise Tax Board.

20(e) A financial institution shall incur no obligation or liability
21to any person arising from any of the following:

22(1) Furnishing information to the Franchise Tax Board as
23required by this section.

24(2) Failing to disclose to a depositor or accountholder that the
25name, address, social security number or other taxpayer
26identification number, or other identifying information of that
27delinquent tax debtor was included in the data exchange with the
28Franchise Tax Board required by this section.

29(3) Any other action taken in good faith to comply with the
30requirements of this section.

31(f) The Franchise Tax Board may institute civil proceedings to
32enforce this section.

33(g) Any financial institution that willfully fails to comply with
34the rules and regulations promulgated by the Franchise Tax Board
35for the administration of delinquent tax collections, unless it is
36shown to the satisfaction of the Franchise Tax Board that the failure
37is due to reasonable cause, shall be assessed a penalty upon notice
38and demand of the Franchise Tax Board and collected in the same
39manner as tax. The penalty imposed under this section shall be in
40an amount equal to fifty dollars ($50) for each record not provided,
P5    1but the total imposed on that financial institution for all such
2failures during any calendar year shall not exceed one hundred
3thousand dollars ($100,000).

4(h) For purposes of this section:

5(1) “Account” means a demand deposit account, share or share
6draft account, checking or negotiable withdrawal order account,
7savings account, time deposit account, or money market mutual
8fund account, regardless of whether the account bears interest.

9(2) “Financial institution” means:

10(A) A depository institution, as defined in Section 1813(c) of
11Title 12 of the United States Code.

12(B) An institution-affiliated party, as defined in Section 1813(u)
13of Title 12 of the United States Code.

14(C) A federal credit union or state credit union, as defined in
15Section 1752 of Title 12 of the United States Code, including an
16institution-affiliated party of a credit union, as defined in Section
171786(r) of Title 12 of the United States Code.

18(D) A benefit association, insurance company, safe deposit
19company, money-market fund, or similar entity authorized to do
20business in this state.

21(3) “Delinquent tax debtor” means any of the following:

22(A) Any person liable for any tax, fee, or surcharge amounts,
23and any penalty, interest, or other amounts required to be paid to
24the board, where the liability remains unpaid after 30 days from
25demand for payment by the board, and the person is not making
26current timely installment payments on the liability under an
27installment payment agreement as provided by law.

28(B) Any person liable for any amounts required to be paid to
29the Employment Development Department or for any debts or
30penalty assessments referred to the Employment Development
31Department for collection and the person is not making current
32timely installment payments on the liability under an approved
33installment payment agreement as provided by law.

34(C) Any person liable for any income or franchise tax or other
35debt referred to the Franchise Tax Board for collection as imposed
36under Part 5 (commencing with Section 10701), Part 10
37(commencing with Section 17001),begin delete Part 10.2 (commencing with
38Section 18401)end delete
begin insert this partend insert, or Part 11 (commencing with Section
3923001), including tax, penalties, interest, and fees, where the tax
40or debt, including the amount, if any, referred to the Franchise Tax
P6    1Board for collection remains unpaid after 30 days from demand
2for payment by the Franchise Tax Board, and the person is not
3making current timely installment payments on the liability under
4an agreement pursuant to Section 19008.

5(i) A financial institution shall be reimbursed by the Franchise
6Tax Board for actual costs incurred to implementbegin delete the provisions
7ofend delete
this section. Upon receipt of an invoice from the financial
8institution, cost reimbursement by the Franchise Tax Board shall
9be limited to the following:

10(1) For one-time startup costs of a financial institution, no more
11 than two thousand five hundred dollars ($2,500).

12(2) For data matching costs of a financial institution, other than
13one-time startup costs, no more than two hundred fifty dollars
14($250) per calendar quarter.

15(j) The first data exchange for purposes of matching tax debtor
16records to financial institution accountholder records shall occur
17no earlier than April 1, 2012.

18(k) This section shall be operative 120 days after the effective
19date ofbegin delete the act adding this sectionend deletebegin insert Chapter 14 of the Statutes of
202011end insert
and shall apply with respect to persons that are delinquent
21tax debtors on and after that date.

22(1) Notwithstanding any otherbegin delete provision ofend delete law, on or after
23January 1, 2013, and on a quarterly basis thereafter, the board and
24the Employment Development Department shall, in the format
25and manner specified by the Franchise Tax Board, provide their
26respective delinquent tax debtor information to the Franchise Tax
27Board for inclusion in the Financial Institutions Records Match
28System.

29(2) The Franchise Tax Board shall include the delinquent tax
30debtor information provided by the board and the Employment
31Development Department in its data file used to match delinquent
32tax debtor records to financial institution accountholder records.

33(3) The Franchise Tax Board shall provide the board or the
34Employment Development Department, as applicable, with any
35matched financial institution accountholder record information
36resulting from the delinquent tax debtor information provided by
37the board or the Employment Development Department.

38(4) The board and the Employment Development Department
39shall reimburse the Franchise Tax Board for any costs incurred by
40the Franchise Tax Board related to the implementation and
P7    1administration of this section with respect to delinquent tax debtors
2described in subparagraph (A) or (B), respectively, of paragraph
3(3) of subdivision (h).

begin insert

4(l) The amendments to this section by the act adding this
5subdivision shall apply to information provided pursuant to this
6section before, on, and after the effective date of that act.

end insert


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