BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1277|
          |Office of Senate Floor Analyses   |                              |
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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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                                                                    Page  3


             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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