BILL ANALYSIS �
AB 1411
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 1411 (Committee on Revenue and Taxation) - As Introduced:
March 19, 2013
Majority vote. Fiscal committee.
SUBJECT : Tax administration: Financial Institution Record
Match: addresses.
SUMMARY : Authorizes the Franchise Tax Board (FTB) to use the
taxpayers' updated address information obtained through the
Financial Institution Record Match (FIRM) program for purposes
other than tax collection. Specifically, this bill:
1)Removes the prohibition on using FIRM tax debtor address
information for tax administration purposes; and,
2)Makes conforming, technical changes to provisions relating to
the FIRM program.
EXISTING LAW :
1)Provides that use of the taxpayer's last known address is
sufficient to satisfy the reasonable notice element of due
process.
2)Defines "last known address" as the address that appears on
the last return filed with the FTB unless the taxpayer has
provided the FTB clear and concise written or electronic
notification of a different address or the FTB has an address
it has reason to believe is the most current address for the
taxpayer.
3)Requires financial institutions doing business in this state
to participate in a quarterly data exchange process with the
FTB to match the FTB's, State Board of Equalization's (BOE),
and Employment Development Department's (EDD) lists of
delinquent debtors with the financial institution's account
holder records. [Revenue and Taxation Code (R&TC) Section
19266(b)(1) and (b)(2)].
AB 1411
Page 2
4)Specifies that any use of the information received from FIRM
for purposes other than tax collection is prohibited and is a
misdemeanor. [R&TC Section 19266(b)].
FISCAL EFFECT : The FTB staff estimates that this bill will
result in an annual revenue gain of $150,000 in fiscal year (FY)
2012-13, $200,000 in FY 2013-14, $150,000 in FY 2014-15, and
$150,000 in FY 150,000.
COMMENTS :
1)The Purpose of this Bill . The FTB is sponsoring this measure,
which allows the FTB to use tax debtor address information
obtained through the FIRM system for purposes other than tax
collection. The FTB states that the use of the information
obtained from FIRM would improve fair and efficient tax
administration by allowing the use of the most current address
available to contact taxpayers.
2)The FIRM Program: Background . Under existing law, the FTB is
required, in coordination with financial institutions doing
business in this state, to operate the FIRM system, which
provides a means to match delinquent tax debtor records with
customer records provided by financial institutions. [SB 86
(Senate Committee on Budget and Fiscal Review) Chapter 4,
Statutes of 2011]. The FIRM system permits the FTB to
identify previously unknown non-interest-bearing deposit
accounts held by delinquent income tax debtors and collect
outstanding income tax debts.
This data match program is similar to one used by the existing
Financial Institution Data Match program mandated by federal
law for the collection of delinquent child support payments.
Financial institutions doing business in California are
required to conduct records matches on delinquent taxpayers
and are compensated for their costs of compliance with these
requirements.
In 2012, the Legislature authorized the expansion of the FIRM
program to the EDD and BOE. The FTB is required to operate
and administer FIRM for those two agencies, utilizing
automated data exchanges to identify accounts of delinquent
tax debtors held at financial institutions doing business in
California.
3)Is There a Problem ? Through the use of automated data
AB 1411
Page 3
exchanges, the FIRM system allows the FTB to match its list of
delinquent tax debtors against the names of financial
institution accountholders. This information exchange is used
solely for tax collection, and existing law prohibits the use
of FIRM-obtained information for any other purpose. This
prohibition occasionally prevents the FTB from using updated
address information obtained through the FIRM system for other
purposes. This can result in taxpayers not receiving notices,
refunds, or other important correspondence from the FTB. AB
1411 would remedy this problem by simply removing the
prohibition on the FTB using address information obtained
through the FIRM system for purposes other than tax
collection.
4)The Operative Date . While AB 1411 would be effective January
1, 2014, it would apply to information obtained through FIRM
not only after, but also before, that date.
5)Related Legislation .
SB 1015 (Senate Committee on Budget and Fiscal Review), Chapter
37, Statutes of 2012, requires the EDD and the BOE to
participate in the FTB's FIRM program.
SB 86 (Senate Committee on Budget And Fiscal Review), Chapter
14, Statutes of 2011, requires the FTB, in coordination with
financial institutions doing business in this state, to
establish FIRM using automated data exchanges to the maximum
extent feasible.
REGISTERED SUPPORT / OPPOSITION :
Support
Franchise Tax Board
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
AB 1411
Page 4