California Legislature—2015–16 Regular Session

Assembly Bill No. 405

Introduced by Assembly Member Brough

February 19, 2015

An act to amend Section 6591.5 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 405, as introduced, Brough. State Board of Equalization: administration: interest.

The Sales and Use Tax Law, and other laws by reference to that law, provide that interest is paid by taxpayers and feepayers with respect to underpayments of various taxes, surcharges, and fees at a modified adjusted rate per annum, as defined by reference to a specified federal statute, and that interest is paid to taxpayers and feepayers with respect to overpayments of various taxes, surcharges, and fees as determined in accordance with a specified federal statute, which requires that the rate paid on overpayments be based on the rate of 13-week treasury bills, as specified.

This bill would revise the definition of “modified adjusted rate per annum,” which would thereby require that interest on overpayments be determined in the same manner as interest on underpayments is now determined.

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

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

SECTION 1.  

Section 6591.5 of the Revenue and Taxation
Code is amended to read:

begin delete

6591.5.  

(a) (1) For interest required to be paid to the state
upon underpayments of tax to the state, “ modified adjusted rate
per annum” means the adjusted annual rate established pursuant
to subdivision (c), plus three percentage points.

(2) For interest required to be paid by the state upon
overpayments of tax, “modified adjusted rate per annum” means
the adjusted annual rate established pursuant to subdivision (d).

(b) “Modified adjusted rate per month, or fraction thereof”
means the modified adjusted rate per annum divided by 12.

(c) The

end delete

begin insert

begin insert 6591.5. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert “Modified adjusted end insert rate begin delete established for interest to
be paid upon underpayments of tax shall be end delete begin insert per annum” means
the rate end insert determined in accordance with the provisions of Section
begin delete 6621 end delete begin insert 6621(a)(2) end insert of the Internal Revenue Code begin insert , end insert which begin delete establish end delete
begin insert establishes end insert the underpayment begin delete rate, except end delete begin insert rate under end insert that begin delete the
determination specified in end delete begin insert code, plus three percentage points,
except its reference to end insert Section 6621(b) of the Internal Revenue
Code begin insert , and the determination therein, end insert shall be modified to be
determined semiannually as follows:

(1) The rate for January shall apply for the following July 1 to
December 31, inclusive.

(2) The rate for July shall apply for the following January 1 to
June 30, inclusive.

begin delete

(d) (1) Except as provided in paragraph (2), the rate established
for interest to be paid by the state upon overpayments of tax shall
be equal to the bond equivalent rate of 13-week treasury bills
auctioned, rounded to the nearest full percent (or if a multiple of
one-half of 1 percent, the rate shall be increased to the next highest
full percent), as follows:

end delete begin delete

(A) The bond equivalent rate of 13-week treasury bills
established at the first auction held during the month of January
shall apply for the following July 1 to December 31, inclusive.

end delete begin delete

(B) The bond equivalent rate of 13-week treasury bills
established at the first auction held during the month of July shall
apply for the following January 1 to June 30, inclusive.

end delete begin delete

(2) For the period July 1, 1991, through June 30, 1992, the rate
to be paid by the state upon overpayments of tax shall be equal to
the bond equivalent rate of 13-week treasury bills established at
the auction held on July 1, 1991, rounded to the nearest full percent
(or if a multiple of one-half of 1 percent, the rate shall be increased
to the next highest full percent).

end delete begin delete

(e)

end delete begin insert

(b) “Modified adjusted rate per month, or fraction thereof”
means the modified adjusted rate per annum divided by 12.

end insert

begin insert (c) end insert  For purposes of this part, and any other provision of law
referencing this method of computation, in computing the amount
of any interest required to be paid by the state or by the taxpayer,
or any other amount determined by reference to that amount of
interest, that interest and that amount shall be computed as simple
interest, not compound interest.