BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 540|
|Office of Senate Floor Analyses | |
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UNFINISHED BUSINESS
Bill No: SB 540
Author: Hertzberg (D)
Amended: 9/4/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/22/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/4/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 36-0, 5/11/15
AYES: Allen, Bates, Beall, Berryhill, Block, Cannella, Fuller,
Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill,
Hueso, Huff, Jackson, Lara, Leno, Leyva, McGuire, Mendoza,
Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan,
Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Anderson, De León, Liu
ASSEMBLY FLOOR: 79-0, 9/8/15 - See last page for vote
SUBJECT: Franchise Tax Board: Taxpayers Rights Advocate
SOURCE: Author
DIGEST: This bill repeals the sunset provision and increases
the maximum relief amount limit for the Taxpayer Advocate Equity
Relief Program (Program).
Assembly Amendments reduce the relief amount maximum to $10,000
and require the Franchise Tax Board (FTB) to be notified
whenever relief is granted.
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ANALYSIS:
Existing law:
1)Authorizes the Taxpayers' Rights Advocate (Advocate) to
resolve taxpayer issues identified by the FTB, and to grant
relief from penalties, fees, or interest attributable to any
of the following:
Erroneous action or erroneous inaction by FTB in
processing documents filed or payments made by taxpayers.
Unreasonable delay caused by FTB.
Erroneous written advice that does not qualify for
relief under the FTB's Chief Counsel's (Chief Counsel's)
authority.
1)Allows the Advocate to grant relief only in situations where
no significant aspect of the error is attributable to the
taxpayer and relief is unavailable under any other statute or
regulation.
2)Allows a maximum relief amount of $7,600, and relief in excess
of $509 must be approved by FTB's Executive Officer.
3)Sunsets on January 1, 2016.
This bill:
1)Extends the Program indefinitely by repealing the January 1,
2016, sunset date.
2)Requires the Advocate to coordinate with the Chief Counsel, on
or after January 1, 2016, in order to abate penalties, fees,
additions to tax, or interest attributable to an erroneous
action or inaction of, unreasonable delay caused by, or
specified written advice issued by the FTB.
3)Requires that the FTB be notified of relief granted by the
Advocate and that records of relief be retained for at least
one year.
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4)Increases the maximum annual taxpayer relief amount that may
be granted for a taxable year from $7,500 to $10,000 and
indexes that amount to inflation.
Comments
1)The Taxpayers' Rights Advocate. In 1988, the Katz-Harris
Taxpayers' Bill of Rights Act codified many existing FTB
administrative procedures and clarified the rights of
California taxpayers. It also established the position of the
Advocate to provide specified protections for taxpayers,
including a resolution of taxpayer complaints and problems.
On July 30, 1996, the federal Taxpayer Bill of Rights was
passed, and later, California followed by enacting the
Taxpayers' Rights: Conformity Legislation. A few years
later, the California Legislature created the Taxpayers' Bill
of Rights Act of 1999, further increasing protection of
taxpayers' rights.
The Advocate reports directly to the FTB's Executive Officer.
The Advocate or his/her designee coordinates the resolution of
taxpayer complaints and problems, and, if appropriate, may
postpone enforcement action while the case is under review.
In 2008, the Legislature temporarily provided the Advocate
with the discretionary authority to grant relief to taxpayers
under limited circumstances. Specifically, beginning in
January 1, 2009, the Advocate was allowed to provide relief
from penalties, fees, additions to tax, or interest imposed on
a taxpayer because of erroneous actions or inactions of the
FTB.
2)Is the Taxpayers' Rights Advocate's permanent authority
justified? FTB notes that, in the absence of the Advocate's
authority to grant relief, eligible taxpayers do have other
avenues for obtaining relief from penalties, fees, additions
to tax or interest. For example, taxpayers may appeal to the
State Board of Equalization, file a lawsuit for refund of
taxes with a court, or file a claim with the Victim
Compensation and Government Claims Board for refund of tax or
losses caused by the action or inaction of a state agency.
However, in those cases, the taxpayers most likely will have
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to incur additional costs, which may exceed the amount of
penalties, interest, or other additions to tax. FTB argues
that the Advocate has prudently applied the discretionary
authority and it is time to re-enact the law without the
sunset provision.
3)Use of the Program. Since the enactment of the law on January
1, 2009, there have been three occurrences where the Advocate
exercised its authority and provided relief to taxpayers.
These occurrences are described below:
Interest was abated in the amount of $2,100 for a
taxpayer because of an erroneous action of processing the
taxpayer's return.
Interest was abated in the amount of $1,800 for a
taxpayer because of an unreasonable delay in issuing a bill
because of a technology upgrade.
Interest totaling $1.1 million was abated for a group of
50 taxpayers including multiple years because of erroneous
written advice contained in the California Fiduciary tax
form instructions. The relief granted to each taxpayer was
below the statutory limit.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee:
1)Minor and absorbable administrative costs to FTB to continue
program; possible cost savings if equitable relief actions
help reduce cases that would otherwise result in appeal or
litigation.
2)Impact to General Fund revenues will depend on the frequency
and magnitude of FTB errors, and is therefore unknown.
Historical experience suggests, however, that overall revenue
impact will be minor.
SUPPORT: (Verified9/8/15)
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California Chamber of Commerce
California Taxpayers Association
Franchise Tax Board
Howard Jarvis Taxpayers Association
OPPOSITION: (Verified9/8/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "Filing taxes
can be challenging; it's even more frustrating for individuals
who fall victim to administrative errors and delays from the tax
collection agency. SB 540 improves the Taxpayers' Rights
Advocate (TRA) program at the California Franchise Tax Board
(FTB). The TRA works on behalf of Californians to correct
problems that can cost individual taxpayers thousands of
dollars."
ASSEMBLY FLOOR: 79-0, 9/8/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, 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,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Chávez
Prepared by: Myriam Bouaziz / GOV. & F. / (916) 651-4119
9/8/15 21:47:06
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