BILL ANALYSIS Ó
SB 442
Page 1
Date of Hearing: June 10, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
SB 442 (Wyland) - As Amended: April 16, 2013
Majority vote. Fiscal committee.
SENATE VOTE : 32-0
SUBJECT : State Board of Equalization: erroneous charges
SUMMARY : Extends, from the Sales and Use Tax (SUT) Law to other
tax and fee programs, the ability of a taxpayer to file a
reimbursement claim with the State Board of Equalization (BOE)
for bank charges and other reasonable third-party check charge
fees incurred as a direct result of an erroneous processing or
collection action by the BOE. Specifically, this bill :
1)Adds erroneous processing and collection actions to the list
of BOE actions giving rise to a claim for reimbursement of
bank charges and third-party check charge fees incurred by a
taxpayer.
2)Alters the deadline for filing reimbursement claims, by
requiring claims to be filed within 90 days of the date the
bank and third-party charges were incurred by the taxpayer,
instead of 90 days from the date of the erroneous BOE action.
EXISTING LAW :
1)Allows a taxpayer, under the SUT Law, to file a claim with the
BOE for reimbursement of bank charges and any other reasonable
third-party check charge fees incurred as a direct result of
an erroneous:
a) Levy or notice to withhold;
b) Processing action; or,
c) Collection action.
2)Allows a taxpayer, under various other BOE-administered tax
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and fee programs, to file a claim only for those charges or
fees incurred as a direct result of an erroneous levy or
notice to withhold.
3)Requires claims to be filed within 90 days of the erroneous
BOE action.
FISCAL EFFECT : The BOE estimates negligible revenues losses.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
The [BOE] collects sales and use tax, as well as special
taxes and fees. The BOE is tasked with undertaking
collection action on delinquent accounts, which includes
issuing a levy or notice to withhold and the seizure of
property, in order to satisfy the tax obligations of that
taxpayer.
Current law allows the BOE to provide a reimbursement for
bank or third party charges associated with an erroneously
issued levy or notice to withhold, erroneous processing
action, or erroneous collection action. This reimbursement
currently only applies to the sales and use tax and must be
filed within 90 days of the erroneous action by the [BOE].
Nearly identical provisions are contained in the other code
sections for special taxes and fees, except that they don't
expressly provide that a taxpayer may claim reimbursement
for bank and third party check charges due to an "erroneous
processing action or erroneous collection action."
There are documented cases where taxpayers are prevented
from filing a claim within 90 days of the erroneous action.
In one example, the BOE filed a levy in error, and the
taxpayer did not receive the BOE's Notice since it was sent
to an incorrect address. Additionally, the taxpayer's
financial institution delayed complying with the levy for
nearly three months, and notified the taxpayer of the levy
at the time. Since the taxpayer's first notification of the
levy came later than 90 days after the initial notice was
issued, which resulted in early withdrawal fees and bank
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processing [fees], the taxpayer was unable to file for a
claim with the BOE for reimbursement of bank charges.
SB 442 would conform all special tax and fee laws
administered by the [BOE] by providing that in addition to
reimbursement of bank or third party check charges incurred
by a taxpayer as the direct result of an erroneous levy or
notice to withhold, a taxpayer may claim reimbursement due
to an erroneous processing action or erroneous collection
action by the BOE.
Additionally, SB 442 will provide a taxpayer 90 days from
the date the bank or third party charges were incurred to
file a reimbursement claim with the BOE, as opposed to 90
days from the BOE's erroneous action.
These changes to existing law [conform] the BOE's special
tax and fee programs to the sales and use tax program and
[allow] the BOE to fairly and equitably administer the
sales and use tax program and special tax and fee programs
under the variety of circumstances that could arise
following an erroneous levy or erroneous processing action
by the BOE.
2) Proponents of this bill note the following:
It only is fair and equitable to reimburse taxpayers for
bank and third-party check charge fees when those charges
are a direct result of a BOE error, and are not due to any
fault of the taxpayer or feepayer. The provisions in this
bill are consistent with the [SUT] Law, and the intent of
the original legislation that authorized the BOE to
reimburse taxpayers for such charges arising from BOE
errors. Also, this bill parallels provisions in Revenue
and Taxation Code Section 21018 administered by the
Franchise Tax Board (FTB), which specifically allow
taxpayers to claim reimbursement for bank charges incurred
by taxpayers through similar types of FTB processing and
collection errors.
3)The BOE, which is sponsoring this measure, notes the following
in its staff analysis of this bill:
a) Erroneous collection or processing action :
"Occasionally, an erroneous BOE action results in a
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taxpayer incurring charges and fees unrelated to a BOE levy
or notice to withhold. Existing special tax and fee laws
only allow reimbursement due to an erroneous levy or notice
to withhold. Accordingly, existing law prohibits
reimbursement for an erroneous processing action or
erroneous collection action by the BOE. An erroneous
processing or collection action occurs when the BOE
double-debits a taxpayer's bank account and erroneously
credits the electronic payment to another taxpayer's
account. The double-payment results in insufficient funds,
which in-turn leads to overdraft bank fees. Existing
special tax and fee laws authorize the BOE to reverse the
erroneous debit; however, the laws do not expressly
authorize reimbursement of the charges and fees incurred."
b) Stringent filing deadline : "Sometimes taxpayers are
unable to file a claim within 90 days from the erroneous
BOE action date. In one example, the BOE filed an
erroneous levy and sent the taxpayer's Notice of Levy to an
incorrect address. Additionally, the taxpayer's financial
institution delayed compliance with the levy for nearly
three months. As a result, the financial institution sent
the first levy notice to the taxpayer about three months
from the erroneous BOE action date. The erroneous levy
resulted in early withdrawal fees and bank processing fees.
The taxpayer failed to meet the 90-day reimbursement claim
deadline due to the delayed levy notice. Existing law
required the BOE to deny the claim even though the taxpayer
met all other conditions. This bill revises the basis of
the 90-day reimbursement claim filing deadline from the
erroneous BOE action date to the date the taxpayer incurs
the bank and third-party charges. This change provides a
dependable measure to ensure a taxpayer receives at least
one of the two action notices: either the BOE notice, or
the bank or third-party notice of action. Had this
timetable been in law for the previously cited taxpayer,
the taxpayer would have met the reimbursement claim
deadline since the 90-day clock started ticking when the
bank levied the taxpayer's account."
4)Committee Staff Comments:
a) What does this bill do? : This bill adds erroneous BOE
processing and collection actions to the list of BOE
actions giving rise to a taxpayer's claim for reimbursement
SB 442
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of bank charges and third-party check charge fees incurred.
Currently, a taxpayer can only seek reimbursement
following erroneous processing or collection actions under
the SUT Law. This bill would simply extend this authority
to other tax and fee programs the BOE administers.
In addition, this bill would alter the deadline for filing
a reimbursement claim, by requiring claims to be filed
within 90 days of the date the bank and third-party charges
were incurred by the taxpayer, instead of 90 days from the
date of the erroneous BOE action.
b) Proposed technical amendments : Committee staff suggests
the following technical amendments to this bill:
i) On page 3, in line 22, strike "for reimbursement"
and insert "or reimbursed";
ii) On page 3, strike lines 27-29, and insert "(1) The
erroneous levy or notice to withhold, erroneous
processing action, or erroneous collection action was
caused by board error.";
iii) On page 4, in line 17, strike "for reimbursement"
and insert "or reimbursed";
iv) On page 5, in line 12, strike "for reimbursement"
and insert "or reimbursed";
v) On page 6, in line 7, strike "for reimbursement" and
insert "or reimbursed";
vi) On page 7, in line 2, strike "for reimbursement" and
insert "or reimbursed";
vii) On page 7, in line 37, strike "for reimbursement"
and insert "or reimbursed";
viii) On page 8, in line 33, strike "for reimbursement"
and insert "or reimbursed";
ix) On page 9, in line 28, strike "for reimbursement"
and insert "or reimbursed";
x) On page 9, in line 35, strike "resulted from" and
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insert "was caused by";
xi) On page 9, in line 40, strike "that was";
xii) On page 10, in line 1, strike "The requirement of
this paragraph" and insert "This provision";
xiii) On page 10, in line 23, strike "to" and insert "by";
xiv) On page 10, in line 24, strike "for reimbursement"
and insert "or reimbursed";
xv) On page 11, in line 19, strike "for reimbursement"
and insert "or reimbursed"; and,
xvi) On page 12, in line 14, strike "for reimbursement"
and insert "or reimbursed".
REGISTERED SUPPORT / OPPOSITION :
Support
State Board of Equalization (sponsor)
California Taxpayers Association
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098