BILL NUMBER: AB 1777	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 7, 2014

INTRODUCED BY   Assembly Member Quirk-Silva
    (   Principal coauthor:   Assembly Member
  Gorell   ) 

                        FEBRUARY 18, 2014

   An act to repeal and add Section 19132.5 of the Revenue and
Taxation Code, relating to taxation, and making an appropriation
therefor.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1777, as amended, Quirk-Silva. Income taxation: timeliness
penalty: abatement.
   Existing law imposes penalties when a taxpayer fails to timely
file an income tax return or fails to timely pay the tax due as shown
on, or as required to be shown on, the tax return, unless it is
shown that the failure is due to reasonable cause and not due to
willful neglect.
   The bill would require the Franchise Tax Board, upon taxpayer
request, to abate a failure-to-file or failure-to-pay timeliness
penalty when specified circumstances are met, including where the
taxpayer has paid, or is in a current arrangement to pay, all tax
currently due and the Franchise Tax Board has not imposed a
timeliness penalty in the year of the request or prior 4 years. The
bill would make a continuous appropriation from the General Fund to
the Franchise Tax Board in those amounts necessary to make payments
to those taxpayers who have paid the penalty that is being abated
before the effective date of this bill.
   The bill would make a legislative finding and declaration
regarding the public purpose served by the bill.
   Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 19132.5 of the Revenue and Taxation Code is
repealed.
  SEC. 2.  Section 19132.5 is added to the Revenue and Taxation Code,
to read:
   19132.5.  (a) (1) A taxpayer may elect to request abatement of a
timeliness penalty under this section for a timeliness penalty that
has been considered and rejected for abatement, waiver, or rescission
pursuant to the provisions of the section under which the penalty is
imposed.
   (2) A taxpayer may, in lieu of requesting consideration for
abatement, waiver, or recission pursuant to the provisions of the
section under which the timeliness penalty is imposed, instead
request abatement of a timeliness penalty under this section.
   (b) If a taxpayer described in subdivision (a) requests, either
orally or in writing, the abatement of a timeliness penalty pursuant
to this section, the timeliness penalty shall be abated if all of the
following apply:
   (1) The taxpayer has not previously been required to file a
California return under Part 10 (commencing with Section 17001), this
part, or Part 11 (commencing with Section 23001), or no other
timeliness penalty has been imposed by the Franchise Tax Board in the
calendar year of the request for abatement or in the prior four tax
years.
   (2) The taxpayer has filed all returns required under Part 10
(commencing with Section 17001), this part, or Part 11 (commencing
with Section 23001), as of the date of the taxpayer's request for
abatement.
   (3) Excluding the timeliness penalty that is the subject of the
abatement request, the taxpayer has paid in full, or arranged to pay
pursuant to an installment agreement, any tax, penalties, fees, and
interest due for all currently required returns and the taxpayer is
current with all installment payments.
   (c) For purposes of this section, "timeliness penalty" means a
penalty imposed under Section 19131, 19132, 19172, or 19172.5.
   (d) For purposes of this section:
   (1) A timeliness penalty imposed and subsequently abated due to a
determination of reasonable cause or reasonable cause and not willful
neglect with respect to the taxpayer or the taxpayer's spouse, shall
be considered to have not been imposed.
   (2) A timeliness penalty is considered imposed on the original due
date of the return for the taxable year for which the penalty is
imposed.
   (3) If a taxpayer requests abatement for more than one taxable
year and two or more taxable years would be eligible for abatement
under this section, then only the penalty for the earliest taxable
year shall be abated.
   (4) This section shall apply to requests for abatement made
before, on, or after the effective date of the act adding this
section.
   (e) The Franchise Tax Board may issue any regulations necessary or
appropriate to implement this section.
   (f) Notwithstanding Section 13340 of the Government Code, and
without regard to fiscal year, there is hereby continuously
appropriated from the General Fund to the Franchise Tax Board those
amounts necessary to make the payments required by the act adding
this subdivision with respect to the abatement of penalties paid
before the effective date of the act adding this subdivision.
  SEC. 3.  The Legislature finds and declares that the abatement by
this act of timeliness penalties with respect to the abatement of
penalties paid before the effective date  of the act adding
this subdivision   this act  , serves a public
purpose and does not constitute a gift of public funds within the
meaning of Section  6  of Article XVI of the California
Constitution.