BILL ANALYSIS Ó
AB 1559
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CONCURRENCE IN SENATE AMENDMENTS
AB
1559 (Dodd)
As Amended August 8, 2016
2/3 vote Urgency
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|ASSEMBLY: |79-0 |(May 5, 2016) |SENATE: |38-0 |(August 15, |
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Original Committee Reference: REV. & TAX.
SUMMARY: Authorizes the State Board of Equalization (BOE), in
the case of a disaster, to extend the time for making any report
or return or paying any tax for a period of up to three months.
The Senate amendments:
1)Delete the provisions allowing an extension for economic
disasters.
2)Remove the references to "natural" disasters and instead
specifically define a "disaster" as a fire, flood, storm,
tidal wave, earthquake, or similar public calamity, whether or
not resulting from natural causes.
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3)Add coauthors.
EXISTING LAW:
1)Authorizes the BOE for good cause to extend the time, not to
exceed one month, for a taxpayer to submit any return or pay
any amount required to be paid, as specified. The extension
may be granted at any time provided a request therefor is
filed with the BOE within or prior to the period for which the
extension may be granted.
2)Requires any person granted extension relief to pay, in
addition to the underlying tax or fee amount, interest at the
modified adjusted rate per month, or fraction thereof, from
the date on which the payment would have been due without the
extension until the date of actual payment.
3)Provides similar authority under the following
BOE-administered laws:
a) The Sales and Use Tax (SUT) Law;
b) The Motor Vehicle Fuel Tax Law;
c) The Use Fuel Tax Law;
d) The Cigarette and Tobacco Products Tax Law;
e) The Alcoholic Beverage Tax Law;
f) The Timber Yield Tax Law;
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g) The Energy Resources Surcharge Law;
h) The Emergency Telephone Users Surcharge Act;
i) The Hazardous Substances Tax Law;
j) The Integrated Waste Management Fee Law;
aa) The Oil Spill Response, Prevention, and Administration
Fees Law;
bb) The Underground Storage Tank Maintenance Fee Law;
cc) The Fee Collection Procedures Law; and,
dd) The Diesel Fuel Tax Law.
4)Authorizes, in the case of a disaster, specified interest
relief for late payments and returns under the SUT Law.
Specifically, if the BOE finds that a person's failure to make
a timely return or payment was due to a disaster, and occurred
notwithstanding the exercise of ordinary care and the absence
of willful neglect, the person may be relieved of interest.
Any person seeking such relief must file with the BOE a
statement under penalty of perjury setting forth the facts
upon which the claim for relief is based.
5)Authorizes specified penalty relief for late payments and
returns under the SUT Law. Specifically, if the BOE finds
that a person's failure to make a timely return or payment is
due to reasonable cause and circumstances beyond the person's
control, and occurred notwithstanding the exercise of ordinary
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care and the absence of willful neglect, the person shall be
relieved of penalties. Any person seeking such relief must
file with the BOE a statement under penalty of perjury setting
forth the facts upon which the claim for relief is based.
6)Authorizes the Governor to proclaim a state of emergency under
specified circumstances. Specifically, the Governor is
empowered to proclaim a state of emergency upon the existence
of conditions of disaster or of extreme peril to the safety of
persons and property within the state, as specified.
AS PASSED BY THE ASSEMBLY, this bill:
1)Authorized the BOE, in the case of a natural or economic
disaster, to extend the time for making any report or return
or paying any tax for a period of up to three months.
2)Provided that the extension may be granted at any time
provided a request therefor is filed with the BOE within or
before the period for which the extension may be granted.
3)Required any person granted a disaster extension to pay, in
addition to the tax or fee amount, interest at the modified
adjusted rate per month, or fraction thereof, from the date on
which the payment would have been due without the extension to
the date of actual payment.
4)Took immediate effect as an urgency measure.
FISCAL EFFECT: Unknown
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COMMENTS:
1)The author has provided the following statement in support of
this bill:
Under limited circumstances, individuals and businesses are
permitted to defer state and local taxes and fees to assist
them in recovering from a disaster such as a wildfire.
Temporary relief from paying taxes and fees helps those
individuals and businesses focus their limited resources
where they are needed most - to restore their livelihood.
However, the one month deferral allowed under current law
is not much more than tinkering on the impacted taxpayer's
financial margins[.]
AB 1559 is an urgency bill, which revises current law by
changing the one month deferral for paying of specified
fees and taxes per filing period, to three months per
filing period in the case of a [...] disaster. This would
grant disaster impacted taxpayers a more significant and
meaningful amount of time to restore their business
activities and get back on their feet.
2)Committee Staff Comments
a) A general overview of current law: Under the SUT Law,
taxpayers must file a SUT return on or before the last day
of the month following the end of the reporting period.
Businesses that are late in paying their tax obligations
must pay a 10% penalty, plus interest on the unpaid tax
from the tax due date to the date of payment. One-month's
interest is due for each month or fraction of a month that
payment is late. Similar statutory regimes govern the
other BOE-administered tax and fee programs.
b) The BOE's existing one-month extension authority:
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Existing law allows the BOE for good cause to extend for up
to one month the time for making any return or paying the
tax due. Such an extension may be granted at any time
provided the request is filed with the BOE within or prior
to the period for which the extension may be granted. An
extension provides the taxpayer additional time to file a
return and pay the tax, and relieves the person of any late
payment penalty. The law, however, continues to impose
interest from the due date until the payment date, except
in the case of a disaster.
c) The BOE's existing authority to grant interest and
penalty relief in specified circumstances: Existing law
authorizes, in the case of a disaster, interest relief for
late payments. Specifically, if the BOE finds that a
person's failure to make a timely return or payment was due
to a disaster, and occurred notwithstanding the exercise of
ordinary care and the absence of willful neglect, a
taxpayer may be relieved of interest. Taxpayers seeking
interest relief, however, must file a statement with the
BOE under penalty of perjury setting forth the facts upon
which the request is based.
Likewise, existing law authorizes taxpayers (including
those impacted by a disaster) to seek penalty relief.
Again, if the BOE finds that a person's failure to make a
timely return or payment is due to reasonable cause and
circumstances beyond the person's control, and occurred
notwithstanding the exercise of ordinary care and the
absence of willful neglect, the person shall be relieved of
penalties. Taxpayers seeking penalty relief must also file
a statement with the BOE under penalty of perjury setting
forth the facts upon which the request is based.
d) What would this bill do? This bill would authorize the
BOE, in the case of a disaster, to extend the time for
making any report or return or paying any tax for a period
of up to three months. This bill was introduced in the
wake of the Butte and Valley Fires, which devastated
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portions of northern California in September 2015.
e) Looking forward: The author notes that this bill is
part of a broader effort to support Lake County and the
victims of the Valley Fire. It should be noted however
that, given its prospective application, this bill is
likely to afford relief to victims of future disasters in
California. Specifically, the Valley Fire occurred in
September 2015, or the third quarter of 2015 for SUT
purposes. Thus, SUT returns for that period were due on
October 31, 2015 (or November 30, 2015, assuming a
one-month extension was sought). Applying this bill's
proposed three-month extension to victims of the Valley
Fire would only bring the filing and payment deadline to
January 31, 2016. Thus, while this bill is unlikely to
provide relief to victims of the Valley and Butte Fires, it
may provide meaningful relief to victims of future
disasters.
f) What is a" disaster"? As passed by the Assembly, this
bill authorized the BOE to provide extension relief in the
case of natural and economic disasters, without
specifically defining those terms. The Senate amendments,
however, delete the authority to provide relief in
connection with economic disasters. In addition, the
Senate amendments delete the term "natural disaster" and
instead provide a specific definition of the term
"disaster" that conforms to existing BOE regulations.
Analysis Prepared by:
M. David Ruff / REV. & TAX. / (916) 319-2098
FN: 0003937
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