BILL ANALYSIS Ó
SB 582
Page 1
Date of Hearing: August 12, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
SB 582 (Knight) - As Amended: June 25, 2013
Majority vote. Fiscal committee.
SENATE VOTE : 38-0
SUBJECT : Tax information: administration
SUMMARY : Requires the Franchise Tax Board (FTB), the State
Board of Equalization (BOE), and the Employment Development
Department (EDD) to conduct a feasibility study on the
development of a single Internet Web-based portal that virtually
consolidates the three agencies. Specifically, this bill :
1)Require FTB, BOE, and EDD to do all of the following:
a) Collaborate and conduct a feasibility study for
developing a single Internet Web-based portal that
virtually consolidates the three agencies; and,
b) Consolidate tax forms, applications, and other documents
to reduce or eliminate multiple submissions of the same
information by taxpayers if the three agencies determine
that a need exist to improve cost-effective services and an
appropriation is made by the legislature.
2)Provides that the Internet Web-based portal shall allow
online, self-service access through a single logon for
taxpayers to do all of the following:
a) Electronically file returns, submit forms or other
information;
b) Remit amounts due, determine account balances and due
dates of taxes; and,
c) Identify the status of an appeal, claim for refund,
request for relief of interest or penalty, and any other
information the agencies deem helpful to the taxpayer to
assist the taxpayer in compliance with the state's tax
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laws.
3)Includes legislative findings and declarations relating to the
state tax administration and the development of a
taxpayer-focused system that virtually consolidates the BOE,
FTB, and EDD
EXISTING LAW requires:
1)The BOE, a constitutional body, to administer sales and use
taxes (SUT), special taxes, and fees, to oversee the
administration of the local property tax by county assessors,
and assess certain statewide utility and railroad property.
In addition, the five-member BOE is authorized to
administratively review determinations made by the BOE staff
with respect to tax programs that the BOE administers and hear
taxpayer appeals of the FTB action on Personal Income Tax
(PIT), Corporation Tax (CT) and homeowner's and renter's
assistance matters.
2)The FTB, a department within the State and Consumer Services
Agency, to administer the PIT and CT Laws. The FTB is also
required to administer non-income tax related programs,
including Political Reform Audit, the Non-Admitted Insurer Tax
Program, and collections of court-ordered debt, vehicle
registration debts, and interagency intercepts. The three
member FTB is comprised of the State Controller, the Director
of the Department of Finance, and the Chair of the BOE.
3)The EDD to administer the collection, accounting, and audit
functions of California's payroll tax program, which consists
of Unemployment Insurance, Employment Training Tax, and
Disability Insurance. The EDD is also required to collect PIT
withholding on wages and salaries. The EDD is a department
within the Labor and Workforce Development Agency.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Author's Statement : The author has provided the following
statement in support of this bill:
Senate Bill 582 asks the [BOE], [FTB], and [EDD] to conduct
a feasibility study to consolidate tax services into a
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single website. The study will investigate the most
effective and cost-efficient manner to develop a web-based
portal that virtually consolidates the agencies to enable
online, self-service access through a single logon for
taxpayers. The study will also investigate the
consolidation of forms, applications, and other documents.
The goal is to streamline filing requirements by providing
taxpayers with up-to-date integrated access to accounts
with all three tax agencies.
2)Arguments in Support : The sponsor states that "[t]he tax
paying process in California has become complex and difficult
to navigate for our taxpayers. To obtain assistance and
comply with California's current tax laws, policies, and
procedures, many taxpayers interact with each of [the] three
agencies separately." This bill will help provide a seamless
tax paying experience with all three agencies by laying the
foundation for a "single website with guidance in navigating
the complexities of payment and reporting obligations,
obtaining real time information pertinent to their individual
accounts, and receiving assistance to achieve optimum
compliance with California's complex tax system." This bill
"would be an important step toward efficiency, both by more
effectively using tax dollars and in assisting the taxpayer in
more easily complying with California's complicated tax laws."
3)Virtual vs. Actual Consolidation : The Legislative Analyst's
Office (LAO) has consistently argued that consolidation of
state tax agencies and functions would require the state to
incur significant implementation costs, with only possible
long-term savings. Whether long-term savings will offset
those immediate costs is largely unknown. The LAO, in its
report, concluded that "consolidation of the tax agencies'
payment and documentation processing activities could in the
medium to long term generate some annual cost savings and
interest earnings through elimination of duplicative functions
and increased efficiencies." Tax Agency Consolidation:
Remittance and Return Processing, LAO, January 2005. However,
the state would have "to incur significant net costs in short
term to achieve these savings." Recognizing that having three
separate agencies creates confusion for some taxpayers, the
LAO report suggested that the state expand electronic filing
and processing. In addition, the LAO recommended using
electronic filing and processing to achieve a "virtual
consolidation" of remittance and document processing. The
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report explained that, under this type of system, "taxpayers
could log onto a single website and through a series of menus,
be directed to the proper form which would allow them to file
their taxes or remit a payment." The form, in turn, would be
automatically directed to the appropriate agency.
4)The California Tax Service Center (CTSC) Website : LAO's
virtual consolidation proposal was partly implemented through
the development of the CTSC website, www.taxes.ca.gov . It was
established to simplify taxpayers' experience in complying
with state and federal tax laws. The website is a result of
the "California Fed State Partnership," which consists of the
BOE, the EDD, and the FTB, and the Internal Revenue Service
(IRS). It includes information on income, payroll, SUT, as
well as other taxes and fees. Although the website provides
links to the appropriate forms, information, requirements, and
payment options located on the BOE's, FTB's, EDD's, and the
IRS' individual websites, it does not currently allow a
taxpayer to access the taxpayer's records at the BOE, EDD, or
FTB with one single logon.
5)What To Do? : This bill requires the FTB, BOE, and EDD to
conduct a feasibility study on the development of a single
Internet Web-based portal. However, the bill does not specify
which department is in charge of drafting the report, when the
report must be completed, or whether the findings must be
presented to the Legislature. Without further clarification,
this bill runs the risk of substantial duplication efforts by
all three agencies. This bill is also unclear as to whether
the feasibility study is required to build off of the current
CTSC website or develop a new website from the ground up. The
author may wish to consider amending this bill to specify the
scope of the proposed feasibility study and to provide more
direction to the agencies.
6)Related Legislation :
AB 833 (Harkey), introduced in the current legislative
session, requires the FTB, BOE, and EDD to conduct a
feasibility study on the creation of a single Internet
web-based portal that virtually consolidates the three
agencies. AB 833 is pending in the Senate Appropriations
Committee.
SB 1326 (Harman), introduced in the 2011-12 legislative
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session, would have required the FTB, BOE, and EDD to create a
single Internet Web-based portal that virtually consolidates
the three agencies. SB 1326 was held under submission in the
Senate Appropriations Committee.
AB 77 (Gorell), introduced in the 2011-12 legislative session,
would have consolidated the FTB, EDD, and the California
Department of Insurance into the BOE. This bill was never
heard in committee.
SB 1133 (Runner), introduced in the 2009-10 legislative
session, was similar to AB 77. SB 1133 was held under
submission in the Senate Revenue and Taxation Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
George Runner, State Board of Equalization (Sponsor).
Opposition
None on file
Analysis Prepared by : Carlos Anguiano / REV. & TAX. / (916)
319-2098