BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1277|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 1277
Author: Brough (R), et al.
Amended: 4/29/15 in Assembly
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/24/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 74-0, 5/22/15 (Consent) - See last page for
vote
SUBJECT: Tax administration: Taxpayers' Rights Advocate: levy
or notice to withhold: return of funds
SOURCE: Board of Equalization
DIGEST: This bill increases the amount the Board of
Equalization's (BOE's) Taxpayer Rights' Advocate can return to
taxpayers, including jeopardy determinations, and allows maximum
return amounts to grow in the future according to inflation.
ANALYSIS:
Existing law:
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1) Directs BOE to administer the Sales and Use Tax Law; Use
Fuel Tax Law; Alcoholic Beverage Tax Law; Energy Resources
Surcharge Law; Emergency Telephone Users Surcharge Law;
Hazardous Substances Tax Law; Integrated Waste Management Fee
Law; Oil Spill Response, Prevention, and Administration Fees
Law; Underground Storage Tank Maintenance Fee Law; and Diesel
Fuel Tax Law.
2) Provides that BOE also administer the Cigarette and Tobacco
Products Tax Law, and other fee programs by applying the
provisions of the Fee Collections Procedures Law, including
the California Tire, Covered Electronic Waste Recycling, Fire
Prevention, Marine Invasive Species, Water Rights Fees,
Lumber Products Assessment, and the Natural Gas Surcharge.
3) Requires BOE to establish the Office of Taxpayer Rights
Advocate (TRA) to facilitate the resolution of taxpayer
complaints including any tax or feepayer complaints regarding
unsatisfactory treatment of taxpayers by board employees, and
stay actions where taxpayers have suffered or will suffer
irreparable loss as the result of those actions.
4) Directs TRA to report directly to the executive officer of
the BOE.
5) Permits BOE to impose a notice to withhold or levy to
collect delinquent taxes, which requires a financial or other
institution to place a hold on the taxpayer's income or
assets held by that institution, and then remit the tax or
fee due to BOE out of these funds.
6) Requires BOE to send a copy of the notice of levy to the
taxpayer.
7) Allows BOE to make a "jeopardy determination" if it believes
that collection will be impacted by delay. A jeopardy
determination is due and payable upon service of the notice
to the taxpayer, and BOE may immediately take all actions
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authorized and necessary to collect the determined liability,
including a notice to withhold or levy.
8) Allows TRA to order the release of a notice to withhold or
levy within 90 days if the TRA finds that the levy threatens
the taxpayer's health or welfare or that of his or her
family, for all 12 tax laws.
9) Allows TRA to return up to $1,500 in previously collected
funds to the taxpayer upon a finding that the levy threatens
the taxpayer's health or welfare; however, TRA does not have
this authority under the Cigarette and Tobacco Products Tax
Law and the Fee Collections Procedures Law.
10)Does not allow TRA to return or release funds collected or
property seized as a result of jeopardy determinations.
This bill:
1) Allows TRA to return funds collected under a notice of levy
or withholding under the Cigarette and Tobacco Products Tax
Law and the Fee Collections Procedures Law.
2) Increases from $1,500 to $2,300 the amount of funds
collected under a notice of levy or withholding the TRA may
return on a monthly basis under all 12 tax laws.
3) Directs BOE to increase the $2,300 maximum amount annually
according to inflation under all 12 tax laws.
4) Permits TRA to return or release funds collected as a result
of jeopardy determinations under all 12 laws if the TRA finds
collecting the assessment is no longer in jeopardy.
Comments
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Tax collection relies on tangible penalties for non-compliance;
without enforcement, taxpayers in our largely self-assessed tax
system would only remit money to the government out of
generosity. While a notice of levy is a particularly harsh
collections mechanism, this step is only taken against taxpayers
with delinquent tax debts who have failed to pay taxes or fees
due under the law, and ignored prior voluntary collections
efforts. AB 1277 allows the TRA to return these previously
collected funds if it threatens the health or welfare of the
taxpayer or the taxpayer's family, meaning that the state is
providing the delinquent taxpayer a temporary loan, when the
taxpayer could instead use a credit card, personal loan, or
other method to meet living expenses. While the return of
levied funds doesn't absolve the debt, this bill allows funds
that would be spent on public services to be sent to the
delinquent taxpayer instead.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified7/15/15)
Board of Equalization (source)
Board of Equalization Member George Runner
California Taxpayers Association
OPPOSITION: (Verified7/15/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "AB 1277
provides greater relief for taxpayers in dire financial
circumstances. This bill would increase the amount of levied
funds the Taxpayers' Rights Advocate is allowed to order
returned from $1,500 to $2,300 in cases where the levy threatens
the health or welfare of the taxpayer, their spouse, and family.
The amount has not been adjusted since the authority was
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established in 1996. AB 1277 relieves taxpayers in severe
circumstances who would otherwise be financially devastated by a
levy."
ASSEMBLY FLOOR: 74-0, 5/22/15
AYES: Achadjian, Travis Allen, Baker, Bigelow, Bloom, Bonilla,
Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Alejo, Jones, O'Donnell, Olsen, Waldron,
Weber
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
7/15/15 15:00:35
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