Amended in Senate April 6, 2015

Senate Bill No. 540

Introduced by Senator Hertzberg

February 26, 2015

An act to amend and repeal Section 21004 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 540, as amended, Hertzberg. Franchise Tax Board: Taxpayers’ Rights Advocate.

The Katz-Harris Taxpayers’ Bill of Rights Act establishes the position of Taxpayers’ Rights Advocate and provides specified protections for taxpayers for purposes of, among other things, determining their correct tax liability. Existing law, until January 1, 2016, authorizes the Taxpayers’ Rights Advocate to abate penalties, fees, additions to tax, or interest attributable to error of the Franchise Tax Board, as specified. Existing law requires any relief granted in which the total reduction exceeds $500, as adjusted, to be submitted to the executive officer of the board for concurrence, and limits the total relief granted to $7,500, as adjusted.

This bill would, on and after January 1, 2016, instead authorize the begin delete chief counsel end delete begin insert Chief Counsel end insert of the Franchise Tax Board to abate penalties, fees, additions to tax, or interest attributable to error of the Franchise Tax Board, remove the limit on the amount of relief that may be granted and the adjustment provision relating to that amount, begin insert and end insert specify the retention period for records of relief granted by the chief begin delete counsel, and remove the sunset date, thus extending these provisions indefinitely. end delete begin insert counsel. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 21004 of the Revenue and Taxation Code,
as amended by Section 1 of Chapter 349 of the Statutes of 2012,
is amended to read:

21004.  

(a) The board shall establish the position of the
Taxpayers’ Rights Advocate. The advocate or his or her designee
shall be responsible for coordinating resolution of taxpayer
complaints and problems, including any taxpayer complaints
regarding unsatisfactory treatment of taxpayers by board
employees. The advocate shall report directly to the executive
officer of the board.

(b) The advocate or his or her designee shall give highest priority
to reviewing and taking prompt and appropriate action, including
staying actions where taxpayers have suffered or will suffer
irreparable loss as the result of board action. Applicable statutes
of limitation shall be tolled during the pendency of a stay. Any
penalties and interest which would otherwise accrue shall not be
affected by the granting of a stay.

(c) (1) On and after January 1, begin delete 2013, and before January 1, end delete
2016, the begin delete advocate may review any application for end delete begin insert Chief Counsel
of the Franchise Tax Board may provide end insert relief pursuant to this
subdivision and abate any penalties, fees, additions to tax, or
interest assessed begin delete on a taxpayer, end delete if it is determined by the begin delete advocate end delete
begin insert Chief Counsel of the Franchise Tax Board end insert that the penalties, fees,
additions to tax, or interest that have been assessed, or any part
thereof, is attributable to any of the following:

(A) Erroneous action or erroneous inaction by the board in
processing documents filed or payments made by taxpayers.

(B) Unreasonable delay caused by the board.

(C) Erroneous written advice that does not qualify for relief
under Section 21012.

(2) Relief may be granted pursuant to this subdivision only if
no significant aspect of that error or delay can be attributed to the
taxpayer involved and relief is not available under any other
provision of this part, Part 10 (commencing with Section 17001),
begin insert Part 10.2 (commencing with Section 18401), end insert or Part 11
(commencing with Section 23001), including any relief granted
under any regulation or other administrative pronouncement of
the board.

(3) (A)  begin delete (i) end delete begin delete   end delete Any relief granted pursuant to this subdivision in
which the total reduction in penalties, fees, additions to tax, or
interest exceeds five hundred dollars ($500) shall be submitted to
the executive officer for concurrence.

begin delete

(ii) The total relief granted pursuant to this subdivision may not
exceed seven thousand five hundred dollars ($7,500).

end delete

(B) Whenever relief is granted under this subdivision, there
shall be placed on file begin insert for at least one year end insert in the office of the
executive officer of the board a public record with respect to that
relief. The public record shall include the following:

(i) The taxpayer’s name.

(ii) The total amount involved.

(iii) The amount payable or refundable due to the error or delay.

(iv) A summary of why the relief is warranted.

(4) A refund may be paid as a result of relief granted under this
subdivision only if the applicable statute of limitations, with respect
to filing a claim for refund, remains open as of the date that the
basis for providing relief, as authorized in subparagraphs (A) to
(C), inclusive, of paragraph (1), as begin delete reflected in a written
communication received by the advocate. end delete begin insert determined by the board. end insert

begin delete

(d) (1) On and after January 1, 2016, the chief counsel of the
board may provide relief pursuant to this subdivision and abate
any penalties, fees, additions to tax, or interest assessed, if it is
determined by the chief counsel that the penalties, fees, additions
to tax, or interest that have been assessed, or any part thereof, is
attributable to any of the following:

(A) Erroneous action or erroneous inaction by the board in
processing documents filed or payments made by taxpayers.

(B) Unreasonable delay caused by the board.

(C) Erroneous written advice that does not qualify for relief
under Section 21012.

(2) Relief may be granted pursuant to this subdivision only if
no significant aspect of that error or delay can be attributed to the
taxpayer involved and relief is not available under any other
provision of this part, Part 10 (commencing with Section 17001),
Part 10.2 (commencing with Section 18401), or Part 11
(commencing with Section 23001), including any relief granted
under any regulation or other administrative pronouncement of
the board.

(3) (A) Any relief granted pursuant to this subdivision in which
the total reduction in penalties, fees, additions to tax, or interest
exceeds five hundred dollars ($500) shall be submitted to the
executive officer for concurrence.

(B) Whenever relief is granted under this subdivision, there
shall be placed on file for at least one year in the office of the
executive officer of the board a public record with respect to that
relief. The public record shall include the following:

(i) The taxpayer’s name.

(ii) The total amount involved.

(iii) The amount payable or refundable due to the error or delay.

(iv) A summary of why the relief is warranted.

(4) A refund may be paid as a result of relief granted under this
subdivision only if the applicable statute of limitations, with respect
to filing a claim for refund, remains open as of the date that the
basis for providing relief, as authorized in subparagraphs (A) to
(C), inclusive, of paragraph (1), as determined by the board.

(e) No other entity may participate in the grant or denial of relief
pursuant to this section.

(f) On January 1 of each calendar year beginning on or after
January 1, 2009, and before January 1, 2016, the board shall
increase the amount specified in subparagraph (A) of paragraph
(3) of subdivision (c) to the amount computed under this
subdivision. That adjustment shall be made as follows:

(1) The Department of Industrial Relations shall transmit
annually to the board the percentage change in the California
Consumer Price Index for All Urban Consumers, as modified for
rental equivalent home ownership for all items, from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.

(2) The board shall then:

(A) Compute the percentage change in the California Consumer
Price Index for All Urban Consumers from the later of June 2008
or June of the calendar year prior to the last increase in the amount
specified in paragraph (1).

(B) Compute the inflation adjustment factor by adding 100
percent to the percentage change so computed, and converting the
resulting percentage to the decimal equivalent.

(C) Multiply the amount specified in paragraph (1) for the
immediately preceding calendar year, as adjusted under this
subparagraph, by the inflation adjustment factor determined in
subparagraph (B), and round off the resulting product to the nearest
one hundred dollars ($100).

end delete begin insert

(d) No other entity may participate in the grant or denial of
relief pursuant to this section.

end insert begin delete

(g)

end delete

begin insert (e) end insert  Notwithstanding any other law or rule of law, all
determinations made under paragraph (1) of subdivision (c) begin delete and
paragraph (1) of subdivision (d) end delete shall not be subject to review in
any administrative or judicial proceeding.

begin insert

(f) (1) The amendments made by Section 1 of Chapter 349 of
the Statutes of 2012 shall become operative on January 1, 2013.

end insert begin insert

(2) The amendments made by the act adding this paragraph
shall become operative on January 1, 2016.

end insert

SEC. 2.  

Section 21004 of the Revenue and Taxation Code, as
added by Section 2 of Chapter 349 of the Statutes of 2012, is
repealed.