BILL ANALYSIS �
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 211|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 211
Author: Hernandez (D)
Amended: 9/3/13
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 5/1/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : 4-2, 5/20/13
AYES: De Le�n, Hill, Padilla, Steinberg
NOES: Walters, Gaines
NO VOTE RECORDED: Lara
SENATE FLOOR : 32-6, 5/28/13
AYES: Beall, Block, Calderon, Cannella, Corbett, Correa, De
Le�n, DeSaulnier, Emmerson, Evans, Galgiani, Hancock,
Hernandez, Hill, Hueso, Jackson, Knight, Lara, Leno, Lieu,
Liu, Monning, Nielsen, Padilla, Pavley, Price, Roth,
Steinberg, Torres, Wolk, Wright, Yee
NOES: Anderson, Fuller, Gaines, Huff, Walters, Wyland
NO VOTE RECORDED: Berryhill, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Tax administration: disclosure of information:
Franchise Tax Board and cities
SOURCE : Author
DIGEST : This bill extends the sunset to January 1, 2019, on
CONTINUED
SB 211
Page
2
the state-local tax sharing program; allows city officials to
receive confidential state tax information; and adds an
additional limitation on the use of the tax data to be utilized
in a form and manner to safeguard the tax information, as
specified.
Assembly Amendments change the author of the bill; delete the
city "agent" as someone allowed to receive confidential
information; and make technical and clarifying changes.
ANALYSIS : Existing state and federal laws generally prohibit
unlawful disclosure or inspection of any income tax return
information. Existing state law allows a committee of either
house of the Legislature to examine confidential taxpayer
information. Criminal sanctions, including imprisonment, apply
to Franchise Tax Board (FTB) personnel convicted of unlawful
disclosure or inspection of tax records. The FTB must notify a
taxpayer if criminal charges have been filed for willful
unauthorized inspection or disclosure of their tax data.
In 2001, the Legislature reenacted the program, but in the
reverse: it allowed city tax officials to obtain state income
tax information subject to a written agreement between FTB and
the taxing authority of a city (AB 63, Cedillo, Chapter 915,
Statutes of 2001); FTB charged the cities for its costs for
collecting and sending the information. In 2008, the
Legislature extended the program until 2014, but allowed cities
to offset costs paid by providing its business license tax
information to FTB to assist Personal Income and Corporation Tax
collection (SB 1146, Cedillo, Chapter 345, Statutes of 2008).
Under the program, FTB may grant information limited to a
taxpayers' name, address, social security or taxpayer
identification number, and business activity code. Only city
employees may use the tax information provided to the city, and
may only use it for tax collection purposes.
This bill extends the sunset from December 31, 2013 to January
1, 2019, on the state-local tax information sharing program, and
allows officials of the city to receive information.
This bill adds an additional limitation on the use of the tax
data to require the data to be utilized in a form and manner to
safeguard the tax information, as prescribed.
CONTINUED
SB 211
Page
3
Tax information provided to a city's taxing authority may not be
furnished to, or used by, any person other than an employee of
that taxing authority and shall be utilized in a form and manner
to safeguard the tax information as required by the FTB,
including, but not limited to:
A. The completion of a data exchange security questionnaire
provided by the FTB prior to approval of a data exchange by
the FTB.
B. The tax official of a city shall allow for an onsite
safeguard review conducted by the FTB.
C. The completion of disclosure training provided by the
FTB and a confidentiality statement signed by all employees
with access to information provided by the FTB confirming
the requirement of data security with respect to that
information and acknowledging awareness of penalties for
unauthorized access or disclosure under Sections 19542 and
19552 and Section 502 of the Penal Code.
D. The tax official of a city shall notify the FTB within
24 hours upon discovery of any incident of unauthorized or
suspected unauthorized access or disclosure of the tax
information and provide a detailed report of the incident
and the parties involved.
E. All records received by the tax officials of a city
shall be destroyed in a manner to make them unusable or
unreadable so an individual record may no longer be
ascertained in a time frame specified by the FTB.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee, the FTB
indicates that this measure would result in revenue gains of
$1.5 million in 2014-15 and $4.9 million in 2015-16. FTB's
indicates that it currently has reciprocal agreements with 102
cities, and that its administrative costs to administer the
program are about $718,000 annually.
SUPPORT : (Verified 9/11/13)
CONTINUED
SB 211
Page
4
California Municipal Revenue and Tax Association
Cities of Arcadia, Big Bear Lake, Commerce, El Segundo, Fresno,
Lakewood, Livermore, Los Angeles, Newport Beach, Oakland,
Orange, Santa Ana, Santa Monica, and Sunnyvale
OPPOSITION : (Verified 9/11/13)
California Taxpayers Association
ARGUMENTS IN SUPPORT : Proponents state that this bill
"Clarifies that cities may contract with third party agents in
pursuing such activities. Passage of this measure will continue
to allow disclosure of limited confidential tax information for
the specific purpose of enhancing local and state tax
enforcement activities. This is an important tool that cities
across California use for business license discovery efforts to
identify businesses that are operating without a license."
ARGUMENTS IN OPPOSITION : Opponents state, "Despite
safeguards, outsourcing tax administration functions heightens
the risk for security breaches, resulting in dissemination of
confidential information for unauthorized use. This information
can be sold for profit, resulting in physical or financial risk
to taxpayers. Potential security breaches are exacerbated by
inappropriate incentives, usually on a contingency-fee basis, to
contractors."
AB:ej 9/11/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED