California Legislature—2015–16 Regular Session

Assembly Bill No. 279

Introduced by Assembly Member Dodd

February 11, 2015

An act to amend Sections 19551.1 and 19551.5 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 279, as introduced, Dodd. Tax administration: disclosure of information: Franchise Tax Board and cities and counties.

Existing law authorizes, until January 1, 2019, a city that has entered into a reciprocal agreement, as defined, with the Franchise Tax Board, to exchange tax information, as provided. Existing law requires, until January 1, 2019, upon the request of the Franchise Tax Board, each city that assesses a city business tax or requires a city business license to annually submit to the board specified information relating to the administration of the city’s business tax program. Existing law defines the term “city” to include, among others, a city and county. Existing law limits the collection and use of this information and provides that any unauthorized use of this information is punishable as a misdemeanor.

This bill would expand these provisions to additionally apply to a county. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 19551.1 of the Revenue and Taxation
Code is amended to read:

19551.1.  

(a) (1) The Franchise Tax Board may permit the tax
officials of any begin delete city end delete begin insert city, county, or city and county end insert to enter into a
reciprocal agreement with the Franchise Tax Board to obtain tax
information from the Franchise Tax Board, as specified in
subdivision (b).

(2) For purposes of this section, “reciprocal agreement” means
a formal agreement to exchange information for tax administration
purposes between tax officials of a begin delete city end delete begin insert city, county, or city and
county, end insert and the Franchise Tax Board.

(b) The information furnished to tax officials of a begin delete city end delete begin insert city,
county, or city and county end insert under this section shall be limited as
follows:

(1) The tax officials of a begin delete city end delete begin insert city, county, or city and county end insert
are authorized to receive information only with respect to taxpayers
with an address as reflected on the Franchise Tax Board’s records
within the jurisdictional boundaries of the begin delete city end delete begin insert city, county, or city
and county end insert who report income from a trade or business to the
Franchise Tax Board.

(2) The tax information that may be provided by the Franchise
Tax Board to a begin delete city end delete begin insert city, county, or city and county end insert is limited to a
taxpayer’s name, address, social security or taxpayer identification
number, and business activity code.

(3) Tax information provided to the taxing authority of a begin delete city
may end delete begin insert city, county, or city and county shall end insert 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 Franchise Tax Board, including,
but not limited to:

(A) The completion of a data exchange security questionnaire
provided by the Franchise Tax Board prior to approval of a data
exchange by the Franchise Tax Board.

(B) The tax official of a begin delete city end delete begin insert city, county, or city and county end insert
shall allow for an onsite safeguard review conducted by the
Franchise Tax Board.

(C) The completion of disclosure training provided by the
Franchise Tax Board and a confidentiality statement signed by all
employees with access to information provided by the Franchise
Tax Board 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
of this code and Section 502 of the Penal Code.

(D) The tax official of a begin delete city end delete begin insert city, county, or city and county end insert
shall notify the Franchise Tax Board 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 begin delete city end delete begin insert city, county,
or city and county end insert shall be destroyed in a manner to make them
unusable or unreadable so an individual record may no longer be
ascertained in a timeframe specified by the Franchise Tax Board.

(4) The information provided to the tax officials of the begin delete city end delete begin insert city,
county, or city and county end insert by the Franchise Tax Board under this
section is subject to Section 19542, and may not be used for any
purpose other than the begin delete city’s end delete begin insert city, county, or city and county’s end insert tax
enforcement, or as otherwise authorized by state or federal law.

(5) Section 19542.1 applies to this section.

(c) The Franchise Tax Board may not provide any information
pursuant to this section until all of the following have occurred:

(1) An agreement has been executed between a begin delete city end delete begin insert city, county,
or city and county end insert and the Franchise Tax Board, that provides that
an amount equal to all first year costs necessary to furnish the begin delete city end delete
begin insert city, county, or city and county end insert information pursuant to this section
shall be received by the Franchise Tax Board before the Franchise
Tax Board incurs any costs associated with the activity permitted
by this section. For purposes of this section, first year costs include
costs associated with, but not limited to, the purchasing of
equipment, the development of processes, and labor.

(2) An agreement has been executed between a begin delete city end delete begin insert city, county,
or city and county end insert and the Franchise Tax Board, that provides that
the annual costs incurred by the Franchise Tax Board, as a result
of the activity permitted by this section, shall be reimbursed by
the begin delete city end delete begin insert city, county, or city and county end insert to the Franchise Tax Board.

(3) Pursuant to the agreement described in paragraph (1), the
Franchise Tax Board has received an amount equal to the first year
costs.

(d) Any information, other than the type of tax information
specified in subdivision (b), may be requested by the tax officials
of a begin delete city end delete begin insert city, county, or city and county end insert from the Franchise Tax
Board by affidavit. At the time a tax official makes the request,
he or she shall provide the person whose information is the subject
of the request, with a copy of the affidavit and, upon request, make
the information obtained available to that person.

(e) This section does not invalidate any other law. This section
does not preclude any begin delete city or county end delete begin insert city, county, or city and county end insert
from obtaining information about individual taxpayers, including
those taxpayers not subject to this section, by any other means
permitted by state or federal law.

(f) Nothing in this section shall be construed to affect any
obligations, rights, or remedies regarding personal information
provided under state or federal law.

(g) Notwithstanding subdivision (c), the Franchise Tax Board
shall waive a begin delete city’s end delete begin insert city, county, or city and county’s end insert reimbursement
of the Franchise Tax Board’s cost if a begin delete city end delete begin insert city, county, or city and
county end insert enters into a reciprocal agreement as defined in paragraph
(2) of subdivision (a). The reciprocal agreement shall specify that
each party shall bear its own costs to furnish the data involved in
the exchange authorized by this section and Section 19551.5, and
a begin delete city end delete begin insert city, county, or city and county end insert shall be precluded from
obtaining reimbursement as specified under Section 5 of the act
adding this subdivision.

(h) This section shall remain in effect only until January 1, 2019,
and as of that date, is repealed.

SEC. 2.  

Section 19551.5 of the Revenue and Taxation Code
is amended to read:

19551.5.  

(a) Notwithstanding any other law, each begin delete city end delete begin insert city,
county, or city and county end insert that assesses a begin delete city end delete begin insert city, county, or city
and county end insert business tax or requires a begin delete city end delete begin insert city, county, or city and
county end insert business license shall, upon the request of the Franchise
Tax Board, annually submit to the Franchise Tax Board the
information that is collected in the course of administration of the
begin delete city’s end delete begin insert city, county, or city and county’s end insert business tax begin insert or business
license end insert program, as described in subdivision (b).

(b) Information, collected in the course of administration of the
begin delete city’s end delete begin insert city, county, or city and county’s end insert business tax begin insert or business
license end insert program, shall be limited to the following:

(1) Name of the business, if the business is a corporation,
partnership, or limited liability company, or the owner’s name if
the business is a sole proprietorship.

(2) Business mailing address.

(3) Federal employer identification number, if applicable, or
the business owner’s social security number begin insert , if known end insert .

(4) Standard Industrial Classification (SIC) Code or North
American Industry Classification System (NAICS) Code.

(5) Business start date.

(6) Business cease date.

(7) City begin insert , county, or city and county account or license end insert number.

(8) Ownership type.

(c) The reports required under this section shall be filed on
magnetic media such as tapes or compact discs, through a secure
electronic process, or in other machine-readable form, according
to standards prescribed by regulations promulgated by the
Franchise Tax Board.

(d) Cities that receive a request from the Franchise Tax Board
shall begin providing to the Franchise Tax Board the information
required by this section as soon as economically feasible, but no
later than December 31, 2009. The information shall be furnished
annually at a time and in the form that the Franchise Tax Board
may prescribe by regulation.

(e) The begin delete city end delete begin insert city, county, or city and county end insert data provided to the
Franchise Tax Board under this section is subject to Section 19542,
and may not be used for any purpose other than state tax
enforcement or as otherwise authorized by law.

(f) If a begin delete city end delete begin insert city, county, or city and county end insert enters into a
reciprocal agreement with the Franchise Tax Board pursuant to
subdivision (a) of Section 19551.1, the begin delete city end delete begin insert city, county, or city
and county end insert shall also waive reimbursement for costs incurred to
provide information required under this section and shall be
precluded from obtaining reimbursement as specified under Section
5 of Chapter 345 of the Statutes of 2008. The reciprocal agreement
shall specify that each party shall bear its own costs to furnish the
data involved in the exchange authorized by Section 19551.1 and
this section, and the Franchise Tax Board shall be precluded from
obtaining reimbursement as specified under subdivision (c) of
Section 19551.1.

(g) A begin delete city end delete begin insert city, county, or city and county end insert shall not be required
to provide information to the Franchise Tax Board pursuant to this
section if the Franchise Tax Board fails to provide tax information
to the begin delete city end delete begin insert city, county, or city and county end insert pursuant to a reciprocal
agreement entered into pursuant to subdivision (a) of Section
19551.1 for reasons other than concerns related to confidentiality
of tax information provided to the begin delete city. end delete begin insert city, county, or city and
county. end insert

(h) This section shall remain in effect only until January 1, 2019,
and as of that date, is repealed.

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.