BILL ANALYSIS Ó
AB 2201
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2201 (Brough) - As Introduced February 18, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill permanently reinstates an expired provision that
allows the Board of Equalization (BOE) to impose one-day's
interest on a late electronic payment in cases if the payment is
one day late and board members find it would be inequitable to
impose interest for an entire month.
FISCAL EFFECT:
AB 2201
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An estimated state and local revenue loss of $78,000.
COMMENTS:
1)Purpose. According to BOE, the sponsor, this bill would
restore a provision that expired on January 1, 2016 that
allows BOE to have flexibility in how it addresses the
inequity of applying an entire month's interest to an
electronic tax payment that is paid one day late, due to
reasonable circumstances.
2)Background. Under current law, a person must pay a 10% penalty
on a late payment to the BOE, plus interest. Unlike the
Franchise Tax Board (FTB) and the Employment Development
Department (EDD), interest is charged on monthly basis rather
than daily basis. In cases where the payment is a single day
late, BOE has developed policies to provide some reasonable
relief to taxpayers. In 1999, BOE established a uniform policy
allowing it to accept payments or documents mailed or
delivered in an envelope postmarked one day after the due date
as timely. In 2010, a similar policy was extended to
electronic payments, allowing the BOE to charge just one day's
interest on electronic payments that were one day late rather
than an entire month's worth of interest, if the BOE finds
that it would be inequitable to impose the full interest. That
particular provision expired in January 2016.
3)Who benefits? Unlike the BOE's one-day grace period for
postmarked payments that applies uniformly to all taxpayers,
the interest relief proposed by this bill is not available to
a person unless, in addition to all other requirements, the
BOE has already relieved the person from all penalties that
applied to the payment of tax, fee or surcharge. Under
AB 2201
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current law, the BOE may only relieve a person from penalties
if it finds that the person's failure to make a payment in a
timely manner was due to reasonable cause and circumstances
beyond the person's control, and occurred notwithstanding
ordinary care and the absence of willful neglect. Supporters
of the current policy contend that it is appropriate to have a
more stringent late policy for electronic payments than mailed
payments because the taxpayer has greater control over the
electronic payment submission process than one reliant on the
U.S. Postal Service or other delivery service - the taxpayer
cannot blame a third party for the delay.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081