BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1856|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
CONSENT
Bill No: AB 1856
Author: Dababneh (D)
Amended: 4/6/16 in Assembly
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/15/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for
vote
SUBJECT: Excise taxes: claim for refund: timely filed
claims
SOURCE: Author
DIGEST: This bill allows a taxpayer making installment payments
on an outstanding liability on taxes administered by the Board
of Equalization (BOE) to file a single claim for refund to cover
all prior overpayments and all subsequent overpayments.
ANALYSIS:
Existing law:
1)Provides that when a taxpayer overpays a tax, interest, fee,
or penalty to BOE, he or she must file a claim for refund
AB 1856
Page 2
within a specified period to recover amounts overpaid.
2)Requires a claim for refund to be in writing and state the
specific grounds for the claim.
3)Requires a claim for refund to be filed within the latest of
the following periods:
a) Three years from the due date of the return for the
period for which the claimed overpayment was made;
b) Six months from the date of the (claimed) overpayment;
c) Six months from the date a determination (billing)
became final; or
d) Three years from the date BOE collected an involuntary
payment by the use of enforcement procedures, such as
levies or liens.
4)Provides that any taxpayer who wants to protest a notice of
determination must file a petition for redetermination within
30 days of the determination becoming final. The only
recourse for taxpayers who miss a 30-day deadline to file a
formal protest of an audit determination is to pay the tax
owed and file a claim for refund. A claim for refund is only
valid for payments made 6 months before the claim is
submitted.
5)Allows a taxpayer that is making installment payments on an
outstanding income tax liability to the Franchise Tax Board to
file a single claim for refund to cover the entire repayment
period. AB 1856 seeks to also allow a taxpayer to file a
single claim for refund to cover the entire repayment period
AB 1856
Page 3
for liabilities owed to BOE.
This bill:
1)Allows a taxpayer making installment payments on an
outstanding liability on taxes administered by BOE to file a
single claim for refund to cover all prior overpayments and
all subsequent overpayments.
2)Applies to refunds under the Sales and Use Tax Law, Use Fuel
Tax, Cigarette and Tobacco Products Tax, Alcoholic Beverage
Tax, Energy Resources Surcharge, Emergency Telephone Users
Surcharge, Hazardous Substance Tax, Integrated Waste
Management Fee, Oil Spill Response, Prevention, and
Administration Fees, Underground Storage Tank Fee, Fee
Collections Procedures, and Diesel Fuel Tax Laws.
Comments
1)Issue at hand. In the case when a taxpayer does not believe
sales tax is due, but BOE has determined otherwise and issues
a billing for an amount due, the taxpayer may protest and
submit a petition for redetermination. If the taxpayer fails
to submit a petition for redetermination, BOE puts the
taxpayer into repayment, who must then submit a monthly
installment payment to BOE to satisfy the amount due.
However, a taxpayer may only submit a claim for refund for
payments made during a six month period before submitting the
claim. Thus, a taxpayer would have to file a new claim every
six months until the repayment period is over. According to
BOE, in some instances the taxpayer is not aware of the
requirement to file multiple refund claims throughout the
repayment period. Instead, the taxpayer believes that they
may file a single refund claim to recover the entire amount.
If the taxpayer files the claim after the first payment, the
taxpayer may only recover the first payment. In instances
where the taxpayer waits until the final payment has been made
AB 1856
Page 4
to file a refund claim, the statute of limitations prevents
the taxpayer from recovering all of their payments and they
are only allowed the last 5-6 payments at most.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/28/16)
Board of Equalization
California Taxpayers Association
OPPOSITION: (Verified6/28/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "This bill
allows a taxpayer making installment tax payments to file a
single claim for refund to cover the period. Taxpayers who have
entered into an installment payment plan often mistakenly
believe they need only file one claim for refund at the
conclusion of the payment plan, rather than filing claims for
refund for each payment within six months after the date of
payment. This proposal is prompted by several cases in which
the taxpayer was barred by the statute of limitations from
recovering all the installment payments made to the BOE even
though the determination was either cancelled or reduced to an
amount less than the total payments received. In each case, the
taxpayer did not file a timely petition for redetermination,
made multiple payments for one liability, but did not file
refund claims for each installment payment. AB 1856 will
provide equitable relief for taxpayers who would be barred from
receiving a refund for one or more installment payments because
they did not file a timely claim for refund for each individual
payment."
AB 1856
Page 5
ASSEMBLY FLOOR: 76-0, 4/28/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty,
Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen
Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
6/29/16 15:50:42
**** END ****