BILL ANALYSIS Ó
AB 1411
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ASSEMBLY THIRD READING
AB 1411 (Revenue and Taxation Committee)
As Introduced March 19, 2013
Majority vote
REVENUE & TAXATION 6-2 APPROPRIATIONS 12-5
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|Ayes:|Bocanegra, Gordon, |Ayes:|Gatto, Bocanegra, |
| |Mullin, Pan, | |Bradford, |
| |V. Manuel Pérez, Ting | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Ammiano, Pan, Quirk, |
| | | |Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Dahle, Nestande |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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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.
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.
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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)).
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, and $150,000 in FY 2014-15.
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 Budget
and Fiscal Review Committee) 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
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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 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. This bill 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 this bill 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 Budget and Fiscal Review
Committee), Chapter 37, Statutes of 2012, requires the EDD and the
BOE to participate in the FTB's FIRM program.
SB 86 (Senate Budget And Fiscal Review Committee), 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.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098FN: 0000490
AB 1411
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