BILL NUMBER: AB 567 AMENDED
BILL TEXT
AMENDED IN SENATE SEPTEMBER 4, 2015
INTRODUCED BY Assembly Member Gipson
FEBRUARY 24, 2015
An act to amend Section 481 of the Revenue and Taxation
Code, relating to taxation. An act to add Section
11362.6 to the Health and Safety Code, to amend and renumber Sections
7076, 7076.1, 7076.2, 7076.3, 7076.4, 7077, and 7078 of, to add
Article 2.1 (commencing with Section 7077) to Chapter 8 o
f Part 1 of Division 2 of, and to add Chapter 9.2 (commencing with
Section 19740) to Part 10.2 of Division 2 of, the Revenue and
Taxation Code, and to add Division 11 (commencing with Section 18740)
to the Unemployment Insurance Code, relating to medical cannabis.
LEGISLATIVE COUNSEL'S DIGEST
AB 567, as amended, Gipson. Property taxation: change in
ownership statement: confidentiality of information.
Medical cannabis: regulation and taxation amnesty.
(1) Existing law, the Compassionate Use Act of 1996, an initiative
measure enacted by the approval of Proposition 215 at the November
5, 1996, statewide general election, authorizes the use of marijuana
for medical purposes. Existing law, the Medical Marijuana Program,
requires the State Department of Public Health to establish a
voluntary program for the issuance of identification cards to
qualified patients and primary caregivers under the Compassionate Use
Act, and grants immunity from arrest for violation of specified
provisions relating to the cultivation, possession, transportation,
and sale of marijuana, if conditions of the act are met.
This bill would prohibit the sale, distribution, provision, or
donation of medical cannabis or medical cannabis products to a
qualified patient or caregiver other than at a licensed dispensing
facility or through a licensed dispensing facility's delivery
service, as defined; would prohibit mobile, vehicular, or technology
platforms that enable qualified patients or primary caregivers to
arrange for any delivery, as defined, with a third party; and would
provide that a dispensary, as defined, that employs or uses the
services of any person under 21 years of age for the sale or delivery
of medical cannabis or medical cannabis products is subject to
suspension or revocation of certain state or local licenses. By
requiring local licensing authorities to suspend or revoke local
licenses, this bill would impose a state-mandated local program.
(2) Existing law imposes sales and use taxes collected and
administered by the State Board of Equalization, personal income and
corporation taxes collected and administered by the Franchise Tax
Board, and employment taxes, as defined, collected and administered
by the Employment Development Department. Existing law sets forth
various penalties, including penalties for the nonpayment or late
payment of those taxes, and the failure to file or intentional filing
of incorrect returns. Existing law established a tax amnesty
program, conducted in 2005, with respect to sales and use tax
penalties, and, personal income and corporation tax penalties and
fees due and payable for tax reporting periods or taxable years
beginning before January 1, 2003.
This bill would require the State Board of Equalization, the
Franchise Tax Board, and the Employment Development Department to
administer tax penalty amnesty programs during the period beginning
on April 1, 2016, through September 30, 2016, or during a timeframe
before December 31, 2016, for medical cannabis-related businesses, as
provided. The bill would define a medical cannabis-related business
for these purposes as a person that engages in the sale of cannabis
for medical purposes to qualified patients or the primary caregivers
of qualified patients pursuant to the Compassionate Use Act or the
Medical Marijuana Program. The bill would require a licensing
authority to revoke or refuse to issue a state or local license to a
medical cannabis-related business that is eligible to, but does not
participate in, those programs and meets other specified conditions.
By requiring local licensing authorities to revoke or refuse to issue
local licenses, this bill would impose a state-mandated local
program.
(3) This bill would make related findings and declarations. The
bill would also make technical and conforming changes.
(4) Existing state constitutional law prohibits the Legislature
from making any gift, or authorizing the making of any gift, of any
public money or thing of value to any individual, municipal, or other
corporation.
This bill would make certain legislative findings and declarations
that amnesty programs to incentivize a specific type of business to
become current with their tax obligations serve a general public
purpose, and therefore are not gifts of public funds.
(5) 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, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
Existing law requires, upon a change in control or change in
ownership of a legal entity that owns an interest in real property in
this state, or when requested by the State Board of Equalization,
that the person or legal entity acquiring ownership control, or the
legal entity that has undergone a change in ownership, file a change
in ownership statement with the board, as specified, listing all
counties in which the legal entity owns real property. Existing law
requires all information requested by the assessor or the board
regarding change in ownership reporting or furnished in a change in
ownership statement to be held secret, except as specifically
provided.
This bill would provide that information requested or furnished in
a change in ownership statement, with respect to a legal entity and
its real property does not include the fact that a change in
ownership statement has been filed with the board or that the board
has issued a determination to the assessor relating to a change in
ownership statement, and that the board and the assessor are not
required to hold these facts secret. This bill would also provide
that the disclosure by the board or the assessor that such a change
in ownership statement has been filed, where the filing was prompted
by information collected by the Franchise Tax Board from the property
tax query on the taxpayer's state income tax return, does not
violate the confidentiality of taxpayer return information.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) The voters of the State of California enacted the
Compassionate Use Act of 1996, which became effective on November 6,
1996, as Section 11362.5 of the Health and Safety Code. The act
authorizes patients and their designated primary caregivers to
possess and cultivate cannabis for personal medical use upon
recommendation or approval of a physician.
(b) In 2004, the Legislature and Governor refined the
Compassionate Use Act through SB 420, which added Sections 11362.7 to
11362.83, inclusive, to the Health and Safety Code, allows the
formation of medical cultivation collectives or cooperatives, and
provides for a voluntary state identification card system for medical
cannabis patients. SB 420 also limits the amount of medical cannabis
patients are allowed to possess and cultivate.
(c) However, the sale of any cannabis still remains illegal under
federal law. At the federal level, marijuana remains classified as a
Schedule I substance under the Controlled Substances Act. Schedule I
substances are defined as drugs with no currently accepted medical
use and a high potential for abuse.
(d) In August 2013, the United States Department of Justice issued
the "Cole Memo" to federal prosecutors, which established priorities
for federal prosecution of cannabis-related activities under the
Controlled Substances Act. The memo indicated that states with a
strong regulatory framework for legalized recreational or medical
cannabis that supports those priorities would make federal
involvement in local jurisdictions less likely.
(e) In February 2014, the United States Department of the Treasury'
s Financial Crimes Enforcement Network (FinCEN) issued guidance to
financial institutions setting forth FinCEN's Bank Secrecy Act
expectations for financial institutions choosing to work with
cannabis-related businesses.
(f) A federal spending bill passed in late 2014 prohibits the use
of United States Department of Justice funds to prevent states,
including California, that authorize the use, distribution,
possession, or cultivation of cannabis for medical use from
implementing laws related to these activities. At a minimum, this
prohibition will remain in effect for the rest of the federal fiscal
year that ends September 30, 2015. Various other federal legislative
proposals to loosen federal restrictions on the cultivation,
possession, and sale of cannabis in states where it is legal are also
pending.
(g) Despite this identified federal guidance, the uncertainty
created by state and federal differences has left cannabis-related
businesses with the fear that compliance with state tax laws could
lead to federal prosecution. Thus, many of these businesses have been
noncompliant since their inception, and would owe massive penalties
and interest if they were to come into compliance.
(h) It is the intent of the Legislature to further the public
purposes of preventing undue hardship on cannabis-related businesses
and providing a strong incentive, the relief of penalties, for those
businesses to come forward and pay the taxes and interest that they
owe. In furtherance of this intent, the Legislature hereby enacts the
Medical Cannabis Tax Amnesty Act as set forth below.
SEC. 2. Section 11362.6 is added to the
Health and Safety Code , immediately following
Section 11362.5 , to read:
11362.6. (a) Any dispensary that employs or uses the services of
any person under 21 years of age for the sale or delivery of medical
cannabis or medical cannabis products shall be subject to suspension
or revocation of the dispensary's state or local medical cannabis
license or driver's license issued pursuant to Division 6 (commencing
with Section 12500) of the Vehicle Code.
(b) A person shall not sell, distribute, provide, or donate
medical cannabis or medical cannabis products to a qualified patient
or caregiver other than at a licensed dispensing facility or through
a licensed dispensing facility's delivery service.
(c) All mobile, vehicular, or technology platforms that enable
qualified patients or primary caregivers to arrange for any delivery
with a third party are prohibited.
(d) For purposes of this section, the following terms have the
following meanings:
(1) "Delivery" means the commercial transfer of medical cannabis
or medical cannabis products from a dispensary to a primary caregiver
or qualified patient.
(2) "Delivery service" means a dispensary that makes a delivery.
(3) "Dispensary" means a physical retail establishment that
operates from a fixed location. "Dispensary" includes mobile
deliveries originating from a fixed location that makes retail sales
of medical cannabis or medical cannabis products.
(4) "Primary caregiver" has the meaning provided in Section
11362.7
(5) "Qualified patient" has the meaning provided in Section
11362.7.
SEC. 3. Section 7076 of the Revenue and
Taxation Code , as added by Section 1 of Chapter 87 of the
Statutes of 2003, is amended and renumbered to read:
7076. 7079. (a) The State Board of
Equalization shall determine which taxpayer's accounts are eligible
for the managed audit program in a manner that is consistent with the
efficient use of its auditing resources and the maximum
effectiveness of the program.
(b) A taxpayer is not required to participate in the managed audit
program.
SEC. 4. Section 7076.1 of the Revenue
and Taxation Code is amended and renumbered to read:
7076.1. 7079.1. A taxpayer's
account is eligible for the managed audit program only if the
taxpayer meets all of the following criteria:
(a) The taxpayer's business involves few or no statutory
exemptions.
(b) The taxpayer's business involves a single or small number of
clearly defined taxability issues.
(c) The taxpayer is taxed pursuant to this part and agrees to
participate in the managed audit program.
(d) The taxpayer has the resources to comply with the managed
audit instructions provided by the board.
SEC. 5. Section 7076.2 of the Revenue
and Taxation Code is amended and renumbered to read:
7076.2. 7079.2. (a) If the board
selects a taxpayer's account for a managed audit, all of the
following apply:
(1) The board shall identify all of the following:
(A) The audit period covered by the managed audit.
(B) The types of transactions covered by the managed audit.
(C) The specific procedures that the taxpayer is to follow in
determining any liability.
(D) The records to be reviewed by the taxpayer.
(E) The manner in which the types of transactions are to be
scheduled for review.
(F) The time period for completion of the managed audit.
(G) The time period for the payment of the liability and interest.
(H) Any other criteria that the board may require for completion
of the managed audit.
(2) The taxpayer shall:
(A) Examine its books, records, and equipment to determine if it
has any unreported tax liability for the audit period.
(B) Make available to the board for verification all computations,
books, records, and equipment examined pursuant to subparagraph (A).
(b) The information provided by the taxpayer pursuant to paragraph
(2) of subdivision (a) is the same information that is required for
the completion of any other audit that the board may conduct.
SEC. 6. Section 7076.3 of the Revenue
and Taxation Code is amended and renumbered to read:
7076.3. 7079.3. Nothing in this
article limits the board's authority to examine the books, papers,
records, and equipment of a taxpayer under Section 7054.
SEC. 7. Section 7076.4 of the Revenue
and Taxation Code is amended and renumbered to read:
7076.4. 7079.4. Upon completion of
the managed audit and verification by the board, interest on any
unpaid liability shall be computed at one-half the rate that would
otherwise be imposed for liabilities covered by the audit period.
Payment of the liabilities and interest shall be made within the time
period specified by the board. If the requirements for the managed
audit are not satisfied, the board may proceed to examine the records
of the taxpayer in a manner to be determined by the board under law.
SEC. 8. Section 7077 of the Revenue and
Taxation Code is amended and renumbered to read:
7077. 7076.3. The board shall
adequately publicize the tax penalty amnesty program so as to
maximize public awareness of the participation in the program. The
board shall coordinate to the highest degree possible its publicity
efforts and other actions taken in implementing this article with
similar programs administered by the Franchise Tax Board.
SEC. 9. Section 7078 of the Revenue and
Taxation Code is amended and renumbered to read:
7078. 7076.5. Subdivision (b) of
Section 19736, to the extent feasible and practical, shall also apply
to the board.
SEC. 10. Article 2.1 (commencing with Section
7077) is added to Chapter 8 of Part 1 of Division 2 of the
Revenue and Taxation Code , to read:
Article 2.1. Medical Cannabis Tax Amnesty
7077. The board shall develop and administer a tax penalty
amnesty program for qualified taxpayers.
7077.05. For the purposes of this article, the following terms
have the following meanings:
(a) "Amnesty period" means the period during which the tax penalty
amnesty program is conducted, as described in Section 7077.1.
(b) "Medical cannabis-related business" means a person that
engages in the sale of cannabis for medical purposes to qualified
patients or the primary caregivers of qualified patients pursuant to
the Compassionate Use Act of 1996 (Section 11362.5 of the Health and
Safety Code) or Article 2.5 (commencing with Section 11362.7) of
Chapter 6 of Division 10 of the Health and Safety Code, commonly
referred to as the Medical Marijuana Program.
(c) "Qualified taxpayer" means a seller that is a medical
cannabis-related business.
7077.1. The tax penalty amnesty program shall be conducted for a
six-month period beginning April 1, 2016, through September 30, 2016,
inclusive, or during a timeframe ending no later than December 1,
2016. The program shall apply to tax liabilities due and payable for
tax reporting periods beginning before January 1, 2014.
7077.2. (a) For any qualified taxpayer that meets the
requirements of Section 7077.3, all of the following shall apply:
(1) The board shall waive all penalties imposed by this part, for
the tax reporting periods for which tax penalty amnesty is requested,
that are owed as a result of the nonreporting or underreporting of
tax liabilities.
(2) No criminal action shall be brought against the qualified
taxpayer, for the tax reporting periods for which tax penalty amnesty
is requested, based on the nonreporting or underreporting of tax
liabilities.
(3) Paragraphs (1) and (2) do not apply to the nonpayment of any
taxes for which a notice of determination has previously been issued.
(b) This section does not apply to violations of this part for
which, as of the first day of the amnesty period, either of the
following applies:
(1) The qualified taxpayer is on notice of a criminal
investigation by a complaint having been filed against the qualified
taxpayer or by written notice having been mailed to the qualified
taxpayer that the qualified taxpayer is under criminal investigation.
(2) A court proceeding has already been initiated.
(c) No refund or credit shall be granted of any penalty paid prior
to the time the qualified taxpayer makes a request for tax penalty
amnesty pursuant to Section 7077.3.
7077.3. (a) This article applies to any qualified taxpayer that
during the amnesty period files an application for tax penalty
amnesty and, within 60 days after the conclusion of the amnesty
period, does all of the following:
(1) Files completed tax returns reporting the nonreported or
underreported tax liabilities for all tax reporting periods for which
amnesty is being applied.
(2) Pays in full the taxes and interest due for each period for
which amnesty is requested, or applies for an installment agreement
under subdivision (b).
(b) The board may enter into an installment payment agreement
pursuant to paragraph (2) of subdivision (a), which shall include
interest on the outstanding amount due at the rate prescribed by law.
Failure by the qualified taxpayer to fully comply with the terms of
the agreement renders the waiver of penalties null and void, unless
the board determines that the failure was due to reasonable causes,
and the total amount of tax, interest, and all penalties shall be
immediately due and payable.
(c) If, subsequent to the amnesty period, the board issues a
notice of determination upon a return filed pursuant to subdivision
(a), the board may impose penalties, and criminal action may be
brought under this part only with respect to the difference between
the amount shown on that return and the correct amount of tax. This
action shall not invalidate any waivers granted under Section 7077.2.
(d) The application required under subdivision (a) shall be in the
form and manner specified by the board, but in no case shall a mere
payment of any taxes and interest due, in whole or in part, for any
period otherwise eligible for amnesty under this part, be deemed to
constitute an acceptable amnesty application under this part. For
purposes of the preceding sentence, the application of a refund from
one period to offset a tax liability for another period otherwise
eligible for amnesty shall not be allowed without the filing of an
amnesty application under this part.
7077.4. (a) (1) Notwithstanding any other law, a licensing
authority shall revoke or refuse to issue, reinstate, or renew a
state or local license of a qualified taxpayer that is eligible to
participate in the tax penalty amnesty program under this article but
does not participate in the amnesty program, and that does any of
the following:
(A) Fails to register with the board.
(B) Has a seller's permit revoked pursuant to Section 7077.6.
(C) Reports a gross understatement of tax.
(2) Revocation or refusal to issue, reinstate, or renew a state or
local license pursuant to paragraph (1) shall not be effective
unless the licensing agency, at least 60 days before the date of
revocation or refusal, mails a notice to the qualified taxpayer that
indicates that the license will be refused or revoked by that date.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "Gross understatement of tax" is a deficiency that is in
excess of 25 percent of the amount of tax reported on a qualified
taxpayer's return filed pursuant to Article 1 (commencing with
Section 6451) of Chapter 5.
(2) "State or local license" includes a license issued for any
activity of a cannabis-related business or a driver's license issued
pursuant to Division 6 (commencing with Section 12500) of the Vehicle
Code.
7077.6. The board shall refuse to issue a permit to any person or
shall revoke a seller's permit issued under this part for any person
that is both of the following:
(a) Eligible to participate in the tax penalty amnesty program
under this article but does not participate in the amnesty program.
(b) Engaged in retail sales of medical cannabis in this state that
would have been eligible to participate in the tax penalty amnesty
program as a medical cannabis-related business.
7077.7. The board shall issue forms and instructions and take
other actions needed to implement this article.
7077.8. The board shall adequately publicize the tax penalty
amnesty program for medical cannabis-related businesses so as to
maximize public awareness of, and participation in, the program. The
board shall coordinate to the highest degree possible its publicity
efforts and other actions taken in implementing this article with
similar programs administered by the Franchise Tax Board and the
Employment Development Department.
SEC. 11. Chapter 9.2 (commencing with Section
19740) is added to Part 10.2 of Division 2 of the Revenue
and Taxation Code , to read:
CHAPTER 9.2. MEDICAL CANNABIS TAX AMNESTY
19740. The Franchise Tax Board shall develop and administer a tax
penalty amnesty program for qualified taxpayers.
19740.5. For the purposes of this chapter, the following terms
have the following meanings:
(a) "Amnesty period" means the period during which the tax penalty
amnesty program is conducted, as described in Section 19741.
(b) "Medical cannabis-related business" means a person that
engages in the sale of cannabis for medical purposes to qualified
patients or the primary caregivers of qualified patients pursuant to
the Compassionate Use Act of 1996 (Section 11362.5 of the Health and
Safety Code) or Article 2.5 (commencing with Section 11362.7) of
Chapter 6 of Division 10 of the Health and Safety Code, commonly
referred to as the Medical Marijuana Program.
(c) "Qualified taxpayer" means a taxpayer with unreported income
from a medical cannabis-related business subject to Part 10
(commencing with Section 17001) or Part 11 (commencing with Section
23001).
19741. The tax penalty amnesty program shall be conducted during
a six-month period beginning April 1, 2016, through September 30,
2016, inclusive, or during a timeframe ending no later than December
31, 2016. The program shall apply to tax liabilities for taxable
years beginning before January 1, 2014.
19742. (a) For any qualified taxpayer that meets all of the
requirements of Section 19743, both of the following apply:
(1) The Franchise Tax Board shall waive all unpaid penalties and
fees imposed by this part for each taxable year for which tax penalty
amnesty is allowed, but only to the extent of the amount of any
penalty or fee that is owed as a result of previous nonreporting or
underreporting of tax liabilities or nonpayment of any taxes
previously assessed.
(2) No criminal action shall be brought against the qualified
taxpayer for each taxable year for which tax penalty amnesty is
allowed for the nonreporting or underreporting of tax liabilities or
the nonpayment of any taxes previously assessed or proposed to be
assessed.
(b) This chapter does not apply to violations of this part for
which, as of the first day of the amnesty period, either of the
following applies:
(1) The qualified taxpayer is on notice of a criminal
investigation by a complaint having been filed against the qualified
taxpayer or by written notice having been mailed to the qualified
taxpayer that the qualified taxpayer is under criminal investigation.
(2) A court proceeding has already been initiated.
(c) No refund or credit shall be granted with respect to any
penalty or fee paid with respect to a taxable year prior to the time
the qualified taxpayer makes a request for tax penalty amnesty
pursuant to Section 19743.
(d) Notwithstanding Chapter 6 (commencing with Section 19301), a
qualified taxpayer shall not file a claim for refund or credit for
any amounts paid in connection with the tax penalty amnesty program
under this chapter.
19743. (a) This chapter applies to any qualified taxpayer that
during the amnesty period files an application for tax penalty
amnesty and, within 60 days after the conclusion of the amnesty
period, does all of the following:
(1) Files completed tax returns for all years for which the
qualified taxpayer has not previously filed a tax return and files
completed amended returns for all years for which the qualified
taxpayer underreported the qualified taxpayer's income.
(2) Pays in full any taxes and interest due for each taxable year
described in paragraph (1), as applicable, for which amnesty is
requested, or applies for an installment payment agreement under
subdivision (b). For qualified taxpayers that have not paid in full
any taxes previously proposed to be assessed, pays in full the taxes
and interest due for that portion of the proposed assessment for each
taxable year for which amnesty is requested or applies for an
installment payment agreement under subdivision (b).
(b) (1) For purposes of complying with the full payment provisions
of paragraph (2) of subdivision (a), the Franchise Tax Board may
enter into an installment payment agreement, which shall include
interest on the outstanding amount due at the rate prescribed in
Section 19521.
(2) Failure by the qualified taxpayer to fully comply with the
terms of an installment payment agreement under this subdivision
shall render the waiver of penalties and fees under Section 19742
null and void, unless the Franchise Tax Board determines that the
failure was due to reasonable cause and not due to willful neglect.
(3) In the case of any failure described under paragraph (2), the
total amount of tax, interest, fees, and all penalties shall become
immediately due and payable.
(c) The application required under subdivision (a) shall be in the
form and manner specified by the Franchise Tax Board, but in no case
shall a mere payment of any taxes and interest due, in whole or in
part, for any taxable year otherwise eligible for amnesty under this
part, be deemed to constitute an acceptable amnesty application under
this part. For purposes of the prior sentence, the application of a
refund from one taxable year to offset a tax liability from another
taxable year otherwise eligible for amnesty shall not, without the
filing of an amnesty application, be deemed to constitute an
acceptable amnesty application under this part.
(d) The Legislature specifically intends that the Franchise Tax
Board, in administering the amnesty application requirement under
this part, make the amnesty application process as streamlined as
possible to ensure participation in the amnesty program will be
available to as many qualified taxpayers as possible without
otherwise compromising the Franchise Tax Board's ability to enforce
and collect the taxes imposed under Part 10 (commencing with Section
17001) and Part 11 (commencing with Section 23001).
(e) Upon the conclusion of the amnesty period, the Franchise Tax
Board may propose a deficiency upon any return filed pursuant to
subdivision (a), impose penalties and fees, or initiate criminal
action under this part with respect to the difference between the
amount shown on that return and the correct amount of tax. This
action shall not invalidate any waivers previously granted under
Section 19742.
(f) All revenues derived pursuant to subdivision (c) shall be
subject to Sections 19602 and 19604.
19744. (a) (1) Notwithstanding any other law, a licensing
authority shall revoke or refuse to issue, reinstate, or renew a
state or local license of a qualified taxpayer that is eligible to
participate in the tax penalty amnesty program under this chapter but
does not participate in the amnesty program, and that does either of
the following:
(A) Fails to file returns with the Franchise Tax Board.
(B) Reports a gross understatement of tax.
(2) Revocation or refusal to issue, reinstate, or renew a state or
local license pursuant to paragraph (1) shall not be effective
unless the licensing agency, at least 60 days before the date of
revocation or refusal, mails a notice to the qualified taxpayer that
indicates that the license will be refused or revoked by that date.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "Gross
understatement of tax" is a deficiency that is in excess of 25
percent of the amount of tax reported on a qualified taxpayer's
return filed pursuant to Section 18633 or 18633.5, Article 1
(commencing with Section 18501) or Article 2 (commencing with Section
18601) of Chapter 2, or Article 3 (commencing with Section 23771) of
Chapter 4 of Part 11.
(2) "State or local license" includes a license issued for any
activity of a cannabis-related business or a driver's license issued
pursuant to Division 6 (commencing with Section 12500) of the Vehicle
Code.
19746. (a) The Franchise Tax Board may issue forms, instructions,
notices, rules, or guidelines, and take any other necessary actions
needed to implement this chapter, specifically including any forms,
instructions, notices, rules, or guidelines that specify the form and
manner of any acceptable form of amnesty application described in
Section 19743.
(b) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this chapter.
19747. (a) The Franchise Tax Board shall conduct a public
outreach program and adequately publicize the tax penalty amnesty
program for qualified taxpayers with income from medical
cannabis-related businesses so as to maximize public awareness and
make qualified taxpayers aware of the program. The Franchise Tax
Board shall coordinate to the highest degree possible its publicity
efforts and other actions taken in implementing this chapter with
similar programs administered by the State Board of Equalization and
the Employment Development Department.
SEC. 12. Division 11 (commencing with Section
18740) is added to the Unemployment Insurance Code
, to read:
DIVISION 11. Medical Cannabis Tax Amnesty
18740. The department shall develop and administer a tax penalty
amnesty program for qualified employers.
18740.5. For purposes of this division, the following terms have
the following meanings:
(a) "Amnesty period" means the period during which the tax penalty
amnesty program is conducted, as described in Section 18741.
(b) "Department" means the Employment Development Department.
(c) "Employment taxes" or "taxes" means the unemployment insurance
tax and employment training tax imposed under Part 1 (commencing
with Section 100) of Division 1, state disability insurance tax
imposed under Part 2 (commencing with Section 2601) of Division 1,
and personal income tax withholding imposed under Division 6
(commencing with Section 13000).
(d) "Medical cannabis-related business" means a person that
engages in the sale of cannabis for medical purposes to qualified
patients or the primary caregivers of qualified patients pursuant to
the Compassionate Use Act of 1996 (Section 11362.5 of the Health and
Safety Code) or Article 2.5 (commencing with Section 11362.7) of
Chapter 6 of Division 10 of the Health and Safety Code, commonly
referred to as the Medical Marijuana Program.
(e) "Person" has the meaning set forth in Section 6005 of the
Revenue and Taxation Code.
(f) "Qualified employer" means an employer or employing unit that
is a medical cannabis-related business subject to Part 1 (commencing
with Section 100) of Division 1, Part 2 (commencing with Section
2601) of Division 1, or Division 6 (commencing with Section 13000).
18741. The tax penalty amnesty program shall be conducted for a
six-month period beginning April 1, 2016, through September 30, 2016,
inclusive, or during a timeframe ending no later than December 31,
2016. The program shall apply only to amounts unpaid for the periods
beginning before January 1, 2014.
18742. (a) For any qualified employer that meets the requirements
of Section 18743, both of the following shall apply:
(1) The department shall waive all penalties imposed by this code,
for the tax reporting periods for which tax penalty amnesty is
requested, which are owed as a result of the nonpayment or
underpayment of employment tax liabilities or failure to file
reports.
(2) No criminal action shall be brought against the qualified
employer, for the tax reporting periods for which tax penalty amnesty
is requested, for the nonreporting or underreporting of tax
liabilities.
(b) This section does not apply to violations of this code for
which, as of the first day of the amnesty period, either of the
following applies:
(1) The qualified employer is on notice of a criminal
investigation by a complaint having been filed against the qualified
employer or by written notice having been mailed to the qualified
employer that the qualified employer is under criminal investigation.
(2) A court proceeding has already been initiated.
(c) No refund or credit shall be granted of any penalty paid prior
to the time the qualified employer makes a request for tax penalty
amnesty pursuant to Section 18743.
18743. (a) This division applies to any qualified employer that
during the amnesty period files an application for tax penalty
amnesty and, within 60 days after the conclusion of the amnesty
period, does all of the following:
(1) Files quarterly contribution returns and reports reporting the
nonreported or underreported wages and taxes for the calendar
quarter that ended December 31, 2013, and prior calendar quarters,
for which amnesty is being applied.
(2) Pays in full all amounts due for all periods for which amnesty
is requested, or applies for an installment agreement under
subdivision (b).
(b) The department may enter into an installment payment agreement
pursuant to paragraph (2) of subdivision (a), which shall include
interest on the outstanding amount due at the rate prescribed by law.
Failure by the qualified employer to fully comply with the terms of
the agreement renders the waiver of penalties null and void, unless
the department determines that the failure was due to reasonable
causes, and the total amount of tax, interest, and all penalties
shall be immediately due and payable.
(c) If, subsequent to the amnesty period, the department issues a
deficiency assessment upon a return filed pursuant to subdivision
(a), the department may impose penalties and criminal action may be
brought under this division only with respect to the difference
between the amount shown on that return and the correct amount of
tax. This action shall not invalidate any waivers granted under
Section 18742.
(d) If the department issues a deficiency assessment under the
conditions described in subdivision (c), the department may issue
that deficiency assessment within 10 years from the last day of the
calendar month following the quarterly period for which the amount is
proposed to be assessed.
(e) The application required under subdivision (a) shall be in the
form and manner specified by the department, but in no case shall a
mere payment of any taxes and interest due, in whole or in part, for
any period otherwise eligible for amnesty under this division, be
deemed to constitute an acceptable amnesty application under this
division. For purposes of the preceding sentence, the application of
a refund from one period to offset a tax liability for another period
otherwise eligible for amnesty shall not be allowed without the
filing of an amnesty application under this division.
18744. (a) (1) Notwithstanding any other law, a licensing
authority shall revoke or refuse to issue, reinstate, or renew a
state or local license of a qualified employer that is eligible to
participate in the tax penalty amnesty program under this division
but does not participate in the amnesty program, and that does either
of the following:
(A) Fails to register with the department.
(B) Reports a gross understatement of tax.
(2) Revocation or refusal to issue, reinstate, or renew a state or
local license pursuant to paragraph (1) shall not be effective
unless the licensing agency, at least 60 days before the date of
revocation or refusal, mails a notice to the qualified employer that
indicates that the license will be refused or revoked by that date.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "Gross understatement of tax" is a deficiency that is in
excess of 25 percent of the amount of tax reported on a qualified
employer's return filed pursuant to this code.
(2) "State or local license" includes a license issued for any
activity of a cannabis-related business or a driver's license issued
pursuant to Division 6 (commencing with Section 12500) of the Vehicle
Code.
18746. The department shall issue forms and instructions and take
other actions needed to implement this division.
18747. The department shall adequately publicize the tax penalty
amnesty program for medical cannabis-related businesses so as to
maximize public awareness of, and participation in, the program. The
department shall coordinate to the highest degree possible its
publicity efforts and other actions taken in implementing this
division with similar programs administered by the State Board of
Equalization and the Franchise Tax Board.
SEC. 13. The Legislature finds and declares that
Sections 10, 11, and 12 of this act, establishing cannabis-related
business tax penalty programs by adding Article 2.1 (commencing with
Section 7077) to Chapter 8 of Part 1 of Division 2 of, and Chapter
9.2 (commencing with Section 19740) to Part 10.2 of Division 2 of,
the Revenue and Taxation Code, and adding Division 11 (commencing
with Section 18740) to the Unemployment Insurance Code serve a
general public purpose by incentivizing a specific type of business
to become current with its tax obligations, and therefore do not
constitute gifts of public funds within the meaning of Section 6 of
Article XVI of the California Constitution.
SEC. 14. If the Commission on State Mandates
determines that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code.
SECTION 1. The Legislature finds and declares
all of the following:
(a) Transparency in assessed value information is critical to the
integrity of the property tax system. The public should have
sufficient information to provide assurance that property tax laws
are equitably applied and that the property tax burden is fairly
distributed. To this end, existing law requires the assessment roll,
which lists the assessed value for every property, to be open to
public inspection. Existing law further requires a quarterly list of
all recorded property transfers occurring in the prior two years to
be open to public inspection in each county.
(b) The right to privacy is a personal and fundamental right
protected by Section 1 of Article I of the California Constitution
and by the 14th Amendment to the United States Constitution. All
individuals have a right to privacy in information pertaining to
them. It is the Legislature's intent that detailed information
requested by the county assessor or the Board of Equalization and
furnished in the change in ownership statement shall continue to be
held in secret by the assessor and the Board. However, the
Legislature does not intend for the board or the assessor to hold
secret the fact that (1) an individual or legal entity has filed a
change in ownership statement with the board pursuant to Section
480.1 with respect to a change in control as defined in subdivision
(c) of Section 64, or pursuant to Section 480.2 with respect to a
change in ownership as defined in subdivision (d) of Section 64 or
that (2) the board has issued a determination to the assessor
relating to the statement filed with the board that a change in
control or change in ownership has occurred. These facts should not
be considered to be confidential information furnished in the change
in ownership statement and should not required to be held secret by
the assessor and the board.
(c) The public interest is not served by holding secret factual
information concerning legal entity changes in ownership that become
public when assessment roll updates reflect assessed value changes.
Furthermore, the public interest is not served when available
information concerning legal entity changes in ownership is not made
public, similar to other transfers in property interests, merely
because the transaction did not require the recordation of any
documents.
(d) This act balances the taxing authority's responsibility to
safeguard confidential taxpayer information with the public's right
to timely information.
(e) That local county assessors require the state's assistance to
administer current change in ownership law as it relates to the
transfers of ownership interests in legal entities. The law requires
the Franchise Tax to include a question on state income tax returns
to assist the State Board of Equalization and the county assessor in
the determination of when legal entity owned property undergoes a
change of ownership for property tax purposes. The Franchise Tax
Board collects these responses for the purpose of transmitting the
information to the State Board of Equalization. The use of the state
income tax return is a practical and cost effective method to
annually communicate with legal entities operating in this state. In
some instances, a legal entity change in ownership statement filed
with the State Board of Equalization will have been prompted by the
legal entity's response to this question.
(f) That the disclosure by the State Board of Equalization or
assessor that a statement has been filed with the State Board of
Equalization in the case where the filing was prompted by a legal
entity's response to the property tax query on a state income tax
return should not be deemed to violate the confidentiality of
taxpayer return information. The provisions of this act allowing the
disclosure of limited facts serves a public policy that overrides the
confidentiality of return information collected by the Franchise Tax
Board.
SEC. 2. Section 481 of the Revenue and Taxation
Code is amended to read:
481. (a) All information requested by the assessor or the board
pursuant to this article or furnished in the change in ownership
statement shall be held secret by the assessor and the board. All
information furnished in either the preliminary change in ownership
statement or the change in ownership statement shall be held secret
by those authorized by law to receive or have access to this
information. These statements are not public documents and are not
open to inspection, except as provided in Section 408.
(b) (1) Information requested or furnished in a change in
ownership statement for a change in control or a change in ownership
as defined in subdivision (c) or (d) of Section 64 does not include
the fact that a change in ownership statement has been filed with the
board or that the board has issued a determination to the assessor
relating to a change in ownership statement filed with the board. The
board and the assessor are not required to hold these facts secret.
(2) Notwithstanding any other law, the disclosure by the board or
assessor that a change in ownership statement has been filed in the
case where the filing was prompted by information collected by the
Franchise Tax Board from the property tax query on the taxpayer's
state income tax return as required by Section 64 shall not be deemed
to violate the confidentiality of taxpayer return information.