BILL ANALYSIS Ó
AB 814
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Philip Ting, Chair
AB 814
(Daly) - As Amended March 26, 2015
Majority vote. Fiscal committee.
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 would
essentially consolidate the three agencies. Specifically, this
bill:
1)Requires the FTB, BOE, and EDD to do all of the following:
a) Collaborate and conduct a feasibility study for
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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)Requires that the Internet Web-based portal allow online
self-service access through a single log-on for taxpayers to
do the following:
a) Electronically file returns, and 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
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, as a constitutional body, to administer sales and use
taxes (SUT), special taxes, and fees. The BOE also oversees
the administration of the local property tax by county
assessors, and assesses certain statewide utility and railroad
property. In addition, the five-members of the BOE are
authorized to administratively review determinations made by
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the BOE staff regarding its tax programs, and hear taxpayer
appeals from the FTB concerning Personal Income Tax (PIT),
Corporation Tax (CT) and homeowner's and renter's assistance
matters.
2)The FTB, as a department within the State and Consumer
Services Agency, to administer and regulate the PIT and CT
Laws. The FTB is also required to administer non-income tax
related programs, such as the Political Reform Audit; the
Non-Admitted Insurer Tax Program; and collections of
court-ordered debt, vehicle registration debts, and
interagency intercepts. The three members of the FTB board 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: The FTB noted in their analysis:
The costs to implement this bill, although unknown at this
time, could be significant. As indicated in the
"Implementation Considerations" section, the scope, roles,
and duties of the BOE, the EDD, and the FTB need to be
identified before a complete analysis of this bill's impact
on the FTB can be ascertained. As this bill moves through
the legislative process and the BOE, the EDD, and the FTB
develop an implementation plan, costs to implement this
bill will be identified.
COMMENTS:
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1)Author's Statement : The author has included the following
statement in support of this bill:
California's tax system is overseen by multiple agencies,
it can sometimes be difficult for consumers to understand
or navigate. Frequently, taxpayers are required to submit
redundant forms, applications, and information to each
agency separately, resulting in an overly burdensome
system. This leads to backlogs in applications, and delays
for taxpayers who are in compliance, while increasing
administrative costs to Californians. This bill would
create cost savings for California Taxpayers, and provide
them with a more convenient and intuitive tax system.
2)Background : SB 582 (Knight), of the 2013-14 Legislative
Session, was vetoed. The Governor stated in his veto message:
Consolidation of the tax departments has been studied for
decades. We don't need to conduct any further studies. I
instruct the Secretary of the Government Operations Agency
to determine if taxpayer service can be improved in a cost
effective manner with a single state Webpage for all state
taxes. If it can, my administration will work with the
author to seek implementing legislation should it be
needed.
This bill contains identical language found in SB 582.
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
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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 report explained that, under this type of
system, "taxpayers could log onto a single Web site 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) Web Site : LAO's
virtual consolidation proposal was partly implemented through
the development of the CTSC's Web site, www.taxes.ca.gov . The
Web site was established to simplify taxpayers' experience in
complying with state and federal tax laws. The Web site 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) and includes information on income,
payroll, SUT, as well as other taxes and fees. Although the
Web site 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
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Internet Web-based portal. However, as noted in the FTB
analysis, this 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
Web site or develop a new Web site 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)Implementation Considerations : The FTB noted the following in
their analysis:
Implementing this bill in the near term could add
complexities and pose risks to current revenue generating
information technology efforts. To study a virtual
consolidation the scope, roles, and duties of each agency
must be determined before a complete analysis of this
bill's impact to the FTB can be ascertained. As this bill
moves through the legislative process, the BOE, the EDD,
and the FTB would need to develop an implementation plan
that establishes the scope of the virtual consolidation and
each agency's roles and duties.
7)Prior Legislation :
a) SB 582 (Knight), of the 2013-14 Legislative Session,
would have required the FTB, the BOE, and the EDD to
conduct a feasibility study on the development of a single
Internet Web-based portal that virtually consolidates the
three agencies. SB 582 was vetoed.
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b) AB 833 (Harkey), of the 2013-14 Legislative Session,
would have required 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 was held on the Senate Appropriations
Committee's Suspense File.
c) SB 1326 (Harman), of the 2011-12 Legislative 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 on the
Senate Appropriations Committee's Suspense File.
d) AB 77 (Gorell), of the 2011-12 Legislative Session,
would have consolidated the FTB, EDD, and the California
Department of Insurance into the BOE. AB 77 was never
heard by this Committee.
e) SB 1133 (Runner), introduced in the 2009-10 Legislative
Session, was similar to AB 77. SB 1133 was held on the
Senate Revenue and Taxation Committee's Suspense File.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
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Opposition
None on file
Analysis Prepared by:Paul Kim / REV. & TAX. / (916) 319-2098