BILL NUMBER: SB 3 CHAPTERED 06/16/93 BILL TEXT CHAPTER 31 FILED WITH SECRETARY OF STATE JUNE 16, 1993 APPROVED BY GOVERNOR JUNE 15, 1993 PASSED THE SENATE JUNE 3, 1993 PASSED THE ASSEMBLY MAY 20, 1993 AMENDED IN ASSEMBLY MAY 4, 1993 AMENDED IN ASSEMBLY APRIL 22, 1993 AMENDED IN SENATE FEBRUARY 23, 1993 INTRODUCED BY Senator Greene DECEMBER 7, 1992 An act to amend Sections 17034, 17035, 17037, 17039, 17045, 17086, 17152, 17222, 17299.8, 17299.9, 17322, 17508, 17552, 17735, 18009, 18937, 21022, 23036, 23058, 23060, 23081, 23101.5, 23184.5, 23225, 23301, 23305e, 23333, 23335, 23455, 23701r, 23772, 23777, 23802, 23810, 23811, 24273.5, 24447, 24448, 24453, 24634, 24946, 25110, 25111, 25112, and 26313 of, to add Part 10.2 (commencing with Section 18401) to Division 2 of, to repeal and add Sections 19053.6 and 26073.4 of, to repeal Sections 17932 and 24992 of, to repeal Chapter 17 (commencing with Section 18401), Chapter 18 (commencing with Section 18551), Chapter 18.5 (commencing with Section 18701), Chapter 19 (commencing with Section 18801), Chapter 20 (commencing with Section 19051), Chapter 21 (commencing with Section 19251), Chapter 22 (commencing with Section 19351), Chapter 23 (commencing with Section 19401), and Chapter 24 (commencing with Section 19451), of Part 10 of Division 2 of, and to repeal Chapter 19 (commencing with Section 25401), Chapter 20 (commencing with Section 25661), Chapter 21 (commencing with Section 25901), Chapter 22 (commencing with Section 26071), Chapter 23 (commencing with Section 26131), and Chapter 24 (commencing with Section 26422) of Part 11 of Division 2 of, the Revenue and Taxation Code, to amend Sections 803, 828, 1111, 1113, 1129, 1181, 1184, 13003, 13020, 13028, 13028.5, 13028.6, 13029, 13052.5, 13054, and 13101 of the Unemployment Insurance Code, and to amend Section 2 of Chapter 1451 of the Statutes of 1990 and Section 43 of Chapter 1348 of the Statutes of 1990, relating to taxation, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 3, Greene. Income taxes: bank and corporation taxes. The existing Revenue and Taxation Code contains the Personal Income Tax Law and the Bank and Corporation Tax Law which impose taxes, as specified. This bill would make various changes to the Revenue and Taxation Code by deleting specified provisions in the Personal Income Tax Law and the Bank and Corporation Tax Law, relating to, among other things, administration, enforcement, and penalties, and adding substantially similar provisions under a new part to that code that would apply to either or both laws, as specified. This bill would make conforming changes in various provisions of the Unemployment Insurance Code relating to unemployment compensation coverage, interest payable on employer contributions, interest due for overpayments of contributions, and withholding of taxes and penalties associated with withholding. This bill would provide a specified operative date for the statute of limitations applicable to specified returns. This bill would also make certain requirements relating to federal audit adjustments apply as provided. This bill would incorporate amendments to Section 23101.5 of the Revenue and Taxation Code made by SB 26 if both this bill and SB 26 are chaptered and this bill is chaptered last. This bill would declare that it is to take effect immediately as an urgency statute, but all of its provisions, with certain exceptions, would become operative on January 1, 1994. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 17034 of the Revenue and Taxation Code is amended to read: 17034. Unless otherwise specifically provided therein, the provisions of any act: (a) That affect the imposition or computation of taxes, additions to tax other than Section 19136, penalties, or the allowance of credits against the tax, shall be applied to taxable years beginning on or after January 1 of the year in which the act takes effect. (b) That change the provisions of Section 19136 (relating to underpayment of estimated tax) shall be applied to taxable years beginning on or after January 1 of the year immediately after the year in which the act takes effect. (c) That otherwise affect the provisions of this part shall be applied on and after the date the act takes effect. SEC. 2. Section 17035 of the Revenue and Taxation Code is amended to read: 17035. The term "withholding agent" means any person required to deduct and withhold any tax under Section 18662. SEC. 3. Section 17037 of the Revenue and Taxation Code is amended to read: 17037. Provisions in other codes or general law statutes which are related to this part include all of the following: (a) Chapter 20.6 (commencing with Section 9891) of Division 3 of the Business and Professions Code, relating to tax preparers. (b) Part 10.2 (commencing with Section 18401), relating to the administration of franchise and income tax laws. (c) Part 10.5 (commencing with Section 20501), relating to the Property Tax Assistance and Postponement Law. (d) Part 10.7 (commencing with Section 21001), relating to the Taxpayers' Bill of Rights. (e) Part 11 (commencing with Section 23001), relating to the Bank and Corporation Tax Law. (f) Sections 15700 to 15702.1, inclusive, of the Government Code, relating to the Franchise Tax Board. SEC. 4. Section 17039 of the Revenue and Taxation Code is amended to read: 17039. (a) Notwithstanding any provision in this part to the contrary, for the purposes of computing tax credits, the term "net tax" means the tax imposed under either Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to lump-sum distributions) less the credits allowed by Section 17054 (relating to personal exemption credits) and any amount imposed under paragraph (1) of subdivision (d) and paragraph (1) of subdivision (e) of Section 17560. Notwithstanding the preceding sentence, the "net tax" shall not be less than the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions), if any. Credits shall be allowed against "net tax" in the following order: (1) Credits that do not contain carryover or refundable provisions, except those described in paragraphs (4) and (5). (2) Credits that contain carryover provisions but do not contain refundable provisions. (3) Credits that contain both carryover and refundable provisions. (4) The minimum tax credit allowed by Section 17063 (relating to the alternative minimum tax). (5) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001). (6) Credits that contain refundable provisions but do not contain carryover provisions. The order within each paragraph shall be determined by the Franchise Tax Board. (b) Notwithstanding the provisions of Sections 17053.5 (relating to the renter's credit), 17061 (relating to refunds pursuant to the Unemployment Insurance Code), and 19002 (relating to tax withholding), the credits provided in those sections shall be allowed in the order provided in paragraph (6) of subdivision (a). (c) (1) Notwithstanding any other provision of this part, no tax credit shall reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions) below the tentative minimum tax, as defined by Section 17062, except the following credits, but only after allowance of the credit allowed by Section 17063 (A) The credit allowed by former Section 17052.4 (relating to solar energy). (B) The credit allowed by former Section 17052.5 (relating to solar energy). (C) The credit allowed by Section 17052.5 (relating to solar energy). (D) The credit allowed by Section 17052.12 (relating to research expenses). (E) The credit allowed by Section 17053.5 (relating to the renter's credit). (F) The credit allowed by Section 17057 (relating to clinical testing expenses). (G) The credit allowed by Section 17058 (relating to low-income housing). (H) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code). (I) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001). (J) The credit allowed by Section 19002 (relating to tax withholding). (2) Any credit which is partially or totally denied under paragraph (1) shall be allowed to be carried over and applied to the net tax in succeeding taxable years, if the provisions relating to that credit include a provision to allow a carryover when that credit exceeds the net tax. (d) Unless otherwise provided, any remaining carryover of a credit allowed by a section which has been repealed or made inoperative shall continue to be allowed to be carried over and applied against the "net tax" until the credit has been exhausted. (e) (1) Unless otherwise provided, if two or more taxpayers (other than husband and wife) share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to his or her respective share of the costs paid or incurred. (2) In the case of a partnership, the credit may be divided among the partners pursuant to a written partnership agreement in accordance with Section 704 of the Internal Revenue Code, relating to partner's distributive share. (3) In the case of a husband and wife who file separate returns, the credit may be taken by either or equally divided between them. SEC. 5. Section 17045 of the Revenue and Taxation Code is amended to read: 17045. In the case of a joint return of a husband and wife under Section 18521, the tax imposed by Section 17041 shall be twice the tax which would be imposed if the taxable income were cut in half. For purposes of this section, a return of a surviving spouse (as defined in Section 17046) shall be treated as a joint return of a husband and wife. SEC. 6. Section 17086 of the Revenue and Taxation Code is amended to read: 17086. (a) Noncash patronage allocations from farmers' cooperative and mutual associations (whether paid in capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice or in some other manner that discloses the dollar amount of those noncash patronage allocations) may, at the election of the taxpayer, be considered as income and included in gross income for the taxable year in which received. (b) If a taxpayer exercises the election provided for in subdivision (a), the amount included in gross income shall be the face amount of those allocations. (c) If a taxpayer elects to exclude noncash patronage allocations from gross income for the taxable year in which received, those allocations shall be included in gross income in the year that they are redeemed or realized upon. (d) If a taxpayer exercises the election provided for in subdivision (c), the face amount of those noncash patronage allocations shall be disclosed in the return made for the taxable year in which those noncash patronage allocations were received. (e) If a taxpayer exercises the election provided for in subdivision (a) or (c) for any taxable year, then the method of computing income so adopted shall be adhered to with respect to all subsequent taxable years unless with the approval of the Franchise Tax Board a change to a different method is authorized. (f) If a taxpayer has made the election provided for in subdivision (c), then (1) the statutory period for the assessment of a deficiency for any taxable year in which the amount of any noncash patronage allocations are realized shall not expire prior to the expiration of four years from the date the Franchise Tax Board is notified by the taxpayer (in the manner as the Franchise Tax Board may by regulation prescribe) of the realization of gain on those allocations; and (2) that deficiency may be assessed prior to the expiration of that four-year period, notwithstanding the provisions of Section 19057 or the provisions of any other law or rule of law which would otherwise prevent that assessment. SEC. 7. Section 17152 of the Revenue and Taxation Code is amended to read: 17152. For the purposes of Section 121(b) of the Internal Revenue Code, as incorporated by Section 17131 for purposes of this part, both of the following shall apply: (a) The dollar amount of the exclusion shall be the same as allowed for federal purposes as determined by the taxpayer's filing status for federal purposes even though the taxpayer is prohibited from filing a joint return pursuant to Section 18521. However, in no instance shall the total amount excludable for the sale of a principal residence exceed the maximum amount allowed by Section 121(b) of the Internal Revenue Code. (b) For taxable years beginning on or after January 1, 1992, Section 121(a)(2) of the Internal Revenue Code shall be modified by reducing the three-year period by the period of the taxpayer' s service, not to exceed 18 months, in the Peace Corps during the five-year period ending on the date of the sale or exchange. SEC. 8. Section 17222 of the Revenue and Taxation Code is amended to read: 17222. No deduction shall be allowed for the tax deducted and withheld under Section 18662 and Section 13020 of the Unemployment Insurance Code either to the employer or to the recipient of the income in computing taxable income under this part. SEC. 9. Section 17299.8 of the Revenue and Taxation Code is amended to read: 17299.8. The Franchise Tax Board may disallow a deduction under this part to an individual or entity for amounts paid as remuneration for personal services if that individual or entity fails to report the payments required under Section 13050 of the Unemployment Insurance Code or Section 18637 or 18638 on the date prescribed therefor (determined with regard to any extension of time for filing). SEC. 10. Section 17299.9 of the Revenue and Taxation Code is amended to read: 17299.9. (a) Notwithstanding any other provisions in this part, in the case of a taxpayer who owns real property and has either failed to provide information required pursuant to Section 18642, or has provided information which is either false, misleading, or incomplete in the information return required pursuant to Section 18642, no deduction shall be allowed for interest, taxes, depreciation, or amortization paid or incurred with respect to that real property, as provided in subdivision (b). (b) No deduction shall be allowed for the items provided in subdivision (a) from 60 days after the due date for filing the information return required pursuant to Section 18642 until the date the Franchise Tax Board determines that all provisions of Section 18642 have been complied with. (c) In the event the period of noncompliance does not cover an entire taxable year, the deductions shall be denied at the rate of one-twelfth for each full month during the period of noncompliance. SEC. 11. Section 17322 of the Revenue and Taxation Code is amended to read: 17322. For purposes of Section 302(c)(2) of the Internal Revenue Code, the periods of limitation to be extended for one year are the periods provided in Sections 19057 and 19371. SEC. 12. Section 17508 of the Revenue and Taxation Code is amended to read: 17508. The provisions of Section 408(o) of the Internal Revenue Code, relating to definitions and rules relating to nondeductible contributions to individual retirement plans, shall be applicable and the information required to be reported shall be reported on the return filed pursuant to Chapter 2 (commencing with Section 18501) of Part 10.2 at the time and in the manner as specified in that section. SEC. 13. Section 17552 of the Revenue and Taxation Code is amended to read: 17552. (a) Notwithstanding Section 17565, a return for a period of less than 12 months shall also be made when the Franchise Tax Board terminates the taxpayer's taxable year under Section 19082 (relating to tax in jeopardy). (b) The provisions of Section 443(c) of the Internal Revenue Code, relating to adjustment in deduction for personal exemption, shall be applied to the credit allowed under Section 17054 in lieu of the deduction allowed by Section 151 of the Internal Revenue Code. SEC. 14. Section 17735 of the Revenue and Taxation Code is amended to read: 17735. In the case of an estate, no deductions shall be allowed under Section 661(a) of the Internal Revenue Code with respect to amounts attributable and taxable to nonresident beneficiaries if the fiduciary fails to obtain a certificate as provided by Section 19513. SEC. 15. Section 17932 of the Revenue and Taxation Code is repealed. SEC. 16. Section 18009 of the Revenue and Taxation Code is amended to read: 18009. Interest shall be assessed, collected and paid in the same manner as the tax at the adjusted annual rate established pursuant to Section 19521 from the date the credit was allowed under this part to the date of payment. SEC. 17. Chapter 17 (commencing with Section 18401) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 18. Chapter 18 (commencing with Section 18551) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 19. Chapter 18.5 (commencing with Section 18701) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 20. Chapter 19 (commencing with Section 18801) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 20.5. Section 18937 of the Revenue and Taxation Code is amended to read: 18937. (a) (1) If any person fails to pay any amount of tax, penalty, addition to tax, interest, or other liability imposed and delinquent under this part, a collection cost recovery fee shall be imposed if the Franchise Tax Board has mailed notice to the person for payment that advises that continued failure to pay the amount due may result in collection action, including the imposition of a collection cost recovery fee. The collection cost recovery fee shall be in the amount of eighty-eight dollars ($88) or an amount as adjusted under subdivision (b). (2) If any person fails or refuses to make and file a tax return required by this part within 25 days after formal legal demand to file the tax return is mailed to that person by the Franchise Tax Board, the Franchise Tax Board shall add a filing enforcement cost recovery fee in the amount of fifty-one dollars ($51) or an amount as adjusted under subdivision (b). (b) For fees charged during the 1993-94 fiscal year and fiscal years thereafter, the amount of those fees shall be set to reflect actual costs and shall be specified in the annual Budget Act. (c) Interest shall not accrue with respect to the cost recovery fees provided by this section. (d) The amounts provided by this section are obligations imposed by this part and may be collected in any manner provided under this part for the collection of a tax. (e) Subdivision (a) is operative with respect to the notices for payment or formal legal demands to file, either of which is mailed on or after the effective date of this section. (f) The Franchise Tax Board shall determine the total amount of the cost recovery fees collected or accrued through June 30, 1993, and shall notify the Controller of that amount. The Controller shall transfer that amount to the Franchise Tax Board, and that amount is hereby appropriated to the board for the 1992-93 fiscal year for reimbursement of its collection and filing enforcement efforts. SEC. 21. Chapter 20 (commencing with Section 19051) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 21.5. Section 19053.6 of the Revenue and Taxation Code is repealed. SEC. 21.6. Section 19053.6 is added to the Revenue and Taxation Code, to read: 19053.6. (a) If a change or correction is made or allowed by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or an amended return is required under Section 18451 and is filed timely, a claim for credit or refund resulting from the adjustment may be filed by the taxpayer within two years from the date of the final federal determination, or within the period provided in Sections 19053 and 19053.1, whichever period expires later. (b) This section shall apply to any federal determination that becomes final on or after January 1, 1993. SEC. 22. Chapter 21 (commencing with Section 19251) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 23. Chapter 22 (commencing with Section 19351) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 24. Chapter 23 (commencing with Section 19401) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 25. Chapter 24 (commencing with Section 19451) of Part 10 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 26. Part 10.2 (commencing with Section 18401) is added to Division 2 of the Revenue and Taxation Code, to read: PART 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS CHAPTER 1. GENERAL PROVISIONS Article 1. General Application 18401. Each provision of this part shall apply to Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001), unless otherwise provided. 18402. (a) Except where the context otherwise requires, the general provisions and definitions provided in Chapter 1 (commencing with Section 17001) of Part 10 and in Chapter 1 (commencing with Section 23001) of Part 11 shall apply to this part. (b) For purposes of this part, "person" includes an individual, fiduciary, partnership, bank, corporation, or organization exempt from taxation under Section 23701. (c) (1) Whenever provisions of this part are applied in connection with Part 10 (commencing with Section 17001), the terms "taxpayer," "corporation" and "taxable year" have the same meaning as defined in Chapter 1 (commencing with Section 17001) of Part 10. (2) Whenever provisions of this part are applied in connection with Part 11 (commencing with Section 23001), the terms "taxpayer," "corporation" and "taxable year" have the same meaning as defined in Article 2 (commencing with Section 23030) of Chapter 1 of Part 11. 18403. For purposes of this part, any return, declaration, report, statement, or other document required to be made or filed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) shall be deemed to have been required to be made or filed under this part. Article 2. Continuity with Prior Law 18412. The provisions of this part insofar as they are substantially the same as statutory provisions relating to the same subject matter in Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), as those provisions, including applicable regulations, existed on December 31, 1993, shall be construed as restatements and continuations thereof, and not as new enactments. 18413. The repeal of any provision in Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) made by the act adding this section shall not affect any act done or any right accruing or accrued, or any suit, appeal, or other proceeding having commenced under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), before that repeal; but all rights and liabilities under that law shall continue, and may be enforced in the same manner, as if that repeal had not been made. 18414. Any provision of this part that refers to the application of any portion of this part to a prior period (or which depends upon the application to a prior period of any portion of this part) shall, when appropriate and consistent with the purpose of that provision, be deemed to refer to (or depend upon the application of) the corresponding provision of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) as was applicable to the prior period. 18415. Unless otherwise specifically provided therein, the provisions of any act: (a) That affect the imposition or computation of taxes, additions to tax other than Sections 19136 or 19142, penalties, or the allowance of credits against the tax, shall be applied to taxable (or income) years beginning on or after January 1 of the year in which the act takes effect. (b) That change the provisions of Sections 19023 to 19027, inclusive, (relating to payment of estimated tax) or Section 19136 or Sections 19142 to 19151, inclusive, (relating to underpayment of estimated tax) shall be applied to taxable (or income) years beginning on or after January 1 of the year immediately after the year in which the act takes effect. (c) That otherwise affect the provisions of this part shall be applied on and after the date the act takes effect. 18416. Unless expressly otherwise provided in this part, any notice may be given by first-class mail postage prepaid. 18417. Provisions in other codes or general law statutes that are related to this part include all of the following: (a) Chapter 20.6 (commencing with Section 9891) of Division 3 of the Business and Professions Code, relating to tax preparers. (b) Sections 1502, 2204 to 2206, inclusive, 6210, 6810, 8210, and 8810 of the Corporations Code, relating to the corporation officer statement penalty. (c) Section 2104 of the Corporations Code, which prevents the application of any provision of this part against any foreign lending institution whose activities in this state are limited to those described in subdivision (d) of Section 191 of the Corporations Code. (d) Sections 15700 to 15702.1, inclusive, of the Government Code, relating to the Franchise Tax Board. (e) Part 10 (commencing with Section 17001) of this division, relating to the Personal Income Tax Law. (f) Part 10.5 (commencing with Section 20501) of this division, relating to the Senior Citizens Property Tax Assistance and Postponement Law. (g) Part 10.7 (commencing with Section 21001) of this division, relating to the Taxpayers' Bill of Rights. (h) Part 11 (commencing with Section 23001) of this division, relating to the Bank and Corporation Tax Law. CHAPTER 2. RETURNS Article 1. Individuals and Fiduciaries 18501. (a) Every individual taxable under Part 10 (commencing with Section 17001) shall make a return to the Franchise Tax Board, stating specifically the items of the individual's gross income from all sources and the deductions and credits allowable, if the individual has any of the following for the taxable year: (1) An adjusted gross income from all sources in excess of six thousand dollars ($6,000), if single. (2) An adjusted gross income from all sources in excess of twelve thousand dollars ($12,000), if married. (3) A gross income from all sources in excess of eight thousand dollars ($8,000), if single, and sixteen thousand dollars ($16,000) if married, regardless of the amount of adjusted gross income. (b) If a husband and wife have for the taxable year an adjusted gross income from all sources in excess of twelve thousand dollars ($12,000) or a gross income from all sources in excess of sixteen thousand dollars ($16,000), each shall make a return or the income of each shall be included on a single joint return as otherwise provided in this article. 18503. If an individual is unable to make a return, the return shall be made by a duly authorized agent or by the guardian, fiduciary, conservator, or other person charged with the care of the person or property of the individual. 18504. Every resident or nonresident who is taxable upon income of an estate or trust shall include that income in his or her gross income. 18505. (a) Every fiduciary (except a receiver appointed by authority of law in possession of part only of the property of an individual) taxable under Part 10 (commencing with Section 17001) shall make a return, which shall contain or be verified by a written declaration that it is made under the penalties of perjury, for any of the following taxpayers for whom he or she acts, stating specifically the items of gross income of the taxpayer and the deductions and credits allowed: (1) Every individual having an adjusted gross income for the taxable year in excess of six thousand dollars ($6,000), if single. (2) Every individual having an adjusted gross income for the taxable year in excess of twelve thousand dollars ($12,000), if married. (3) Every individual having a gross income for the taxable year in excess of eight thousand dollars ($8,000), regardless of the amount of adjusted gross income. (4) Every estate the net income of which for the taxable year is in excess of one thousand dollars ($1,000). (5) Every trust (not treated as a corporation under Section 23038) the net income of which for the taxable year is in excess of one hundred dollars ($100). (6) Every estate or trust (not treated as a corporation under Section 23038) the gross income of which for the taxable year is in excess of eight thousand dollars ($8,000), regardless of the amount of the net income. (7) Every decedent, for the year in which death occurred, and for prior years, if returns for those years should have been filed but have not been filed by the decedent, under the rules and regulations that the Franchise Tax Board may prescribe. (b) The fiduciary of any estate or trust required to file a return under subdivision (a), for any taxable year shall, on or before the date on which that return was required to be filed, furnish to each beneficiary (or nominee thereof) a statement in accordance with the provisions of Section 6034A of the Internal Revenue Code. 18506. A trust that qualifies under Section 401(a) of the Internal Revenue Code and which is exempt is not required to file a return unless it changes the character of its organization, the purpose for which it was organized, or its method of operation or unless the trust has unrelated business taxable income. Where an exempt trust has unrelated business taxable income which exceeds one thousand dollars ($1,000) it shall file a return, verified by an executive officer under penalties of perjury in the form prescribed by the Franchise Tax Board on or before the 15th day of the fourth month following the close of the taxable year. 18507. If the requirements of Section 18501 do not apply, any individual who is a nonresident for all or any portion of the taxable year shall be required to file a return, regardless of the amount of his or her adjusted gross income, if he or she is required to pay any tax pursuant to Part 10 (commencing with Section 17001). 18508. Under the rules and regulations that the Franchise Tax Board may prescribe, a return filed by one of two or more joint fiduciaries is sufficient. The fiduciary filing the return, which shall contain or be verified by a written declaration that it is made under the penalties of perjury, shall state both of the following: (a) That he or she has sufficient knowledge of the affairs of the taxpayer for whom the return is made to enable him or her to make the return. (b) That the return is, to the best of his or her knowledge and belief, true and correct. 18509. Any fiduciary required to make a return under Section 18505 is subject to all the provisions of Part 10 (commencing with Section 17001) and this part that apply to individuals. 18510. For purposes of Sections 18501, 18505, and 18521, gross income shall be computed without regard to the exclusion provided for in Section 121 of the Internal Revenue Code, relating to the one-time exclusion of gain from the sale of principal residence by an individual who has attained age 55 years. 18521. (a) Except as otherwise provided in this article, an individual shall use the same filing status that he or she used on his or her federal income tax return filed for the same taxable year. (b) Except as provided in subdivision (d), if a joint federal income tax return is filed for the taxable year, the income of each shall be included in a single joint return. (c) Except as provided in subdivision (d), in the case of a husband and wife who file a joint federal income tax return, where either spouse was a nonresident for any portion of the taxable year, the husband and wife shall file a joint nonresident return. (d) Notwithstanding subdivisions (b) and (c), and subject to the prohibitions of subdivision (e), a husband and wife may file separate returns if either spouse was either of the following during the taxable year: (1) An active member of the armed forces or any auxiliary branch thereof. (2) A nonresident for the entire taxable year who had no income from a California source. (e) For any taxable year with respect to which a joint return has been filed, a separate return shall not be made by either spouse after the period for either to file a separate return has expired. (f) A joint return may not be filed if the husband and wife have different taxable years; except that if their taxable years begin on the same day and end on different days because of the death of either or both, then a joint return may be made with respect to the taxable year of each. The above exception shall not apply if the surviving spouse remarries before the close of his or her taxable year, or if the taxable year of either spouse is a fractional part of a year under Section 443(a) of the Internal Revenue Code. (g) In the case of the death of one spouse or both spouses the joint return with respect to the decedent may be made only by the decedent's executor or administrator; except that, in the case of the death of one spouse, the joint return may be made by the surviving spouse if (1) no return for the taxable year has been made by the decedent, (2) no executor or administrator has been appointed, and (3) no executor or administrator is appointed before the last day prescribed by law for filing the return of the surviving spouse. If an executor or administrator of the decedent is appointed after the making of the joint return by the surviving spouse, the executor or administrator may disaffirm the joint return by making, within one year after the last day prescribed by law for filing the return of the surviving spouse, a separate return for the taxable year of the decedent with respect to which the joint return was made, in which case the return made by the survivor shall constitute his or her separate return. 18522. If an individual has filed a separate return for a taxable year for which a joint return could have been made by him or her and his or her spouse under Section 18521, and the time prescribed for filing the return for that taxable year has expired, that individual and his or her spouse may nevertheless make a joint return for that taxable year, provided a joint federal income tax return is made under the provisions of Section 6013(b) of the Internal Revenue Code. A joint return filed by the husband and wife in that case shall constitute the return of the husband and wife for that taxable year, and all payments, credits, refunds, or other repayments made or allowed with respect to the separate return of either spouse for that taxable year shall be taken into account in determining the extent to which the tax based upon the joint return has been paid. 18523. If a joint return is made under Section 18522, any election (other than the election to file a separate return) made by either spouse in his or her separate return for the taxable year with respect to the treatment of any income, deduction, or credit of the spouse shall not be changed in the making of the joint return where the election would have been irrevocable if the joint return had not been made. 18524. If a joint return is made under Section 18522 after the death of either spouse, the return with respect to the decedent may be made only by his or her executor or administrator. 18525. A joint return may be made under Section 18522 only if there is paid in full at or before the time of the filing of the joint return all of the following: (a) All amounts previously assessed with respect to either spouse for that taxable year. (b) All amounts shown as the tax by either spouse upon his or her separate return for that taxable year. (c) Any amount determined, at the time of the filing of the joint return, as a proposed deficiency with respect to either spouse for that taxable year if, prior to the filing, a notice under Section 19033 of the proposed deficiency has been mailed. 18526. A joint return may not be made under Section 18522 in any of the following situations: (a) After the expiration of four years from the last date prescribed by law for filing the return for the taxable year (determined without regard to any extension of time granted to either spouse). (b) After there has been mailed to either spouse, with respect to the taxable year, a notice of deficiency under Section 19033, if the spouse, as to that notice, files a protest under Section 19041 or appeal under Section 19045. (c) After either spouse has commenced a suit in any court for the recovery of any part of the tax for that taxable year. (d) After either spouse has entered into a closing agreement under Section 19441 with respect to the taxable year. 18527. For the purposes of Article 1 (commencing with Section 19301) of Chapter 6 (relating to refunds and credits), a joint return made under Section 18522 shall be deemed to have been filed on the last date prescribed for filing the return for the taxable year (determined without regard to any extension of time granted to either spouse). 18528. For the purposes of Sections 19057 to 19067, inclusive (relating to period of limitations upon assessment and collection), and for the purposes of Section 19131 (relating to delinquent returns), a joint return made under Section 18522 shall be deemed to have been filed in any of the following circumstances: (a) Where both spouses filed separate returns prior to making the joint return, on the date the last separate return was filed (but not earlier than the last date prescribed by this part for filing the return of either spouse). (b) Where one spouse filed a separate return prior to the making of the joint return, and the other spouse had six thousand dollars ($6,000) or less of adjusted gross income and eight thousand dollars ($8,000) or less of gross income for the taxable year, on the date of the filing of the separate return (but not earlier than the last date prescribed by law for the filing of the separate return). (c) Where only one spouse filed a separate return prior to the making of a joint return and the other spouse had an adjusted gross income in excess of six thousand dollars ($6,000) or a gross income in excess of eight thousand dollars ($8,000) for the taxable year, on the date of the filing of the joint return. 18529. If a joint return is made under Section 18522, the period of limitations provided in Sections 19057 to 19067, inclusive, on the making of assessments and collecting taxes shall with respect to that return include one year immediately after the date of the filing of the joint return (computed without regard to Section 18528). 18530. Where the amount shown as the tax by the husband and wife on a joint return made under Section 18522 exceeds the aggregate of the amounts shown as the tax upon the separate return of each spouse, each of the following shall apply: (a) If any part of the excess is attributable to negligence or intentional disregard of rules and regulations (but without intent to defraud) at the time of the making of the separate return, then 20 percent of the total amount of the excess shall be assessed, collected and paid, in lieu of the 20 percent addition to the tax provided in subdivision (a) of Section 19164. (b) If any part of the excess is attributable to fraud with intent to evade tax at the time of the making of the separate return, then 75 percent of the total amount of the excess shall be assessed, collected and paid, in lieu of the 75 percent addition to the tax provided in subdivision (b) of Section 19164. 18531. For the purposes of Chapter 9 (commencing with Section 19701) which relates to criminal penalties in the case of fraudulent returns, the term "return" includes a separate return filed by a spouse with respect to a taxable year for which a joint return is made under Section 18522 after the filing of the separate return. 18532. For the purposes of this article, the status as husband and wife of two individuals having taxable years beginning on the same day shall be determined as follows: (a) If both have the same taxable year, then as of the close of that year. (b) If one dies before the close of the taxable year of the other, then as of the time of the death. 18533. (a) Under regulations prescribed by the Franchise Tax Board, if (1) A joint return has been made under this chapter for a taxable year and on that return taxable income was understated by either the omission of an amount properly includable therein, or by erroneous deductions or credits, which is attributable to one spouse, (2) The other spouse establishes that in signing the return he or she did not know of, and had no reason to know of, that understatement, and (3) Taking into account whether or not the other spouse significantly benefited directly or indirectly from the understatement of taxable income and taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax for that taxable year attributable to that understatement, then the other spouse shall be relieved of liability for tax (including interest, penalties, and other amounts) for that taxable year to the extent that the liability is attributable to that understatement of taxable income. (b) For purposes of this section, the determination of the spouse to whom items of taxable income understatement are attributable shall be made without regard to community property laws. (c) This section shall apply to all taxable years, but shall not apply to a year which has been closed by a statute of limitations, res judicata or otherwise. (d) For purposes of paragraph (2) of subdivision (a), "reason to know" means whether or not a reasonably prudent person would have had reason to know of the understatement. (e) For purposes of this section, with respect to an omission of an item from income, "attributable to one spouse" may be determined by whether a spouse rendered substantial service in producing the item of income to which the understatement is attributable. If neither spouse rendered substantial services in producing that income, then the attribution of applicable items of understatement shall be treated as community property. An erroneous deduction or credit shall be attributable to the spouse who caused that deduction or credit to be entered on the return. 18534. (a) Under regulations prescribed by the Franchise Tax Board, if: (1) An individual does not file a joint return for any taxable year, (2) That individual does not include in gross income for that taxable year an item of community income properly includable therein, (3) The individual establishes that he or she did not know of, and had no reason to know of, that item of community income, and (4) Taking into account all facts and circumstances, it is inequitable to include that item of community income in that individual's gross income, then, for purposes of Part 10 (commencing with Section 17001) and this part, that item of community income shall be included in the gross income of the other spouse (and not in the gross income of the individual). (b) The Franchise Tax Board may disallow the benefits of any community property law to any taxpayer with respect to any income if that taxpayer acted as if solely entitled to that income and failed to notify the taxpayer's spouse before the due date (including extensions) for filing the return for the taxable year in which the income was derived of the nature and amount of that income. 18535. (a) In lieu of electing nonresident partners filing a return pursuant to Section 18501 or 18507, the Franchise Tax Board may, pursuant to requirements and conditions set forth in forms and instructions, provide for the filing of a group return for electing nonresident partners by a partnership doing business in, or deriving income from, sources in California. The tax rate or rates applicable to each electing partner's distributive share shall be the highest marginal rate or rates provided by Part 10 (commencing with Section 17001). Except as provided in subdivision (b), no deductions shall be allowed except those necessary to determine each partner's distributive share, and no credits shall be allowed except those directly attributable to the partnership. As required by the Franchise Tax Board, the partnership as agent for the electing partners shall make the payments of tax, additions to tax, interest, and penalties otherwise required to be paid by the electing partners. (b) Deductions provided by Chapter 5 (commencing with Section 17501) of Part 10, attributable to earned income of a partner derived from a partnership filing a group return on behalf of electing nonresident partners under subdivision (a), shall be allowed if the partner certifies, in the form and manner as the Franchise Tax Board may prescribe, that he or she has no earned income from any other source. (c) This section shall also be applicable to nonresident shareholders of a corporation which is treated as an "S corporation" under Chapter 4.5 (commencing with Section 23800) of Part 11. In that case, the provisions of subdivisions (a) and (b) are modified to refer to "shareholders" in lieu of "partners" and to "S corporation" in lieu of "partnership." 18542. Notwithstanding any other provision of law, the Franchise Tax Board may design tax returns to provide for the designation of contributions to specified funds, as otherwise provided by law, on a separate schedule which shall be attached to the primary return form. 18547. (a) Any person required to register a tax shelter with the Secretary of the Treasury under Section 6111 of the Internal Revenue Code shall, if that tax shelter is organized in California, be required to send a duplicate of that registration information to the Franchise Tax Board not later than the day on which the first offering for sale of interests in that tax shelter occurs. (b) Any person required to register under Section 6111 of the Internal Revenue Code who receives a tax registration number from the Secretary of the Treasury shall, within 30 days after request by the Franchise Tax Board, file a statement of that registration number. (c) Section 6111(b) of the Internal Revenue Code, relating to inclusion of tax shelter identification numbers on returns, shall be applicable. 18551. Section 13021 of the Unemployment Insurance Code sets forth requirements for the filing of returns and payment of tax by every employer required to withhold any personal income tax on wages. 18552. The Franchise Tax Board is authorized to require that information with respect to persons subject to the taxes imposed by Article 4 (commencing with Section 18631) of Chapter 2 (relating to tax withheld at source) as is necessary or helpful in securing proper identification of those persons. 18566. Returns filed under this article on the basis of the calendar year shall be filed on or before the 15th day of April following the close of the calendar year. Returns made on the basis of a fiscal year shall be filed on or before the fifteenth day of the fourth month following the close of the fiscal year. 18567. (a) The Franchise Tax Board may grant a reasonable extension of time for filing any return, declaration, statement or other document required by Part 10 (commencing with Section 17001) or this part in the manner and form as the Franchise Tax Board may determine. Except for a taxpayer residing or traveling abroad, no extension shall be for more than six months. In the case of a taxpayer residing or traveling abroad, returns shall be filed no later than the 15th day of the sixth month following the close of the taxable year, unless the requirements for extension have been fulfilled on or before that date. (b) An extension of time granted pursuant to this section or Section 21022 is not an extension of time for payment of tax required to be paid on or before the due date of the return without regard to extension. Underpayment of tax penalties shall be imposed as provided by law without regard to any extension granted under this section or Section 21022. (c) A reasonable extension for payment of tax required by this part may be granted by the Franchise Tax Board whenever in its judgment good cause exists. 18570. (a) In the case of an individual who is serving as a member of the armed forces of the United States or any auxiliary branch thereof, or the merchant marine, beyond the boundaries of the United States, the Franchise Tax Board shall automatically grant, without application being made therefor, an extension of time, free from interest and penalties, for filing the return (except income withheld at source), for payment of the tax (except income withheld at source), for taking any of the steps required by Sections 19041, 19045, 19306, 19324, and 19331, until 180 days after his or her return to the United States. (b) "United States," as used in subdivision (a), means the 50 states of the United States and the District of Columbia. (c) This section shall also apply to the spouse of any individual described in subdivision (a). 18571. (a) The provisions of Section 7508 of the Internal Revenue Code, relating to time for performing certain acts postponed by reason of service in combat zone, shall apply. (b) Section 7508(e)(1) of the Internal Revenue Code, relating to tax in jeopardy, etc., is modified to refer to jeopardy assessments and liens authorized under this part, in lieu of the references to Section 6851 and Chapter 70 or 71 of the Internal Revenue Code. (c) Notwithstanding Section 17034, this section shall be operative without regard to taxable years and shall be operative with respect to any actions specified in Section 18570 that are required or permitted to be taken on or after August 2, 1990. Article 2. Banks and Corporations 18601. (a) Except as provided in subdivision (b) or (c), every taxpayer subject to the tax imposed by Part 11 (commencing with Section 23001) shall, within two months and 15 days after the close of its income year, transmit to the Franchise Tax Board a return in a form prescribed by it, specifying for the income year, all the facts as it may by rule, or otherwise, require in order to carry out this part. A tax return, disclosing net income for any income year, filed pursuant to Chapter 2 (commencing with Section 23101) or Chapter 3 (commencing with Section 23501) of Part 11 shall be deemed filed pursuant to the proper chapter of Part 11 for the same income period, if the chapter under which the return is filed is determined erroneous. (b) In the case of cooperative associations described in Section 24404, returns shall be filed on or before the 15th day of the ninth month following the close of its income year. (c) In the case of taxpayers, other than taxpayers described in subdivision (d), which dissolve or withdraw, each taxpayer shall within two months and 15 days after the close of the month in which the dissolution or withdrawal takes place, transmit to the Franchise Tax Board a return in a form prescribed by it, specifying for the period involved, all such facts as it may by rule, or otherwise, require in order to carry out this part. (d) In the case of taxpayers filing under Chapter 17 (commencing with Section 25101) of Part 11 as part of a unitary business, each taxpayer shall file with the Franchise Tax Board, within two months and 15 days after the close of the income year of the unitary group within which dissolution or withdrawal takes place, a return in a form prescribed by it specifying for the period involved, all the facts as it may by rule, or otherwise require, in order to carry out Part 11 (commencing with Section 23001). 18602. In the event that taxes, interest, and penalties have been or shall be assessed against, paid by, or collected from a corporation under Chapter 2 (commencing with Section 23101) of Part 11, which assessment, payment, or collection should have been made under Chapter 3 (commencing with Section 23501) of Part 11, those taxes, interest, and penalties shall be considered as having been assessed, paid, or collected under Chapter 3 (commencing with Section 23501) of Part 11 as of the date or dates they were made. 18604. (a) The Franchise Tax Board may grant a reasonable extension of time for filing any return, declaration, statement, or other document required by Part 11 (commencing with Section 23001), in the manner and form as the Franchise Tax Board may determine. No extension or extensions shall aggregate more than seven months from the due date for filing the return. (b) An extension for the filing of the return of taxes imposed by Part 11 (commencing with Section 23001) shall be allowed any bank or corporation if, in the manner and at the time as the Franchise Tax Board may prescribe, that bank or corporation pays, on or before the date prescribed for payment of the tax, the amount properly estimated as provided in Section 19023 or 19024. (c) An extension of time granted pursuant to this section is not an extension of time for payment of tax required to be paid on or before the due date of the return without regard to extension. Underpayment of tax penalties shall be imposed as provided by law without regard to any extension granted under this section. 18605. A reasonable extension of time for filing a return, statement, or other document required under Section 23772 or 23774 may be granted by the Franchise Tax Board whenever in its judgment good cause exists. The Franchise Tax Board may prescribe rulings and regulations as are necessary and reasonable to carry out this section. 18606. (a) In cases where receivers, trustees in a case under Title 11 of the United States Code, or assignees are operating the property or business of a bank or corporation those receivers, trustees, or assignees shall make returns for that bank or corporation in the same manner and form as that bank or corporation is required to make a return. (b) Any tax due on the basis of returns made by receivers, trustees, or assignees shall be collected in the same manner as if collected from the bank or corporation of whose business or property they have custody and control. Article 3. General Provisions Applicable to All Persons 18621. Except as otherwise provided by the Franchise Tax Board, any return, declaration, statement, or other document required to be made under any provision of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), this part, or any applicable regulation shall contain, or be verified by, a written declaration that it is made under the penalties of perjury. Those returns, and all other returns, declarations, statements, or other documents or copies thereof required, shall be in any form as the Franchise Tax Board may from time to time prescribe, including, but not limited to, on paper, on magnetic media pursuant to Section 19524, or by electronic imaging technology pursuant to Section 18621.5, and shall be filed with the Franchise Tax Board. The Franchise Tax Board shall prepare blank forms for the returns, declarations, statements, or other documents and shall distribute them throughout the state and furnish them upon application. Failure to receive or secure the form does not relieve any taxpayer from making any return, declaration, statement, or other document required. 18621.5. (a) Any return, declaration, statement, or other document required to be made under this part that is filed using electronic technology shall be in a form as the Franchise Tax Board may prescribe and shall be accompanied by a transmittal document signed in accordance with Section 18621 in the case of individuals, banks, or corporations, or subdivision (a) of Section 18633 in the case of a partnership. (b) Notwithstanding any other provision of law, any return, declaration, statement, or other document otherwise required to be signed that is filed in a traditional medium and captured using electronic imaging technology shall be deemed to be a valid original document upon reproduction to paper form by the Franchise Tax Board. (c) "Electronic imaging technology" means a system of microphotography, optical disk, or reproduction by other technique that does not permit additions, deletions, or changes to the original document. The system may include, but is not limited to, any magnetic media or other machine readable form. (d) "Traditional medium" means any return, declaration, statement, or other document required to be made pursuant to this article other than those made using electronic imaging technology. 18622. (a) If the amount of gross income or deductions for any year of any taxpayer as returned to the United States Treasury Department is changed or corrected by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or where a renegotiation of a contract or subcontract with the United States results in a change in gross income or deductions, that taxpayer shall report the change or correction, or the results of the renegotiation, within six months after the final federal determination of the change or correction or renegotiation, or as required by the Franchise Tax Board, and shall concede the accuracy of the determination or state wherein it is erroneous. The changes or corrections need not be reported unless they affect the amount of tax payable under this part. (b) Any taxpayer filing an amended return with the Commissioner of Internal Revenue shall also file within six months thereafter an amended return with the Franchise Tax Board which shall contain any information as it shall require. However, an amended return need not be filed unless the change therein would affect the amount of tax payable under this part. (c) Notification of a change or correction by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or renegotiation of a contract or subcontract with the United States that results in a change in gross income or deductions or the filing of an amended return shall be reported in the form and manner as prescribed by the Franchise Tax Board. 18623. (a) The Franchise Tax Board is authorized to provide, with respect to any amount required to be shown on any return, form, statement, or other document required to be filed with the Franchise Tax Board, that if the amount of the item is other than a whole dollar amount, either of the following shall apply: (1) The fractional part of a dollar shall be disregarded. (2) The fractional part of a dollar shall be disregarded unless it amounts to one-half dollar ($0.50) or more, in which case the amount (determined without regard to the fractional part of a dollar) shall be increased by one dollar ($1). (b) Any person making a return, statement, or other document shall be allowed, under regulations prescribed by the Franchise Tax Board, to make the return, statement, or other document without regard to subdivision (a). (c) Subdivisions (a) and (b) shall not be applicable to items which must be taken into account in making the computations necessary to determine the amount required to be shown on a form, but shall be applicable only to the final amount. 18624. (a) Identifying numbers shall be required on state tax returns, statements, or other documents in accordance with Section 6109 of the Internal Revenue Code, except as otherwise provided. (b) Section 6109(e) of the Internal Revenue Code, relating to furnishing numbers for certain dependents, shall not apply. 18625. An income tax return preparer shall furnish a copy of any state tax return to a taxpayer and retain information in accordance with Section 6107 of the Internal Revenue Code. Article 4. Information Returns 18631. This article does not apply to the payment of interest obligations not taxable under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). 18632. Division 6 (commencing with Section 13000) of the Unemployment Insurance Code sets forth provisions administered by the Employment Development Department relating to the reporting, collection, refunding to the employer, and enforcement of taxes required to be withheld from wages paid by employers. 18633. (a) Every partnership, within three months and 15 days after the close of its taxable year, shall make a return for that taxable year, stating specifically the items of gross income and the deductions allowed by Part 10 (commencing with Section 17001). The return shall include the names, addresses, and taxpayer identification numbers of the persons, whether residents or nonresidents, who would be entitled to share in the net income if distributed and the amount of the distributive share of each person. The return shall contain or be verified by a written declaration that it is made under the penalties of perjury, signed by one of the partners. (b) Each partnership required to file a return under subdivision (a) for any partnership taxable year shall (on or before the day on which the return for that taxable year was required to be filed) furnish to each person who is a partner or who holds an interest in that partnership as a nominee for another person at any time during that taxable year a copy of that information required to be shown on that return as may be required by regulations. (c) Any person who holds an interest in a partnership as a nominee for another person shall do both of the following: (1) Furnish to the partnership, in the manner prescribed by the Franchise Tax Board, the name, address, and taxpayer identification number of that other person, and any other information for that taxable year as the Franchise Tax Board may by form and regulation prescribe. (2) Furnish to that other person, in the manner prescribed by the Franchise Tax Board, the information provided by that partnership under subdivision (b). (d) The provisions of Section 6031(d) of the Internal Revenue Code, relating to the separate statement of items of unrelated business taxable income, shall apply. 18634. (a) Any taxpayer making the election under Section 25110 shall file with the Franchise Tax Board within six months after the bank or corporation files its California return required under this part a domestic disclosure spreadsheet if it and its related banks' or corporations' payroll, property, or sales in foreign countries exceeds ten million dollars ($10,000,000) or if it and its related banks' or corporations' total assets exceed two hundred fifty million dollars ($250,000,000), or such higher levels as may be subsequently established by regulation. (b) The domestic disclosure spreadsheet shall be filed once every three years, unless there is a substantial change in the taxpayer's business activities, in which case it shall be filed for the year in which the change occurs. (c) For purposes of this section, banks and corporations are related if more than 50 percent of the voting stock of one is directly or indirectly owned or controlled by the other or if more than 50 percent of the voting stock of both is directly or indirectly owned or controlled by the same interest. (d) The spreadsheet shall provide for full disclosure as to the income reported to each state, the state tax liability, and the method used for apportioning or allocating income to the states, and any other information as provided for by regulations as may be necessary to determine the amount of taxes due to each state and to identify the corporate parent and those of its affiliates of which more than 20 percent of the voting stock is directly or indirectly owned or controlled by the parent. (e) The spreadsheet shall be reviewed for completeness by the Franchise Tax Board and if it is not properly completed shall not be accepted and shall be subject to penalties. (f) This section shall not apply to any bank or corporation with regard to any year if that bank's or corporation's payroll, property, and sales within the United States are each less than five hundred thousand dollars ($500,000). (g) The Auditor General shall review the utility of the spreadsheet to the Franchise Tax Board's audits and shall submit a preliminary report of its findings to the Legislature by December 31, 1991, and a final report by December 31, 1994. 18635. Every trust claiming a charitable, religious, scientific, literary, or educational deduction under Section 642 (c) of the Internal Revenue Code for the taxable year shall furnish information with respect to the taxable year, at the time and in the manner as the Franchise Tax Board may by regulations prescribe, setting forth all of the following: (a) The amount of the charitable, religious, scientific, literary, or educational deduction taken under Section 642(c) of the Internal Revenue Code within that year (showing separately the amount of the deduction which was paid out and the amount which was permanently set aside for charitable, religious, scientific, literary, or educational purposes during that year). (b) The amount paid out within that year which represents amounts for which charitable, religious, scientific, literary, or educational deductions under Section 642(c) of the Internal Revenue Code have been taken in prior years. (c) The amount for which charitable, religious, scientific, literary, or educational deductions have been taken in prior years but which has not been paid out at the beginning of that year. (d) The amount paid out of principal in the current and prior years for charitable, religious, scientific, literary, or educational purposes. (e) The total income of the trust within that year and the expenses attributable thereto. (f) A balance sheet showing the assets, liabilities, and net worth of the trust as of the beginning of that year. This section shall not apply in the case of a taxable year if all the taxable income for that year, determined under the applicable principles of the law of trusts, is required to be distributed currently to the beneficiaries. 18636. Section 6039 of the Internal Revenue Code, relating to information required in connection with certain options, shall apply. 18637. (a) Every individual, partnership, bank, corporation, joint stock company or association, insurance company, business trust, or so-called Massachusetts trust, engaged in a trade or business in this state and making payment in the course of the trade or business to another person, including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of this state or any political subdivision of this state, or any city organized under a freeholder's charter, or any political body not a subdivision or agency of the state, having the control, receipt, custody, disposal, or payment of interest (other than interest coupons payable to bearer), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income amounting to six hundred dollars ($600) or over, paid or payable during any year to any taxpayer, shall make a complete return to the Franchise Tax Board, which shall contain or be verified by a written declaration that it is made under the penalties of perjury, under the regulations and in the form and manner and to the extent as may be prescribed by it. (b) For purposes of subdivision (a), "trade or business" includes the activities of nonprofit organizations. (c) In lieu of an information return required by subdivision (a), the Franchise Tax Board may require that a copy of the federal information return be filed with the Franchise Tax Board. (d) Every entity required to make a return under subdivision (a) shall furnish to each person whose name is required to be set forth in the return a written statement showing both of the following: (1) The name, address, and identification number of the entity required to make the return. (2) The aggregate amount of payments to the person required to be shown on the return. The written statement required under this subdivision shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subdivision (a) was required to be made. (e) This section shall not apply to tips with respect to which Section 13055 of the Unemployment Insurance Code applies. The only records which an employer shall be required to keep under this section in connection with charged tips shall be charge receipts and copies of statements furnished by employees under Section 13055 of the Unemployment Insurance Code. 18638. Every individual, partnership, bank, corporation, joint stock company or association, insurance company, business trust, or so-called Massachusetts trust, shall be required to file a return for certain payments of remuneration for services and furnish a written statement to the person whose name is required to be set forth on the return in accordance with the provisions of Section 6041A of the Internal Revenue Code, except that no return or statement shall be required if a statement with respect to the services is required to be furnished under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code (relating to withholding tax on wages) or Section 18647, and no return or statement shall be required with respect to direct sales pursuant to Section 6041A(b) of the Internal Revenue Code. 18639. (a) Any person required to file an information return with the Internal Revenue Service under Section 6049 of the Internal Revenue Code (relating to payment of interest) or Section 6042 of the Internal Revenue Code (relating to payment of dividends) shall be required to report that information to the Franchise Tax Board. (b) Every person required to make a return under this section shall also furnish a statement to each person whose name is set forth in the return, as required to do so by the Internal Revenue Code. 18640. (a) Any corporation allocating amounts as patronage dividends, rebates, or refunds (whether in cash, merchandise, capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice, or in some other manner that discloses to each patron the amount of the dividend, refund, or rebate) shall render a correct return, which shall contain or be verified by a written declaration that it is made under the penalties of perjury, stating both of the following: (1) The name and address of each patron to whom it has made those allocations amounting to one hundred dollars ($100) or more during the calendar year. (2) The amount of those allocations to each patron. If required by the Franchise Tax Board, any corporation described in this subdivision shall render a correct return, which shall contain or be verified by a written declaration that it is under penalties of perjury, of all patronage dividends, rebates, or refunds made during the calendar year to its patrons. This section shall not apply in the case of any corporation exempt from tax under Article 1 (commencing with Section 23701) of Chapter 4 of Part 11. (b) Every cooperative required to make a return under subdivision (a) shall furnish to each person whose name is required to be set forth in that return a written statement showing both of the following: (1) The name and address of the cooperative required to make that return. (2) The aggregate amount of the allocations required to be made to the person as shown on that return. (c) The written statement required under subdivision (b) shall be furnished (either in person or in a separate mailing by first-class mail which includes adequate notice that the statement is enclosed) to the person on or before January 31 of the year following the calendar year for which the return under subdivision (a) was required to be made, and shall be in the form which the Franchise Tax Board may prescribe. 18641. (a) Every person doing business as a broker shall, when required by the Franchise Tax Board, make a return, in accordance with regulations as the Franchise Tax Board may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and any other information which the Franchise Tax Board may by forms or regulations require with respect to that business. (b) (1) Every person required to make a return under subdivision (a) shall furnish to each customer whose name is required to be set forth in that return a written statement showing all of the following: (A) The name and address of the person required to make that return. (B) The information required to be shown on that return with respect to that customer. (2) The written statement required under paragraph (1) shall be furnished to the customer on or before January 31 of the year following the calendar year for which the return under subdivision (a) was required to be made. (c) For purposes of this section: (1) "Broker" includes any of the following: (A) A dealer. (B) A barter exchange. (C) Any other person, who, for a consideration, regularly acts as a middleman with respect to personal property or services. A person shall not be treated as a broker with respect to activities consisting of managing a farm on behalf of another person. (2) "Customer" means any person for whom the broker has transacted any business. (3) "Barter exchange" means any organization of members providing personal property or services who jointly contract to trade or barter that personal property or services. (4) "Person" includes any governmental unit and any agency or instrumentality thereof. (d) In lieu of the return required by this section, a copy of the similar return filed with the Internal Revenue Service pursuant to Section 6045 of the Internal Revenue Code, and the regulations adopted thereto, may be filed with the Franchise Tax Board. 18642. (a) All owners and transferors of an interest in real property or a mobilehome shall file a return upon written request by the Franchise Tax Board which includes a social security number or other identification number prescribed by the Franchise Tax Board, identification of the property interest, and any other pertinent information about the interest requested by the Franchise Tax Board. (b) Subdivision (a) shall not apply to any of the following: (1) Property granted a homeowner's property tax exemption. (2) Property which is not assessed by a California county assessor. (c) Owners and transferors failing to file a return required by subdivision (a) on or before the due date of the return shall be subject to the penalty provided by Section 19183, unless the failure is due to reasonable cause and not due to willful neglect. (d) Owners failing to file a return required by subdivision (a) within 60 days of the due date of the return shall be subject to the sanctions provided by Section 17299.9 disallowing certain expenses related to the property for which a return is required, unless it is shown that the failure is due to reasonable cause and not due to willful neglect. (e) The Franchise Tax Board shall mail to each owner and transferor required to file a return pursuant to subdivision (a) a notice at least 60 days prior to the due date of the return. The notice shall be in a form and shall include any information which the Franchise Tax Board prescribes and shall advise owners and transferors of all of the following: (1) The requirement to provide the Franchise Tax Board with a social security number or other identification number prescribed by the Franchise Tax Board. (2) When the statement is due. (3) A general description of the tax consequences of not providing the requested information. (f) The social security number or other identification number furnished pursuant to this section shall be used exclusively for tax administration purposes. It is the intent of the Legislature in enacting this section to utilize the social security number or other identification number for the sole purpose of establishing the identification of individuals or entities affected by state tax laws. 18643. (a) (1) If the transaction involves real property in California, any person required to file a return with the Secretary of the Treasury under Section 6045 (e) of the Internal Revenue Code shall send a copy of that return to the Franchise Tax Board at the time prescribed for filing the return with the Secretary of the Treasury. (2) For transactions involving California real property which close during the calendar year 1988 but are reported to the Secretary of the Treasury on a return filed after January 1, 1989, the person required to file the return shall file a copy with the Franchise Tax Board at the time prescribed for filing with the Secretary of the Treasury. (b) The penalties provided under Section 19183 shall apply for failure to comply with subdivision (a). (c) No later than January 1, 1994, the Franchise Tax Board shall submit a report to the Legislature including a cost benefit analysis, which evaluates the effectiveness of programs established by the Franchise Tax Board in implementing this section. 18644. (a) The operator of a boat on which one or more individuals, during a calendar year, perform services described in subdivision (o) of Section 13009 of the Unemployment Insurance Code shall submit to the Franchise Tax Board (at the time, and in the manner and form, as the Franchise Tax Board shall by regulations prescribe) information respecting all of the following: (1) The identity of each individual performing those services. (2) The percentage of each individual's share of the catches of fish or other forms of aquatic animal life, and the percentage of the operator's share of those catches. (3) If that individual receives his or her share in kind, the type and weight of that share, together with the other information as the Franchise Tax Board may prescribe by regulations reasonably necessary to determine the value of those shares. (4) If that individual receives a share of the proceeds of those catches, the amount so received. (b) Every person required to make a return under subdivision (a) shall furnish to each person whose name is required to be set forth in that return a written statement showing the information relating to that person contained in that return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subdivision (a) was required to be made. 18645. (a) The Franchise Tax Board may require a copy of the federal information return to be filed with the Franchise Tax Board if a federal information return was required under any of the following: (1) Section 6039C of the Internal Revenue Code, relating to returns with respect to foreign persons holding direct investments in United States real property interests, if that person holds a direct investment in a California real property interest as defined in Section 18662. (2) Section 6050H of the Internal Revenue Code, relating to mortgage interest received in trade or business from individuals. (3) Section 6050J of the Internal Revenue Code, relating to foreclosures and abandonments of security. (4) Section 6050K of the Internal Revenue Code, relating to exchanges of certain partnership interests. (5) Section 6050L of the Internal Revenue Code, relating to certain dispositions of donated property. (6) Section 6050N of the Internal Revenue Code, relating to returns regarding payments of royalties. (b) Every person required to make a return under subdivision (a) shall also furnish a statement to each person whose name is required to be set forth in the return, as required to do so by the Internal Revenue Code. (c) A transferor of a partnership interest shall be required to notify the partnership of that exchange in accordance with Section 6050K(c) of the Internal Revenue Code. (d) The Franchise Tax Board shall require a copy of the federal information return to be filed with the Franchise Tax Board if a federal information return was required under Section 6050I of the Internal Revenue Code, relating to cash received in trade or business. (e) (1) The Attorney General shall, upon court order following a showing ex parte to a magistrate of an articulable suspicion that an individual or entity has committed a felony offense to which a federal information return is related, be provided a copy of a federal information return filed with the Franchise Tax Board under subdivision (d). The Attorney General may make a return or information therefrom available to a district attorney subject to regulations promulgated by the Attorney General. The regulations shall require the district attorney seeking the return or information to specify in writing the specific reasons for believing that a felony offense has been committed to which the return or information is related. (2) Any information or return obtained by the Attorney General or a district attorney pursuant to this section shall be confidential and used only for investigative or prosecutorial purposes. (f) This section shall remain in effect only until January 1, 1994, and as of that date is repealed. 18645. (a) The Franchise Tax Board may require a copy of the federal information return to be filed with the Franchise Tax Board if a federal information return was required under any of the following: (1) Section 6039C of the Internal Revenue Code, relating to returns with respect to foreign persons holding direct investments in United States real property interests, if that person holds a direct investment in a California real property interest as defined in Section 18662. (2) Section 6050H of the Internal Revenue Code, relating to mortgage interest received in trade or business from individuals. (3) Section 6050I of the Internal Revenue Code, relating to cash received in trade or business. (4) Section 6050J of the Internal Revenue Code, relating to foreclosures and abandonments of security. (5) Section 6050K of the Internal Revenue Code, relating to exchanges of certain partnership interests. (6) Section 6050L of the Internal Revenue Code, relating to certain dispositions of donated property. (7) Section 6050N of the Internal Revenue Code, relating to returns regarding payments of royalties. (b) Every person required to make a return under subdivision (a) shall also furnish a statement to each person whose name is required to be set forth in the return, as required to do so by the Internal Revenue Code. (c) A transferor of a partnership interest shall be required to notify the partnership of that exchange in accordance with Section 6050K(c) of the Internal Revenue Code. (d) This section shall become operative on January 1, 1994. 18646. (a) The head of every state agency (as defined by Section 11000 of the Government Code) entering into any contract shall make a return (at the time and in the form the Franchise Tax Board may by regulation prescribe) setting forth all of the following: (1) The name, address, type of business entity, and taxpayer identification number of each person with which that agency entered into a contract during the calendar year. (2) Any other information the Franchise Tax Board may require. (b) The Franchise Tax Board may provide that this section also shall apply to any of the following: (1) Licenses granted by state agencies. (2) Subcontracts under contracts to which subdivision (a) applies. (c) This section shall not apply to contracts or licenses in any class which are below a minimum amount or value which may be determined by the Franchise Tax Board for that class. 18647. (a) Every employer who during any calendar year provides group-term life insurance on the life of an employee during part or all of the calendar year under a policy (or policies) carried directly or indirectly by the employer shall make a return according to the forms or regulations prescribed by the Franchise Tax Board, setting forth the cost of the insurance and the name and address of the employee on whose life the insurance is provided, but only to the extent that the cost of the insurance is includable in the employee's gross income under Section 79(a) of the Internal Revenue Code. For purposes of this section, the extent to which the cost of group-term life insurance is includable in the employee's gross income under Section 79(a) of the Internal Revenue Code shall be determined as if the employer were the only employer paying the employee remuneration in the form of that insurance. (b) Every employer required to make a return under subdivision (a) shall furnish to each employee whose name is required to be set forth in the return a written statement showing the cost of the group-term life insurance shown on the return. The written statement required under the preceding sentence shall be furnished to the employee on or before January 31 of the year following the calendar year for which the return under subdivision (a) was required to be made. 18648. (a) Any person who is a promoter of tax shelters, as defined in subdivision (c), shall, within 60 days of a request, make a complete return to the Franchise Tax Board containing the full identification of each investment sold during the reporting period. For each investment, all of the following information shall be provided: (1) Name of investment. (2) Description of the business activities of the investment. (3) Form of investment, such as limited partnership, investment plan, or arrangement. (4) A list of investors showing full name, address, social security number, and the amount invested by each investor in the investment during the reporting period. (5) The total amount invested by all investors during the reporting period in the investment. (6) Any other related information which the Franchise Tax Board may request. The return shall be verified by a written declaration that it is made under penalty of perjury. (b) Every person making a return under subdivision (a) shall furnish, within 60 days of the request, to each investor whose name is set forth in the return a written statement showing all of the following: (1) The name and address of the person making the return. (2) The aggregate amount of investments of each investor as shown on that return for each reporting period. (c) For purposes of this section, the term "a promoter of tax shelters" shall mean any person who: (1) (A) Organizes (or assists in the organization of) any entity, any investment plan or arrangement, or any other plan or arrangement which generates a loss for any investor in excess of his or her cash investment from an activity described in Section 465(c) of the Internal Revenue Code. (B) Participates in the sale of any interest in any entity or plan or arrangement referred to in subparagraph (A). (2) Makes or furnishes (in connection with that organization or sale): (A) A statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement. (B) A statement as to the value of any property or services. (d) A promoter of tax shelters shall keep records necessary to substantiate the information required to be contained on a return. (e) "Reporting period," as used in subdivision (a), shall mean each calendar year specified on the request from the Franchise Tax Board. (f) A return filed by a partnership under this part shall be deemed to have satisfied the reporting requirement of this section for the reporting period covered by the partnership return with respect to the investors in the partnership. (g) The Franchise Tax Board shall establish a review process for all requests for information under this section comparable to the process of obtaining an administrative subpoena, including the requirement that a member of the Franchise Tax Board shall approve each request. 18649. A copy of the information furnished pursuant to Section 1275(c)(2) of the Internal Revenue Code shall be provided to the Franchise Tax Board by any issuer subject to tax under this part at the time and in the manner required by the Franchise Tax Board. Article 5. Withholding 18661. When necessary to make effective the provisions of this article or Article 4 (commencing with Section 18631), the name and address of the recipient of income shall be furnished upon demand of the person paying the income. 18662. (a) The Franchise Tax Board may, by regulation, require any person, in whatever capacity acting (including lessees or mortgagors of real or personal property, fiduciaries, employers, and any officer or department of the state or any political subdivision or agency of the state, or any city organized under a freeholder's charter, or any political body not a subdivision or agency of the state), having the control, receipt, custody, disposal, or payment of items of income specified in subdivision (b), to withhold an amount, determined by the Franchise Tax Board to reasonably represent the amount of tax due when the items of income are included with other income of the taxpayer, and to transmit the amount withheld to the Franchise Tax Board at the time as it may designate. (b) The items of income referred to in subdivision (a) are interest, dividends, rent, prizes and winnings, premiums, annuities, emoluments, compensation for services, including bonuses, partnership income or gains, and other fixed or determinable annual or periodical gains, profits, and income. (c) The Franchise Tax Board may authorize the tax under subdivision (a) to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent. (d) Any person failing to withhold from any payments any amounts required by subdivision (a) to be withheld is liable for the amount withheld or the amount of taxes due from the person to whom the payments are made to an extent not in excess of the amounts required to be withheld, whichever is greater, unless it is shown that the failure to withhold is due to reasonable cause. (e) (1) In the case of any disposition of a California real property interest by a person (but not a partnership as determined in accordance with Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue Code, or a corporation), when the return required to be filed with the Secretary of the Treasury under Section 6045(e) of the Internal Revenue Code indicates, or the authorization for the disbursement of the transaction's funds instructs, that the funds be disbursed either to a transferor with a last known street address outside the boundaries of this state at the time of the transfer of the title to the California real property or to the financial intermediary of the transferor, the transferee shall be required to withhold an amount equal to 31/3 percent of the sales price of the California real property conveyed. (2) In the case of any disposition of a California real property interest by a corporation, the transferee shall be required to withhold an amount equal to 31/3 percent of the sales price of the California real property conveyed, if the corporation immediately after the transfer of the title to the California real property has no permanent place of business in California. For purposes of this subdivision, a corporation has no permanent place of business in California if all of the following apply: (A) It is not organized and existing under the laws of California. (B) It does not qualify with the office of the Secretary of State to transact business in California. (C) It does not maintain and staff a permanent office in California. (3) Notwithstanding any other provision of this subdivision, all of the following shall apply: (A) No transferee shall be required to withhold any amount under this subdivision if the sales price of the California real property conveyed does not exceed one hundred thousand dollars ($100,000). (B) No transferee shall be required to withhold any amount under this subdivision unless written notification of the withholding requirements of this subdivision has been provided by the real estate escrow person. (C) No transferee shall be required to withhold under this subdivision when the transferor is a bank acting as trustee other than a trustee of a deed of trust. (D) No transferee shall be required to withhold under this subdivision when the transferee is a bank or corporate beneficiary under a mortgage or beneficiary under a deed of trust and the California real property is acquired in judicial or nonjudicial foreclosure or by a deed in lieu of foreclosure. (E) No transferee shall be required to withhold any amount under this subdivision if the transferee, in good faith and based on all the information of which he or she has knowledge, relies on a written certificate executed by the transferor, certifying under penalty of perjury, any of the following: (i) That the transferor is a resident of California. (ii) That the California real property being conveyed is the principal residence of the transferor, within the meaning of Section 1034 of the Internal Revenue Code. (iii) The transferor, if a corporation, has a permanent place of business in California. (4) (A) At the request of the transferor, the Franchise Tax Board may authorize that a reduced amount or no amount be withheld under this subdivision if the Franchise Tax Board determines that to substitute a reduced amount or no amount shall not jeopardize the collection of tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). If the transferor provides documentation sufficient for the Franchise Tax Board to determine the actual gain required to be recognized on the transaction, the Franchise Tax Board may authorize a reduced amount based on the amount of the gain, as determined, which will result in a sum which is substantially equivalent to the amount of tax reasonably estimated to be due under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) from the inclusion of the gain in the gross amount of the transferor. (B) Within 45 days after receiving a request that a reduced amount or no amount be withheld, the Franchise Tax Board shall either authorize a reduced amount or no amount, or deny the request. (C) In the case where the parties to the transaction are requesting that a reduced amount or no amount be withheld and the response by the Franchise Tax Board to the request has not been received at the time title to the California real property is transferred, the parties may direct the real estate escrow person to hold in trust for 45 days the amount required to be withheld under this subdivision. The parties shall instruct the real estate escrow person that at the end of 45 days the real estate escrow person shall remit the amount withheld to the Franchise Tax Board in accordance with this section, unless the Franchise Tax Board has authorized that a reduced amount or no amount be withheld. (5) Amounts withheld and payments made in accordance with this subdivision shall be reported and remitted to the Franchise Tax Board in the form and at the time as the Franchise Tax Board shall determine. (6) "California real property interest" means an interest in real property located in California and defined in Section 897 (c)(1)(A)(i) of the Internal Revenue Code. (7) For purposes of this subdivision, "financial intermediary" means an agent for the purpose of receiving and transferring funds to a principal. (8) For purposes of this subdivision, "real estate escrow person" means any of the following persons involved in the real estate transaction: (A) The person (including any attorney, escrow company, or title company) responsible for closing the transaction. (B) If no other person described in subparagraph (A) is responsible for closing the transaction, then any other person who receives and disburses the consideration or value for the interest or property conveyed. (9) (A) Unless the real estate escrow person provides "assistance," it shall be unlawful for any real estate escrow person to charge any customer for complying with the requirements of this subdivision. (B) For purposes of this paragraph, "assistance" includes, but is not limited to, helping the parties clarify with the Franchise Tax Board the issue of whether withholding is required under this subdivision, helping the parties request that the Franchise Tax Board authorize a reduced amount or no amount be withheld under this subdivision, or, upon request of the parties, withholding an amount under this subdivision and remitting the amount to the Franchise Tax Board. (C) For purposes of this paragraph, "assistance" does not include providing the written notification of the withholding requirements of this subdivision, or providing the certification that either: (i) The transferor is a resident of California or that the California real property being conveyed is the transferor's principal residence. (ii) The transferor, if a corporation, has a permanent place of business in California. (D) In a case where the real estate escrow person provides "assistance" in complying with the withholding requirements of this subdivision, it shall be unlawful for the real estate escrow person to charge any customer a fee that exceeds forty-five dollars ($45). (10) For purposes of this subdivision, "sales price" means the sum of all of the following: (A) The cash paid, or to be paid. The term "cash paid, or to be paid" does not include stated or unstated interest or original issue discount (as determined by Sections 1271 to 1275, inclusive, of the Internal Revenue Code). (B) The fair market value of other property transferred, or to be transferred. (C) The outstanding amount of any liability assumed by the transferee or to which the California real property interest is subject immediately before and after the transfer. (f) Whenever any person has withheld any amount pursuant to this section, the amount so withheld shall be held in trust for the State of California. The amount of the fund shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including penalties) as are applicable with respect to the taxes imposed by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part. 18663. (a) The Franchise Tax Board shall annually (or more often if necessary) prepare and make available to the Employment Development Department, wage withholding tables which shall be used by every employer making payment of any wages to a resident employee for services performed either within or without this state; or to a nonresident employee for services performed in this state, to deduct and withhold from those wages for each payroll period, a tax computed in a manner as to produce, so far as practicable, with due regard to the credits for personal exemptions allowable under Section 17054, a sum which is substantially equivalent to the amount of tax reasonably estimated to be due under Part 10 (commencing with Section 17001) resulting from the inclusion in the gross income of the employee the wages which were subject to withholding. (b) (1) For supplemental wages paid on or after January 1, 1992, the rate of withholding that may be applied to supplemental wages in lieu of the wage withholding tables specified in subdivision (a) shall be 6 percent. (2) For purposes of this subdivision, "supplemental wages" includes, but is not limited to, bonus payments, overtime payments, commissions, sales awards, back pay including retroactive wage increases, and reimbursements for nondeductible moving expenses that are paid for the same or a different period, or without regard to a particular period. 18664. (a) The Franchise Tax Board shall implement a pilot project of withholding on payments to independent contractors doing business with state agencies. The purpose of the pilot project is to withhold income taxes on payments to independent contractors in a manner similar to current withholding on wages. (b) The Franchise Tax Board may require the Controller or any officer or department of the state or any agency of the state to withhold an amount, as prescribed in subdivision (c), on all payments made pursuant to a contract between the state and any person other than a corporation, for which the primary purpose is the providing of personal services to the state and for which the total price of the contract exceeds six hundred dollars ($600). For purposes of this section, "personal services" does not include services rendered as part of a construction contract. The amount withheld shall be transmitted to the Franchise Tax Board at the time and in a manner that the Franchise Tax Board may require. (c) The amount to be withheld shall be 1 percent of each payment under the contract. That percentage is deemed to take into account the trade or business expenses allowable under Part 10 (commencing with Section 17001). In lieu of this, the contractor may elect that the amount to be withheld be 3 percent of each payment under the contract less a reasonable allowance for trade or business expenses allowable under Part 10 (commencing with Section 17001). The contractor shall demonstrate the reasonableness of the allowance for trade or business expenses to the Franchise Tax Board in a manner that the Franchise Tax Board may require. (d) The Franchise Tax Board shall develop and publish forms and procedures for reporting and remitting payments made and taxes withheld under this section. (e) This section shall remain in effect only until January 1, 1995, and as of that date is repealed, unless a later enacted statute, which is chaptered before January 1, 1995, deletes or extends that date. 18665. Unless otherwise specifically provided, the provisions of any law effecting changes in withholding shall begin with withholding in the calendar year succeeding the year the provision was chaptered, or the provision is operative, whichever is later. 18666. (a) Section 1446 of the Internal Revenue Code shall apply to the extent that the amounts represent income from California sources, except as otherwise provided. (b) (1) The rate of tax referred to in Section 1446(b)(2)(A) of the Internal Revenue Code shall be the maximum tax rate specified in Section 17041, rather than the rate specified in Section 1 of the Internal Revenue Code. (2) The rate of tax referred to in Section 1446(b)(2)(B) of the Internal Revenue Code shall be the rate specified in Section 23151, 23181, or 23183, as applicable, rather than the rate specified in Section 11 of the Internal Revenue Code. 18667. The Franchise Tax Board may require employers to submit copies of income tax withholding exemption certificates. If the Franchise Tax Board determines that a certificate is invalid for state income tax purposes, the Franchise Tax Board shall notify the employer and the affected employee of its determination. An employee who disagrees with the Franchise Tax Board's determination may request review of the determination by filing a written petition in the form and within the time prescribed by the Franchise Tax Board. After review, the Franchise Tax Board shall give written notification of its decision to both the employer and the employee. 18668. (a) Every person required under this article to deduct and withhold any tax is hereby made liable for that tax, to the extent provided by this section and, insofar as they are not inconsistent with this article, all the provisions of this part relating to penalties, interest, assessment, and collections shall apply to persons subject to this part, and for these purposes any amount required to be deducted and paid to the Franchise Tax Board under this article shall be considered the tax of the person. Any person who fails to withhold from any payments any amount required to be withheld under this article is liable for the amount withheld or the amount of taxes due from the taxpayer to whom the payments are made but not in excess of the amount required to be withheld, whichever is more, unless it is shown that the failure to withhold is due to reasonable cause. (b) If any amount required to be withheld under this article is not paid to the Franchise Tax Board on or before the due date required by regulations, interest shall be assessed at the adjusted annual rate established pursuant to Section 19521, computed from the due date to the date paid. (c) Whenever any person has withheld any amount pursuant to this article, the amount so withheld shall be held to be a special fund in trust for the State of California. (d) In lieu of the amount provided for in subdivision (a), unless it is shown that the failure to withhold is due to reasonable cause, whenever any transferee is required to withhold any amount pursuant to subdivision (e) of Section 18662, the transferee is liable for the greater of the following amounts for failure to withhold only after the transferee, as specified, is notified in writing of the requirements under subdivision (e) of Section 18662: (1) Five hundred dollars ($500). (2) Ten percent of the amount required to be withheld under subdivision (e) of Section 18662. (e) (1) Unless it is shown that the failure to notify is due to reasonable cause, the real estate escrow person shall be liable for the amount specified in subdivision (d), when written notification of the withholding requirements of subdivision (e) of Section 18662 is not provided to the transferee and the California real property disposition is subject to withholding under subdivision (e) of Section 18662. (2) The real estate escrow person shall provide written notification to the transferee in substantially the same form as follows: "In accordance with Section 18662 of the Revenue and Taxation Code, a buyer may be required to withhold an amount equal to 31/3 percent of the sales price in the case of a disposition of California real property interest by either: 1. A seller who is an individual with a last known street address outside of California or when the disbursement instructions authorize the proceeds to be sent to a financial intermediary of the seller, OR 2. A corporate seller which has no permanent place of business in California. The buyer may become subject to penalty for failure to withhold an amount equal to the greater of 10 percent of the amount required to be withheld or five hundred dollars ($500). However, notwithstanding any other provision included in the California statutes referenced above, no buyer will be required to withhold any amount or be subject to penalty for failure to withhold if: 1. The sales price of the California real property conveyed does not exceed one hundred thousand dollars ($100,000), OR 2. The seller executes a written certificate, under the penalty of perjury, certifying that the seller is a resident of California, or if a corporation, has a permanent place of business in California, OR 3. The seller, who is an individual, executes a written certificate, under the penalty of perjury, that the California real property being conveyed is the seller's principal residence (as defined in Section 1034 of the Internal Revenue Code)." The seller is subject to penalty for knowingly filing a fraudulent certificate for the purpose of avoiding the withholding requirement. The California statutes referenced above include provisions which authorize the Franchise Tax Board to grant reduced withholding and waivers from withholding on a case-by-case basis. (3) The real estate escrow person shall not be liable under this subdivision, if the tax due as a result of the disposition of California real property is paid by the original or extended due date of the transferor's return for the taxable or income year in which the disposition occurred. (4) The real estate escrow person and the transferee shall not be liable under paragraph (1) or subdivision (d), if the failure to withhold is the result of the real estate escrow person's reliance, based on good faith and on all the information of which he or she has knowledge, upon a written certificate executed by the transferor under penalty of perjury certifying to any of the following: (A) That the transferor is a resident of California. (B) That the California real property being conveyed is the principal residence of the transferor within the meaning of Section 1034 of the Internal Revenue Code. (C) The transferor, if a corporation, has a permanent place of business in California. (5) Any transferor who for the purpose of avoiding the withholding requirements of subdivision (e) of Section 18662 knowingly executes a false certificate pursuant to this subdivision shall be liable for twice the amount specified in subdivision (d). (6) Unless the failure to notify is due to willful disregard of the withholding requirements of subdivision (e) of Section 18662, the real estate escrow person shall not be liable under this subdivision if the disposition of California real property occurs prior to July 1, 1991. (f) The amount of tax required to be deducted and withheld under this article shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including penalties) as are applicable with respect to the taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). 18669. (a) Whenever any payer required to deduct and withhold tax under this article sells, transfers, dissolves, withdraws, terminates, or otherwise disposes of the business or a substantial portion of its assets, the successors (including assigns, purchasers, heirs, distributees, beneficiaries, or other persons acquiring either a substantial portion of the assets or the business) shall withhold in trust a sufficient part of the purchase price or set aside in trust money or property to cover the amount of the taxes required to be withheld and any interest or penalties with respect thereto which are due or unpaid by the payer. The money, property or portion of the purchase price shall be held in trust until a certificate is issued by the Franchise Tax Board stating that no amount of such tax, interest, or penalties are due or unpaid from the payer. (b) Upon written request by the successor, the Franchise Tax Board shall, within 60 days, issue a certificate or a statement showing the amount of tax, interest, and penalties due from the payer. Except as provided in subdivision (c), failure to issue a certificate or statement within the 60-day period shall be deemed equivalent to the issuance of a certificate stating that no tax, interest, or penalties are due. If the Franchise Tax Board issues a statement showing that taxes, interest, and penalties are claimed to be due, the amount stated therein (not in excess of the fair market value of the assets or business acquired) shall be paid by the successor to the Franchise Tax Board within (1) 30 days after the statement is mailed or delivered to the successor, or (2) on the day the business or assets are acquired, whichever occurs last. If a request for a certificate is not made by the successor, the amount of tax, interest, or penalties due or unpaid by the payer shall be paid by the successor to the Franchise Tax Board on the day the business or assets are acquired. If a successor fails to pay the amount required by this section by the time prescribed in this subdivision, a penalty of 10 percent of the amount payable shall be levied. (c) The issuance of a certificate stating that no taxes, interest, and penalties are due, or the failure to issue the certificate or statement within the period of 60 days shall not release the payer from liability on account of any taxes, interest, and penalties then or thereafter determined to be due from him or her, but shall release the successor from any further liability on account of any such taxes, interest, and penalties. Payment by the successor pursuant to subdivision (b) shall not release the payer from liability except to the extent of the amount paid by the successor. (d) Any successor that fails to withhold money or other property or fails to pay the amount or value of the property withheld as provided in this section shall be personally liable for the payment of the taxes, interest, and penalties due from the payer up to but not exceeding the fair market value of the assets or business acquired. The Franchise Tax Board shall have all of the remedies for collection against any successor that acquires the business or substantially all the assets thereof of a payer as provided by this part against any payer liable for taxes, interest, and penalties. The time within which the obligation may be enforced against the successor acquiring the business or substantially all the assets thereof of a payer shall commence from (1) the date the successor acquires the assets or business, (2) the date an assessment against the successor payer becomes final, or (3) 31 days after the statement is mailed or delivered to the successor if a certificate is requested by the successor as provided in subdivision (b), whichever of the three events is later. 18670. (a) The Franchise Tax Board may by notice, served personally or by first-class mail, require any employer, person, officer or department of the state, political subdivision or agency of the state, including the Regents of the University of California, a city organized under a freeholders' charter, or a political body not a subdivision or agency of the state, having in their possession, or under their control, any credits or other personal property or other things of value, belonging to a taxpayer or to an employer or person who has failed to withhold and transmit amounts due pursuant to this article, to withhold, from the credits or other personal property or other things of value, the amount of any tax, interest, or penalties due from the taxpayer or the amount of any liability incurred by that employer or person for failure to withhold and transmit amounts due from a taxpayer under this part and to transmit the amount withheld to the Franchise Tax Board at the times that it may designate. However, in the case of a depository institution, as defined in Section 19(b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)(A)), amounts due from a taxpayer under this part shall be transmitted to the Franchise Tax Board not less than 10 business days from receipt of the notice. To be effective, the notice shall state the amount due from the taxpayer and shall be delivered or mailed to the branch or office reported in information returns filed with the Franchise Tax Board, or the branch or office where the credits or other property is held, unless another branch or office is designated by the employer, person, officer or department of the state, political subdivision or agency of the state, including the Regents of the University of California, a city organized under a freeholders' charter or a political body not a subdivision or agency of the state. (b) (1) At least 45 days before sending a notice to withhold to the address indicated on the information return, the Franchise Tax Board shall request a depository institution to do either of the following: (A) Verify that the address on its information return is its designated address for receiving notices to withhold. (B) Provide the Franchise Tax Board with a designated address for receiving notices to withhold. (2) Once the depository institution has specified a designated address pursuant to paragraph (1), the Franchise Tax Board shall send all notices to that address unless the depository institution provides notification of another address. The Franchise Tax Board shall send all notices to withhold to a new designated address 30 days after notification. (3) Failure to verify or provide a designated address within 30 days of receiving the request shall be deemed verification of the address on the information return as the depository institution's designated address. (c) Any bank, corporation, or person failing to withhold the amounts due from any taxpayer and transmit them to the Franchise Tax Board after service of the notice shall be liable for those amounts. However, in the case of a depository institution, if a notice to withhold is mailed to the branch where the account is located or principal banking office, the depository institution shall be liable for a failure to withhold only to the extent that the accounts can be identified in information normally maintained at that location in the ordinary course of business. 18671. (a) Subject to the limitations in subdivisions (b) and (c), the Franchise Tax Board, may, by notice, served personally or by first-class mail, require any person, officer, department of the state, or political subdivision or agency of the state including the Regents of the University of California, a city organized under a freeholder's charter, or a political body not a subdivision or agency of the state, to withhold the amount of any tax, interest, or penalties due from a taxpayer, or the amount due from an employer or person who has failed to withhold and transmit amounts due pursuant to this article, from any payments due the taxpayer, employer, or person and from any payments becoming due the taxpayer, employer, or person after receipt of the notice. The amounts withheld shall be transmitted to the Franchise Tax Board at those times as it may designate. (b) The effect of a levy made pursuant to subdivision (a) shall be continuous from the date the notice is received until the amount due stated on the notice has been withheld, until the notice has been withdrawn, or until one year after the date the notice is received, whichever occurs first. (c) The amount required to be withheld pursuant to a notice issued under subdivision (a) is the lesser of the amount due stated on the notice, or either of the following: (1) If the taxpayer, employer, or person is not a natural person, 100 percent of the amount of each payment due or becoming due the taxpayer, employer, or person during the period the levy is in effect as provided in subdivision (b). (2) If the taxpayer, employer, or person is a natural person, 25 percent of the amount of each payment due or becoming due the taxpayer, employer, or person during the period the levy is in effect as provided in subdivision (b). (d) For purposes of this section, the term "payments" does not include earnings as defined in subdivision (a) of Section 706.011 of the Code of Civil Procedure or funds in a deposit account as defined in Section 9105 of the Commercial Code. The term "payments" does include any of the following: (1) Payments due for services of independent contractors, dividends, rents, royalties, residuals, patent rights, mineral, or other natural resource rights. (2) Payments or credits due or becoming due as a result of written or oral contracts for services or sales whether denominated as wages, salary, commission, bonus, or otherwise. (3) Any other payments or credits due or becoming due periodically as a result of an enforceable obligation to the taxpayer, employer, or person. 18672. Any employer or person failing to withhold the amount due from any taxpayer and to transmit the same to the Franchise Tax Board after service of a notice pursuant to Section 18670 or 18671 is liable for those amounts. 18674. (a) Any employer or person required to withhold and transmit any amount pursuant to this article shall comply with the requirement without resort to any legal or equitable action in a court of law or equity. Any employer or person paying to the Franchise Tax Board any amount required by it to be withheld is not liable therefor to the person from whom withheld unless the amount withheld is refunded to the withholding agent. However, if a depository institution, as defined in 12 U.S.C. Sec. 461(b)(1)(A) withholds and pays to the Franchise Tax Board pursuant to this article any moneys held in a deposit account in which the delinquent taxpayer and another person or persons have an interest, or in an account held in the name of a third party or parties in which the delinquent taxpayer is ultimately determined to have no interest, the depository institution paying those moneys to the Franchise Tax Board is not liable therefor to any of the persons who have an interest in the account, unless the amount withheld is refunded to the withholding agent. (b) In the case of a deposit account or accounts for which this notice to withhold applies, the depository institution shall send a notice by first-class mail to each person named on the account or accounts included in the notice from the Franchise Tax Board, provided that a current address for each person is available to the institution. This notice shall inform each person as to the reason for the hold placed on the account or accounts, the amount subject to being withheld, and the date by which this amount is to be remitted to the Franchise Tax Board. An institution may assess the account or accounts of each person receiving this notice a reasonable service charge not to exceed three dollars ($3). (c) Any employer or person required under this article to withhold payments from a taxpayer may file an action in interpleader when a bona fide dispute has arisen as to priority of lien between the tax levied under this part and that of a federal taxing agency. 18675. Any person from whom a tax is collected by withholding under this article or under Section 13020 of the Unemployment Insurance Code is entitled to the remedies set forth in Articles 1 (commencing with Section 19301) and 3 (commencing with Section 19381) of Chapter 6. Any refund of the tax under Chapter 6 (commencing with Section 19301) shall be made to the withholding agent instead of directly to the taxpayer, if requested in writing by the withholding agent at the time the amounts refundable were transmitted to the Franchise Tax Board. 18676. Whenever, under any provision of this article, service is authorized upon the state of any notice to withhold, unless expressly exempted from the provisions of this section, the service to be effective must, in addition to any other requirements, be made on the state agency owing the obligation prior to the time the agency presents the claim for payment thereof to the Controller. 18677. (a) For purposes of this article, if a lender, surety, or other person, who is not an employer under those sections with respect to an employee or group of employees, pays wages directly to such an employee or group of employees, employed by one or more employers, or to an agent on behalf of the employee or employees, the lender, surety, or other person shall be liable in his or her own person and estate to this state in a sum equal to the taxes (together with interest) required to be deducted and withheld from the wages by the employer. (b) If a lender, surety, or other person supplies funds to or for the account of an employer for the specific purpose of paying wages of the employees of the employer, with actual notice or knowledge that the employer does not intend to or will not be able to make timely payment or deposit of the amounts of tax required by this part to be deducted and withheld by the employer from those wages, the lender, surety, or other person shall be liable in his or her own person and estate to the State of California in a sum equal to the taxes (together with interest) which are not paid over to this state by the employer with respect to the wages. However, the liability of the lender, surety, or other person shall be limited to an amount equal to 25 percent of the amount so supplied to or for the account of the employer for that purpose. (c) Any amounts paid to this state pursuant to this section shall be credited against the liability of the employer. CHAPTER 3. VOLUNTARY CONTRIBUTIONS Article 1. California Election Campaign Fund 18701. This article shall be known and may be cited as the California Election Campaign Fund Act. 18702. The Legislature finds and declares: (a) Candidates are now frequently dependent on large contributions from wealthy individuals and interest groups for campaign financing. Individuals and interest groups who make large contributions thus may enjoy disproportionate access to public officials and influence in government decisionmaking. Large contributions may also impede the solicitation of small contributions. (b) This act seeks to reduce candidate dependence on large contributions and the excessive influence of large contributors, by providing qualified political parties with a campaign fund based on small contributions, which fund shall be used to assist candidates under the direction of the state parties and certain of their elected representatives. 18703. (a) Every individual, who is lawfully able to make contributions to qualified political parties in California, may designate the payment of one dollar ($1), five dollars ($5), ten dollars ($10), or twenty-five dollars ($25), in addition to his or her income tax liability to be paid over to the California Election Campaign Fund in accordance with the provisions of this article. In the case of a joint return of individuals, each spouse may separately designate that one dollar ($1), five dollars ($5), ten dollars ($10), or twenty-five dollars ($25), shall be paid to that fund. (b) For the purposes of subdivision (a), the California income tax liability of an individual for any taxable year is the amount of his or her total income tax liability for that taxable year pursuant to the applicable provisions of this code. (c) If an individual chooses to contribute an amount as provided for in subdivision (a) to the California Election Campaign Fund under subdivision (a), he or she shall designate on the applicable California tax return which of the qualified political parties of the State of California the contribution shall benefit. The Franchise Tax Board shall revise the forms for reporting California tax liability in accordance with this section. 18704. (a) There is hereby established in the State Treasury a special fund to be known as the California Election Campaign Fund (hereafter referred to as "the fund"), to which the Controller shall transfer an amount not in excess of the sum of the amounts certified by the Franchise Tax Board under subdivision (b). There is hereby appropriated to the fund for each fiscal year from the General Fund, an amount equal to the sum of the amounts so certified during each fiscal year, which shall remain available to the fund without fiscal year limitation; provided, however, that the Controller and the Franchise Tax Board may designate a reasonable amount to be retained by the state from the fund in order to compensate the state for reasonable administrative expenses connected with the operation of the fund. (b) (1) On or before July 1 of each year, the Franchise Tax Board shall certify to the Controller the total amount designated by April 15 of that year for the benefit of each qualified political party in accordance with this section. On or before July 15 of each year, the Controller shall pay to each qualified political party from the fund the amount so certified. (2) The Chair of the State Central Committee of each qualified political party is hereby authorized to receive payments on behalf of that party from the fund. 18705. On or before each calendar year, the Secretary of State shall forward to the Franchise Tax Board a list of qualified political parties. Qualification in the State of California shall be determined in accordance with Section 6430 of the Elections Code from the most recent election for which officially canvassed results are available. Any sums designated to a political party which are not qualified pursuant to this section shall be retained by the state for its General Fund. (a) The Chair of the State Central Committee of each political party receiving payments pursuant to this chapter shall segregate those moneys and disburse them only upon his or her determination that a majority of a committee composed as follows concurs in each such disbursement: (1) Chair of that party. (2) As to the majority party of the Assembly, its Speaker; or, as to each minority party of the Assembly, that party's Minority Leader. (3) As to the majority party of the Senate, its President pro Tempore; or, as to each minority party of the Senate, that party's Minority Leader. (b) As to any party unrepresented by both paragraphs (2) and (3) of subdivision (a), its chair shall be the sole member of the committee provided for in subdivision (a). (c) As to any party unrepresented by one, but not both, of the categories specified in paragraphs (2) and (3) of subdivision (a), the two members of that committee provided for by subdivision (a) shall choose a third member to serve for each calendar year. (d) Any funds received by a committee's political party which are disbursed by the committee to candidates shall be disbursed only to candidates for state office in connection with a statewide general election. 18706. This article shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1997, deletes or extends that date. Article 2. State Children's Trust Fund 18711. (a) Any individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the State Children's Trust Fund. (b) The contribution shall be in full dollar amounts and may be made individually by each signatory on the joint return. (c) A designation under subdivision (a) shall be made for any taxable year on the initial return for that taxable year, and once made shall be irrevocable. In the event that payments and credits reported on the return, together with any other credits associated with the taxpayer's account do not exceed the tax liability, if any, shown thereupon, the return shall be treated as though no designation had been made. In the event that no designee is specified, the contribution shall, after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and administration of funds under this article, be transferred to the General Fund. The individual shall be notified in cases where the discrepancy between the amount actually available for designation and the amount designated exceeds ten dollars ($10). (d) If an individual designates a contribution to more than one account, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the form of the return to include a space labeled the "State Children's Trust Fund For the Prevention of Child Abuse" to allow for the designation permitted under subdivision (a). (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18712. (a) The Franchise Tax Board shall determine annually the total amount designated pursuant to this article and notify the Controller of that amount. (b) The Controller shall transfer that amount, less the direct, actual costs of the Franchise Tax Board for the collection and administration of funds under this article, to the State Children's Trust Fund. The Controller shall transfer the amount of the board's costs to the board. Notwithstanding Section 13340 of the Government Code, money transferred to the Franchise Tax Board pursuant to this section is hereby continuously appropriated, without regard to fiscal years, to reimburse the board for its costs incurred pursuant to this article. 18713. It is the intent of the Legislature that this article create an additional source of funding for a specified purpose. The funds generated by this article shall not be used in place of funds from other sources which are available for appropriation to the State Children's Trust Fund. 18714. This article applies to taxable years ending on or after December 31, 1983. 18715. (a) This article shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1997, deletes that date, in which event subdivision (b) shall apply. (b) If the repeal date specified in subdivision (a) has been deleted and if, thereafter, in any calendar year the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c), as may be applicable, then this article is repealed with respect to taxable years beginning on or after January 1 of that calendar year. If necessary, for years after the repeal date in subdivision (a) is deleted, the Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contributions. (c) For each calendar year, beginning with calendar year 1992, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. Article 3. California Fund for Senior Citizens 18721. (a) Any individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the California Fund for Senior Citizens established by Section 18722 to be used to conduct the sessions of the California Senior Legislature and to support its ongoing activities on behalf of older persons. (b) The contribution shall be in full dollar amounts and may be made individually by each signatory on the joint return. (c) A designation under subdivision (a) shall be made for any taxable year on the initial return for that taxable year, and once made shall be irrevocable. In the event that payments and credits reported on the return, together with any other credits associated with the individual's account do not exceed the tax liability, if any, shown thereupon, the return shall be treated as though no designation had been made. In the event that no designee is specified, the contribution shall, after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and administration of funds under this article, be transferred to the General Fund. The individual shall be notified in cases where the discrepancy between the amount actually available for designation and the amount designated exceeds ten dollars ($10). (d) In the event an individual designates a contribution to more than one account, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the forms of the return to include a space labeled the "California Fund for Senior Citizens" to allow for the designation permitted under subdivision (a). The forms shall also include in the instructions the information that the contribution may be in the amount of one dollar ($1) or more and that the contribution will be used to conduct the sessions of the California Senior Legislature and to support its ongoing activities on behalf of older persons. (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18722. There is hereby established in the State Treasury the California Fund for Senior Citizens to receive contributions made pursuant to Section 18721. The Franchise Tax Board shall notify the Controller of both the amount of money paid by individuals in excess of their tax liability and the amount of refund money which individuals have designated pursuant to Section 18721 to be transferred to the California Seniors' Fund. The Controller shall transfer from the Personal Income Tax Fund to the California Fund for Senior Citizens an amount not in excess of the sum of the amounts designated by individuals pursuant to Section 18721 for payment into that fund. 18723. (a) All moneys transferred to the California Fund for Senior Citizens pursuant to Section 18722, upon appropriation by the Legislature, shall be allocated as follows: (1) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (2) To the California Commission on Aging for allocation as follows: (A) To the California Senior Legislature, in the 1988-89 fiscal year, and each succeeding fiscal year thereafter, the sum of seventy-five thousand dollars ($75,000), or the balance of the fund if less than that amount remains in the fund, for the conduct of sessions of the California Senior Legislature. (B) The balance, if any, but not to exceed two hundred fifty thousand dollars ($250,000), to the California Senior Legislature for its ongoing activities on behalf of older persons. Thirty-three thousand dollars ($33,000) of the balance allocated under this subparagraph, or the entire balance allocated under this subparagraph if the balance is less than thirty-three thousand dollars ($33,000), shall be specifically allocated annually for the conduct of elections of members of the California Senior Legislature. That amount may be carried over from fiscal years in which there are no elections and accumulated, in an amount not to exceed sixty-six thousand dollars ($66,000), for use in election years, and any portion of that amount not used in an election year shall be reallocated pursuant to subparagraph (C). (C) The balance, if any, to the commission for senior citizen direct service programs through contracts with the Department of Aging and Long-Term Care. (b) All moneys allocated pursuant to paragraph (2) of subdivision (a) may be carried over from the year in which they were received and encumbered in any following year. (c) The amount allocated pursuant to subparagraphs (A) and (B) of paragraph (2) of subdivision (a) may be adjusted annually, as determined by the Department of Finance, to reflect changes in salary adjustments, price increases, and travel reimbursement adjustments included for all state agencies in the annual Budget Act. 18724. (a) This article shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1997, deletes that date, in which event subdivision (b) shall apply. (b) If the repeal date specified in subdivision (a) has been deleted and if, thereafter, in any calendar year the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c), as may be applicable, then this article is repealed with respect to taxable years beginning on or after January 1 of that calendar year. If necessary, for years after the repeal date in subdivision (a) is deleted, the Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contributions. (c) For each calendar year, beginning with calendar year 1992, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. Article 4. Designations for the Veterans Memorial Account 18731. (a) Any taxpayer may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the Veterans Memorial Account in the General Fund, as established pursuant to Section 1316 of the Military and Veterans Code. (b) The contribution shall be in full dollar amounts and may be made individually by each signatory on the joint return. (c) A designation under subdivision (a) shall be made for any taxable year beginning on or after January 1, 1991, and before January 1, 1996, on the initial return for that taxable year, and once made shall be irrevocable. In the event that payments and credits reported on the return, together with any other credits associated with the taxpayer's account, do not exceed the tax liability, if any, shown thereupon, the return shall be treated as though no designation had been made. If the amount designated exceeds the amount actually available for designation, the amount designated shall be adjusted to correspond to the amount actually available for designation. (d) In the event a taxpayer designates a contribution to more than one account, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the forms of the return to include a space labeled the Veterans Memorial Account to allow for the designation permitted under subdivision (a). The forms shall also include in the instructions the information that the contribution may be in the amount of one dollar ($1) or more and that the contribution shall be used to build a memorial to California veterans. (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18732. The Franchise Tax Board shall determine annually the total amount designated pursuant to this article and shall notify the Controller of that amount. The Controller shall transfer from the Personal Income Tax Fund to the Veterans Memorial Account in the General Fund an amount equal to the total amount designated by individuals pursuant to Section 18731 for payment into that account. 18733. Notwithstanding Section 13340 of the Government Code, all money transferred to the Veterans Memorial Account in the General Fund pursuant to Section 18732 is hereby continuously appropriated, without regard to fiscal years, for allocation as follows: (a) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (b) (1) To the Veterans Memorial Commission established pursuant to Section 1310 of the Military and Veterans Code for use in the construction, maintenance, and operation of a suitable memorial to veterans at the State Capitol, including the amount of one hundred thousand dollars ($100,000) for purposes of repair of the memorial. Any modifications or alterations of, or addition to, the Veterans Memorial shall be performed in accordance with criteria established by the Veterans Memorial Commission. (2) For purposes of this subdivision, "operation" includes, but is not limited to, developing and publishing informational brochures for the memorial, producing an information film about the memorial, and conducting tours of the memorial. (c) If moneys in the account exceed the amount required to construct, improve, maintain, or repair a Veterans Memorial, the balance shall be allocated by the Veterans Memorial Commission to be used for the construction, improvement, or repair of other veterans' memorials as designated by that commission. (d) Any moneys allocated to the Veterans Memorial Commission pursuant to subdivision (c) may be deposited by that commission in a trust account in a private financial institution. (e) Those moneys identified in subdivision (b) for the purpose of the repair of the Veterans Memorial may be deposited in a separate special account to be disbursed as required by the Director of Veterans Affairs. 18734. (a) This article shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute which is enacted before January 1, 1997, deletes that date, in which event subdivision (b) shall apply. (b) If the repeal date specified in subdivision (a) has been deleted and if, thereafter, in any calendar year the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c), as may be applicable, then this article is repealed with respect to taxable years beginning on and after January 1 of that calendar year. If necessary, for years after the repeal date in subdivision (a) is deleted, the Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contributions. (c) For each calendar year, beginning with calendar year 1992, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. Article 5. Fish and Game Preservation Fund 18741. (a) Any individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the Endangered and Rare Fish, Wildlife, and Plant Species Conservation and Enhancement Account in the Fish and Game Preservation Fund. (b) The contribution shall be in full dollar amounts and may be made individually by each signatory on a joint return. (c) A designation under subdivision (a) shall be made for any taxable year on the initial return for that taxable year, and once made shall be irrevocable. If payments and credits reported on the return, together with any other credits associated with the individual's account, do not exceed the tax liability, if any, shown thereon, the return shall be treated as though no designation had been made. If no designee is specified, the contribution shall, after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and administration of funds under this article, be transferred to the General Fund. The individual shall be notified in cases where the discrepancy between the amount actually available for designation and the amount designated exceeds ten dollars ($10). (d) If an individual designates a contribution to more than one account, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the form of the return to include a space labeled "Rare and Endangered Species Preservation Program" to allow for the designation permitted under subdivision (a). (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18742. (a) The Franchise Tax Board shall determine annually the total amount designated and available pursuant to this article and notify the Controller of that amount. (b) The Controller shall transfer that amount, less the direct actual costs of the Franchise Tax Board for the collection and administration of funds under this article, to the Fish and Game Preservation Fund to be credited by the Department of Fish and Game to the Endangered and Rare Fish, Wildlife, and Plant Species Conservation and Enhancement Account. Notwithstanding Section 13340 of the Government Code, all money transferred to the Fish and Game Preservation Fund, under this article, is hereby continuously appropriated to the Department of Fish and Game for the purposes specified in Section 1771 of the Fish and Game Code, and is subject to review by the budget committees of the Legislature. The Controller shall transfer the amount of the costs of the Franchise Tax Board to the Franchise Tax Board. 18743. It is the intent of the Legislature that this article create an additional funding for programs for endangered and rare animals and native plant species and shall be used to supplement, not supplant, other funding sources for these programs. 18744. This article applies to taxable years ending on or after December 31, 1983. 18745. (a) This article shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1997, deletes that date, in which event subdivision (b) shall apply. (b) If the repeal date specified in subdivision (a) has been deleted and if, thereafter, in any calendar year the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c), as may be applicable, then this article is repealed with respect to taxable years beginning on and after January 1 of that calendar year. If necessary, for years after the repeal date in subdivision (a) is deleted, the Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contributions. (c) For each calendar year, beginning with calendar year 1992, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. Article 6. California Alzheimer's Disease and Related Research Fund 18761. The Legislature finds and declares all of the following: (a) Alzheimer's disease and related disorders are devastating health conditions which affect a significant number of Californians and can cause serious financial, social, and emotional hardships on the victims and their family caregivers. Approximately 50 percent of all nursing home admissions in the state may be attributable to Alzheimer's disease and related disorders. (b) There is no known cause or cure for Alzheimer's disease at this time. It is also acknowledged that its continued progression over time can lead to other medical disorders that generally prove fatal. (c) It is the intent of the Legislature, in enacting this article, to establish a systematic program for the conduct of research regarding the cause, cure, and treatment of Alzheimer's disease and related disorders. The outcome of this research may have direct effects and consequences on the development of a comprehensive system which will provide diagnoses and treatment to victims of those health problems. This program shall award grants to eligible physicians, hospitals, laboratories, educational institutions, and other organizations and persons for the purpose of enabling those organizations and persons to conduct research. 18762. For the purposes of this article, "research" shall include, but not be limited to, expenditures to develop and advance the understanding, techniques, and modalities effective in the care, treatment, and cure of Alzheimer's victims and their families. 18763. (a) Any individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the California Alzheimer's Disease and Related Disorders Research Fund, which is established by Section 18764. (b) The contributions shall be in full dollar amounts and may be made individually by each signatory on the joint return. (c) A designation under subdivision (a) shall be made for any taxable year on the individual return for that taxable year, and once made shall be irrevocable. In event that payments and credits reported on the return, together with any other credits associated with the individual's account, do not exceed the individual's tax liability, the return shall be treated as though no designation has been made. In the event that no designee is specified, the contribution shall be transferred to the General Fund, after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and the administration of funds under this article. (d) In the event an individual designates a contribution to more than one account, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the forms of the return to include a space labeled the "Alzheimer's Disease/Related Disorders Fund" to allow for the designation permitted under subdivision (a). The forms shall also include in the instructions information that the contribution may be in the amount of one dollar ($1) or more and that the contribution shall be used to conduct research relating to the cure and treatment of Alzheimer's disease. (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18764. There is in the State Treasury the California Alzheimer's Disease and Related Disorders Research Fund to receive contributions made pursuant to Section 18763. The Franchise Tax Board shall notify the Controller of both the amount of money paid by individuals in excess of their tax liability and the amount of refund money which individuals have designated pursuant to Section 18763 to be transferred to the California Alzheimer's Disease and Related Disorders Research Fund. The Controller shall transfer from the Personal Income Tax Fund to the California Alzheimer's Disease and Related Disorders Research Fund an amount not in excess of the sum of the amounts designated by individuals pursuant to Section 18763 for payment into that fund. 18765. All money transferred to the California Alzheimer's Disease and Related Disorders Research Fund, upon appropriation by the Legislature, shall be allocated as follows: (a) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (b) To the appropriate state department as established by the Secretary of the Health and Welfare Agency in consultation with the Department of Aging, and any others which the secretary deems appropriate. These funds shall be expended for the purpose of conducting research relating to the care, treatment, and the cure of Alzheimer's disease through contracts or grants developed and awarded as determined by the Secretary of the Health and Welfare Agency, in consultation with the Department of Aging and any others which the secretary deems appropriate. 18766. (a) This article shall remain in effect only until January 1, 1997, and as of that date, is repealed unless a later enacted statute, which is enacted before January 1, 1997, deletes that date, in which event subdivision (b) shall apply. (b) If the repeal date specified in subdivision (a) has been deleted and if, thereafter, in any calendar year the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c), as may be applicable, then this article is repealed with respect to taxable years beginning on and after January 1 of that calendar year. If necessary, for years after the repeal date in subdivision (a) is deleted, the Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contributions. (c) For each calendar year, beginning with calendar year 1992, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. Article 7. Designations to the California Seniors Special Fund 18771. (a) Any individual who is allowed the credit under subdivision (c) of Section 17054 may designate on the tax return that a contribution is being made in an amount not to exceed the amount of the credit, without regard to Section 17054.1, which is to be paid to the California Seniors Special Fund. (b) The contribution may be made individually by each eligible signatory on the joint return who is allowed the credit under subdivision (c) of Section 17054. (c) The individual's return shall be treated as if no designation is made under this article if either of the following apply: (1) The credit allowed by subdivision (c) of Section 17054 reported on the return is insufficient to cover the amount of the contribution. (2) Payments and credits reported on the return, together with any other credits associated with the taxpayer's return are insufficient to cover the amount of tax owed plus the contribution. (d) A designation under subdivision (a) shall be made for any taxable year on the initial return for that taxable year, and once made shall be irrevocable. (e) The Franchise Tax Board shall revise the forms of the return to allow for the designation permitted under subdivision (a). (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18772. There is hereby established in the State Treasury the California Seniors Special Fund to receive contributions made pursuant to Section 18771. The Franchise Tax Board shall notify the Controller of the amount of the credits designated pursuant to Section 18771 to be transferred into the California Seniors Special Fund. The Controller shall transfer from the Personal Income Tax Fund to the California Seniors Special Fund an amount not in excess of the sum of the credits designated by individuals pursuant to Section 18771 for payment into that fund. 18773. (a) All money transferred to the California Seniors Special Fund pursuant to Section 18771 shall, upon appropriation, be allocated as follows: (1) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (2) To the California Commission on Aging, the sum of eighty thousand dollars ($80,000) in each fiscal year, or the balance of the fund if less than that amount remains for the operational support of the Area Agency on Aging Advisory Council of California (TACC) for its advocacy efforts on behalf of the senior citizens of California. (3) The balance, if any, to the California Department of Aging for allocation on a per capita basis of individuals 60 years of age or older to the area agencies on aging for the support of direct services to senior citizens, as those services have been identified in each agency's area plan. Each area agency on aging which elects to receive moneys from the California Seniors Special Fund shall include in their annual report a narrative describing the amount of moneys so received and the purposes for which the money was expended. (b) All moneys allocated pursuant to paragraph (2) of subdivision (a) may be carried over from the year in which they were received and encumbered in any following year. (c) The amount allocated pursuant to paragraph (2) of subdivision (a) may be adjusted annually, as determined by the Department of Finance, to reflect changes in salary adjustments, price increases, and travel reimbursement adjustments included for all state agencies in the annual Budget Act. Article 8. Designations to the California Breast Cancer Research Fund 18791. The Legislature finds and declares all of the following: (a) Breast cancer is a devastating health condition which will affect one out of nine American women during their lifetimes. Every three minutes a woman is diagnosed with breast cancer and every 12 minutes a woman dies of breast cancer. In 1992, 182,000 women in the United States will be diagnosed with breast cancer and 46,300 will die from the disease. In 1992, nearly 19,000 California women will be diagnosed with breast cancer and 7,000 will die from the disease. Periodic mammography screening has reduced breast cancer mortality by almost 50 percent. Nearly 15 percent of early tumors are not detected on mammograms. Thirty percent of all tumors found on mammograms are missed due to poorly performed or misinterpreted tests. The direct and indirect costs concerning a breast cancer diagnosis exact a huge economic toll of eight billion dollars ($8,000,000,000) a year, with the impact on the health system, the loss of worktime, the loss of women employees and lives lost to a disease that bankrupts families emotionally and economically. (b) There is no known cause, cure, or prevention at this time for breast cancer. Women are encouraged to screen themselves and be screened for breast cancer. According to some studies early detection through mammography reduces the rate of death from breast cancer by 30 to 50 percent. The state of breast cancer screening must be continually improved to identify breast tumors. Current techniques for breast cancer screening include mammography, both film screen and xerography, and ultrasound. (c) It is the intent of the Legislature in enacting this article, to establish a systematic program to conduct research regarding the cause, cure, and prevention of breast cancer. The outcome of this research may have direct effects and consequences on the development of a comprehensive system which may identify the cause, cure, and prevention of breast cancer as well as improving the screening, diagnoses and treatment of victims of breast cancer. This program shall award grants to eligible physicians, hospitals, laboratories, educational institutions, and other organizations and persons for the purpose of enabling organizations and persons to conduct research. 18792. For the purpose of this article, "research" shall include, but not be limited to, expenditures to develop and advance the understanding, techniques, and modalities effective in the prevention, cure, screening, and treatment of breast cancer. 18793. (a) Any individual may designate on the tax return that a contribution in excess of the tax liability, if any, be made to the California Breast Cancer Research Fund, which is established by Section 18794. (b) The contributions shall be in full dollar amounts and may be made individually by each signatory on the joint return. (c) A designation shall be made for any taxable year on the individual return for that taxable year, and once made shall be irrevocable. In the event that payments and credits reported on the return, together with any other credits associated with the individual's account, do not exceed the individual's liability, the return shall be treated as though no designation has been made. In the event that no designee is specified, the contribution shall be transferred to the General Fund, after reimbursement of the direct actual costs of the Franchise Tax Board for the collection and the administration of funds under this article. (d) In the event an individual designates a contribution to more than one account, and the amount available is insufficient to satisfy the total amount designated, the contribution shall be allocated among the designees on a pro rata basis. (e) The Franchise Tax Board shall revise the forms of the return to include a space labeled the "California Breast Cancer Research Fund" to allow for the designation permitted. The forms shall also include in the instructions information that the contribution may be in the amount of one dollar ($1) or more and that the contribution shall be used to conduct research relating to the cure, screening, and treatment of breast cancer. (f) A deduction shall be allowed under Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 for any contribution made pursuant to subdivision (a). 18794. There is in the State Treasury the California Breast Cancer Research Fund to receive contributions made pursuant to Section 18793. The Franchise Tax Board shall notify the Controller of both the amount of money paid by taxpayers in excess of their tax liability and the amount of refund money which taxpayers have designated pursuant to Section 18793 to be transferred to the California Breast Cancer Research Fund. The Controller shall transfer from the Personal Income Tax Fund to the California Breast Cancer Research Fund an amount not in excess of the sum of the amounts designated by individuals pursuant to Section 18793 for payment into that fund. It is the intent of the Legislature that the 1992 tax return include a space for the California Breast Cancer Research Fund to take the place of the United States Olympic Committee Fund, as it appeared on the 1990 tax return. 18795. All money transferred to the California Breast Cancer Research Fund, upon appropriation by the Legislature, shall be allocated as follows: (a) To the Franchise Tax Board and the Controller for reimbursement of all costs incurred by the Franchise Tax Board and the Controller in connection with their duties under this article. (b) To the State Department of Health Services. These funds shall be expended for the purpose of conducting research relating to the prevention, cure, screening, and treatment of breast cancer disease through contracts or grants developed and awarded as determined by the State Department of Health Services. 18796. (a) This article shall remain in effect only until January 1, 1998, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1998, deletes that date, in which event subdivision (b) shall apply. (b) If the repeal date specified in subdivision (a) has been deleted and if, thereafter, in any calendar year the Franchise Tax Board estimates by September 1 that contributions described in this article made on returns filed in that calendar year will be less than two hundred fifty thousand dollars ($250,000), or the adjusted amount specified in subdivision (c), as may be applicable, then this article is repealed with respect to taxable years beginning on and after January 1 of that calendar year. If necessary, for years after the repeal date in subdivision (a) is deleted, the Franchise Tax Board shall estimate the annual contribution amount by September 1 of each year using the actual amounts known to be contributed and an estimate of the remaining year's contributions. (c) For each calendar year, beginning with calendar year 1993, the Franchise Tax Board shall adjust, on or before September 1 of that calendar year, the minimum estimated contribution amount specified in subdivision (b) as follows: (1) The minimum estimated contribution amount for the calendar year shall be an amount equal to the product of the minimum estimated contribution amount for the prior September 1 multiplied by the inflation factor adjustment as specified in paragraph (2) of subdivision (h) of Section 17041, rounded off to the nearest dollar. (2) The inflation factor adjustment used for the calendar year shall be based on the figures for the percentage change in the California Consumer Price Index received on or before August 1 of the calendar year pursuant to paragraph (1) of subdivision (h) of Section 17041. (d) Notwithstanding the repeal of this article, any contribution amounts designated pursuant to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. CHAPTER 4. PAYMENTS AND ASSESSMENTS Article 1. Payment of Tax by All Persons 19001. Except as provided by Article 2 (commencing with Section 19021), the tax imposed under Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001) shall be paid at the time and place fixed for filing the return (determined without regard to any extension of time for filing the return). 19002. (a) The amount withheld under Article 5 (commencing with Section 18661) of Chapter 2 or Section 13020 of the Unemployment Insurance Code during any calendar year shall be allowed to the recipient of the income as a credit against the tax for the taxable year with respect to which the amount was withheld. (b) In the case of a partnership or S corporation filing a group return as agent for electing nonresident partners or shareholders in accordance with Section 18535, for purposes of this part, the amount withheld under Article 5 (commencing with Section 18661) of Chapter 2 during any taxable year shall be allowed as a credit attributable to the partnership or S corporation on the group return for the taxable year with respect to which that amount was withheld. (c) (1) For purposes of Section 19306, any tax actually deducted and withheld during any calendar year under Article 5 (commencing with Section 18661) of Chapter 2 or Section 13020 of the Unemployment Insurance Code shall, in respect of the recipient of the income, be deemed to have been paid on the last day prescribed for filing the return under Article 1 (commencing with Section 18501) or Article 2 (commencing with Section 18601) of Chapter 2 (without regard to any extension of time for filing the return), with respect to which the tax is allowable as a credit under subdivision (a) or (b). (2) For purposes of Sections 19306 and 19340, any amount paid as estimated tax under Section 19025 or 19136 of this code or Section 13043 of the Unemployment Insurance Code for any taxable year shall be deemed to have been paid on the last day prescribed for filing the return under Article 1 (commencing with Section 18501) or Article 2 (commencing with Section 18601) of Chapter 2 (without regard to any extension of time for filing the return). (d) Notwithstanding subdivision (b) or (c), for purposes of Section 19306 with respect to any tax deducted and withheld under Article 5 (commencing with Section 18661) of Chapter 2 or Section 13020 of the Unemployment Insurance Code both of the following shall apply: (1) If a return is filed before the due date for that return, the return shall be considered filed on the due date. (2) If a tax with respect to an amount paid is paid before the due date for that return, the tax shall be considered paid on the due date. (e) If any overpayment of income tax is claimed as a credit against estimated tax for the succeeding taxable year, that amount shall be considered as a payment of estimated tax in accordance with Section 19007, for the succeeding taxable year, and no claim for credit or refund of the overpayment shall be allowed for the taxable year in which the overpayment arises. 19004. A taxpayer may elect to pay the tax prior to the date prescribed for its payment. 19005. (a) The tax, and any interest and penalties, shall be paid to the Franchise Tax Board. Except as provided in Section 19029, remittances may be in the form of a check, payable to the Franchise Tax Board, at the time and in the manner as the Franchise Tax Board may prescribe. If a check is not paid by the bank on which it is drawn, the taxpayer tendering the check remains liable for the payment of the tax, and all interest and penalties, as if the check had not been tendered. (b) Notwithstanding Title 1.3 (commencing with Section 1747) of Part 4 of Division 3 of the Civil Code, the Franchise Tax Board may allow remittances to be in the form of a credit account number and authorization to draw upon a specified credit account, at that time and under those conditions as the Franchise Tax Board may prescribe. Remittances in the form of an authorization to draw upon a specified credit account shall include an amount, not to exceed 2 percent of the balance otherwise due, for purposes of paying the discount rate associated with drawing upon the credit account. (c) Remittances made pursuant to subdivision (b) may be drawn on an account with a financial institution which agrees to add the discount rate associated with the use of the credit account number to the credit card holder's billing. Remittances drawn as described in this subdivision shall not include an amount for purposes of paying the discount rate associated with drawing upon the credit account. 19006. (a) The spouse who controls the disposition of or who receives or spends community income as well as the spouse who is taxable on the income is liable for the payment of the taxes imposed by Part 10 (commencing with Section 17001) on that income. (b) Whenever a joint return is filed by a husband and wife, the liability for the tax on the aggregate income is joint and several. The liability may be revised by a court in a proceeding for dissolution of the marriage of the husband and wife, provided: (1) The order revising tax liability may not relieve a spouse of tax liability on income earned by or subject to the exclusive management and control of the spouse. The liability of the spouse for the tax, penalties, and interest due for the taxable year shall be in the same ratio to total tax, penalties, and interest due for the taxable year as the income earned by or subject to the management and control of the spouse is to total gross income reportable on the return. (2) The order revising tax liability: (A) Must separately state the taxable years for which revision of tax liability is granted. (B) Shall not revise a tax liability that has been fully paid prior to the effective date of the order; however, any unpaid amount may be revised. (C) Shall become effective when the Franchise Tax Board is served with or acknowledges receipt of the order. (D) Shall not be effective if the gross income reportable on the return exceeds fifty thousand dollars ($50,000) or the amount of tax liability the spouse is relieved of exceeds two thousand five hundred dollars ($2,500) unless a tax revision clearance certificate is obtained from the Franchise Tax Board and filed with the court. (c) Notwithstanding subdivisions (a) and (b), whenever a joint return is filed by a husband and wife and the tax liability is not fully paid, that liability, including interest and penalties, may be revised by the Franchise Tax Board as to one spouse. (1) However, the liability shall not be revised: (A) To relieve a spouse of tax liability on income earned by or subject to the exclusive management and control of the spouse. The liability of the spouse for the tax, penalties, and interest due for the taxable year shall be in the same ratio to total tax, penalties, and interest due for the taxable year as the income earned by or subject to the management and control of the spouse is to total gross income reportable on the return. (B) To relieve a spouse of liability below the amount actually paid on the liability prior to the granting of relief, including credit from any other taxable year available for application to the liability. (2) The liability may be revised only if the spouse whose liability is to be revised establishes that he or she did not know of, and had no reason to know of, the nonpayment at the time the return was filed. For purposes of this paragraph, "reason to know" means whether or not a reasonably prudent person would have had reason to know of the nonpayment. (3) For purposes of this section, the determination of the spouse to whom items of gross income are attributable shall be made without regard to community property laws. (4) The determination of the Franchise Tax Board as to whether the liability is to be revised as to one spouse shall be made not less than 30 days after notification of the other spouse and shall be based upon whether, under all of the facts and circumstances surrounding the nonpayment, it would be inequitable to hold the spouse requesting revision liable for the nonpayment. Any action taken under this section shall be treated as though it were action on a protest taken under Section 19044 and shall become final upon the expiration of 30 days from the date that notice of the action is mailed to both spouses, unless, within that 30-day period, one or both spouses appeal the determination to the board as provided in Section 19045. (5) This subdivision shall apply to all taxable years subject to the provisions of this part, but shall not apply to any taxable year which has been closed by a statute of limitations, res judicata, or otherwise. 19007. Payment of the estimated tax, or any installment thereof, shall be considered payment on account of the taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) for the taxable year. 19008. The Franchise Tax Board may, in cases of financial hardship, as determined by the Franchise Tax Board, allow an individual or fiduciary to enter into installment payment agreements with the Franchise Tax Board to pay taxes due, plus applicable interest and penalties over the life of the installment period. Failure by an individual or fiduciary to comply fully with the terms of the installment payment agreement shall render the agreement null and void, unless the Franchise Tax Board determines that the failure was due to a reasonable cause, and the total amount of tax, interest, and all penalties shall be immediately due and payable. 19009. (a) Whenever any person or employer who is required to collect, account for, and pay over any tax (1) At the time and in the manner prescribed by law or regulations (A) fails to collect, truthfully account for, or pay over the tax, or (B) fails to make deposits, payments, or returns of the tax, and (2) Is notified, by notice delivered in hand or by registered mail of any such failure, then all the requirements of subdivision (b) shall be complied with. In the case of a bank, corporation, partnership, or trust, notice to an officer, partner, or trustee, shall, for purposes of this section, be deemed to be sufficient notice to the bank, corporation, partnership, or trust and to all officers, partners, trustees, and employees thereof. (b) Any person or employer who is required to collect, account for, and pay over any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), if notice has been delivered to that person or employer in accordance with subdivision (a), shall collect the taxes, which become collectible after delivery of the notice, shall (not later than the end of the second banking day after any amount of the taxes is collected) deposit that amount in a separate account in a bank located within the limits of this state, and shall keep the amount of those taxes in that account until payment over to the Franchise Tax Board. Any such account shall be designated as a special fund in trust for the Franchise Tax Board, payable to the Franchise Tax Board by that person or employer as trustee. (c) Whenever the Franchise Tax Board is satisfied, with respect to any notification made under subdivision (a), that all requirements of law and regulations with respect to the taxes, will henceforth be complied with, it may cancel the notification. The cancellation shall take effect at the time as is specified in the notice of the cancellation. 19010. Unless otherwise provided, any provision of this part that relates to the assessment and collection of tax shall also apply to the assessment and collection of estimated tax. Article 2. Banks and Corporations 19021. In the case of taxpayers subject to the tax imposed by Article 3 (commencing with Section 23181) of Chapter 2 of Part 11, there shall be due and payable on or before the 15th day of the third month following the close of the preceding year from each such taxpayer a percentage of its net income as disclosed by its return which is equal to the rate applicable to corporations subject to the tax imposed by Article 2 (commencing with Section 23151) of Chapter 2 of Part 11 plus the personal property tax rate equivalent included in the bank and financial corporation tax rate determination by the Franchise Tax Board pursuant to Sections 23186 and 23186.1, less the credit allowable by Section 23184. The payment required by this section shall not be less than the minimum tax specified in Section 23153. 19022. The amount of tax payable by taxpayers subject to the tax imposed by Article 3 (commencing with Section 23181) of Chapter 2 of Part 11 as set forth in a notice mailed to the taxpayers pursuant to Section 23186.1 shall be due and payable on or before the 15th day following the mailing of the notice by the Franchise Tax Board. 19023. For purposes of this article, in the case of a corporation other than a financial corporation, the term "estimated tax" means the amount which the corporation estimates as the amount of the tax imposed by Part 11 (commencing with Section 23001); but in no event shall the estimated tax of a corporation subject to the tax imposed by Article 2 (commencing with Section 23151) of Chapter 2 of Part 11 be less than the minimum tax prescribed in Section 23153. 19024. (a) In the case of banks and financial corporations, "estimated tax" means the amount which the bank or financial corporation estimates as the amount of the tax imposed by Part 11 (commencing with Section 23001) at the rate determined by the Franchise Tax Board for the preceding year pursuant to Section 23186.1, less the offset allowable by Section 23184, but in no event shall the estimated tax of a financial corporation be less than the minimum tax prescribed in Section 23153. (b) In case of an increase or decrease in the rate of tax imposed under Section 23151 (tax on general corporations), a bank or financial corporation shall be required to increase or decrease the rate determined by the Franchise Tax Board for the preceding year by the same amount as the change in the rate imposed under Section 23151 determined in accordance with Section 24251 (relating to computation of tax when law changed). 19025. (a) If the amount of estimated tax does not exceed the minimum tax specified by Section 23153, the entire amount of the estimated tax shall be due and payable on or before the 15th day of the fourth month of the income year. (b) If the amount of estimated tax exceeds the minimum tax specified by Section 23153, the amount payable shall be paid in installments as follows: The following percentages of the estimated tax shall be paid on the 15th day of the-- ____________________________________ If the requirements of this subdivision 4th 6th 9th 12th are first met-- month month month month Before the 1st day of the 4th month of the income year ...... 25 (but 25 25 25 not less than the minimum tax pro- vided in Section 23153) After the last day of the 3rd month and before the 1st day of the 6th month of the income year ... ____ 33 1/3 33 1/3 33 1/3 After the last day of the 5th month and before the 1st day of the 9th month of the income year ... ____ ____ 50 50 After the last day of the 8th month and before the 1st day of the 12th month of the income year ... ____ ____ ____ 100 19026. If, after paying any installment of estimated tax required by subdivision (b) of Section 19025, the taxpayer makes a new estimate, the amount of each remaining installment (if any) shall be the amount which would have been payable if the new estimate had been made when the first estimate for the income year was made, increased or decreased (as the case may be) by the amount computed by dividing (a) The difference between (1) The amount of estimated tax required to be paid before the date on which the new estimate is made, and (2) The amount of estimated tax which would have been required to be paid before that date if the new estimate had been made when the first estimate was made, by (b) The number of installments remaining to be paid on or after the date on which the new estimate is made. 19027. The application of this article to income years of less than 12 months shall be in accordance with regulations prescribed by the Franchise Tax Board. 19029. (a) All payments required under this part regardless of the income year to which the payments apply shall be remitted to the Franchise Tax Board by electronic funds transfer pursuant to Division 11 (commencing with Section 11101) of the Commercial Code, once any of the following conditions is met with respect to any taxpayer: (1) The estimated tax payment made pursuant to Section 19025 or the payment made pursuant to Section 18604 with regard to an extension of time to file exceeds fifty thousand dollars ($50,000) in any income year beginning on or after January 1, 1991, or twenty thousand dollars ($20,000) in any income year beginning on or after January 1, 1995. (2) The total tax liability exceeds two hundred thousand dollars ($200,000) in any income year beginning on or after January 1, 1991, or eighty thousand dollars ($80,000) in any income year beginning on or after January 1, 1995. For purposes of this section, total tax liability shall be the total tax liability as shown on the original return, after any adjustment pursuant to Section 19051. (3) A taxpayer submits a request to the Franchise Tax Board and is granted permission to make electronic funds transfers. (4) A taxpayer required to remit payments to the Franchise Tax Board by electronic funds transfer may elect to discontinue making payments where the threshold requirements set forth in paragraphs (1) and (2) were not met for the preceding income year. The election shall be made in a form and manner prescribed by the Franchise Tax Board. (b) Any taxpayer required to remit payment by electronic funds transfer pursuant to this section who makes payment by other means shall pay a penalty of 10 percent of the amount paid, unless it is shown that the failure to make payment as required was for reasonable cause and was not the result of willful neglect. (c) Any taxpayer required to remit payments by electronic funds transfer pursuant to this section may request a waiver of those requirements from the Franchise Tax Board. The Franchise Tax Board may grant a waiver only if it determines that the particular amounts paid in excess of the threshold amounts established in this section were not representative of the taxpayer's tax liability. If a taxpayer is granted a waiver, subsequent remittances by electronic funds transfer shall be required only on those terms set forth in the waiver. (d) The Franchise Tax Board shall accept remittances by electronic funds transfer pursuant to this section no later than January 1, 1993. Electronic funds transfer procedures, in addition to those described in subdivision (e), shall be as prescribed by the Franchise Tax Board. Payment is deemed complete on the date the electronic funds transfer is initiated, if settlement to the state's demand account occurs on or before the banking day following the date the transfer is initiated. If settlement to the state's demand account does not occur on or before the banking day following the date the transfer is initiated, payment is deemed to occur on the date settlement occurs. (e) For purposes of this section: (1) "Electronic funds transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape, so as to order, instruct, or authorize a financial institution to debit or credit an account. Electronic funds transfer shall be accomplished by an automated clearinghouse debit, automated clearinghouse credit, or by Federal Reserve Wire Transfer (Fedwire). (2) "Automated clearinghouse" means any federal reserve bank, or an organization established by agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and that authorizes an electronic transfer of funds between those banks or bank accounts. (3) "Automated clearinghouse debit" means a transaction in which any department of the state, through its designated depository bank, originates an automated clearinghouse transaction debiting the taxpayer's bank account and crediting the state's bank account for the amount of tax. Banking costs incurred for the automated clearinghouse debit transaction by the taxpayer shall be paid by the state. (4) "Automated clearinghouse credit" means an automated clearinghouse transaction in which the taxpayer, through its own bank, originates an entry crediting the state's bank account and debiting its own bank account. Banking costs incurred by the state for the automated clearinghouse credit transaction may be charged to the taxpayer. (5) "Fedwire" means any transaction originated by the taxpayer and utilizing the national electronic payment system to transfer funds through federal reserve banks, pursuant to which the taxpayer debits its own bank account and credits the state' s bank account. Electronic funds transfers may be made by Fedwire only if prior approval is obtained from the Franchise Tax Board and the taxpayer is unable, for reasonable cause, to make payments pursuant to paragraph (3) or (4). Banking costs charged to the taxpayer and to the state may be charged to the taxpayer. (6) In determining whether a payment or total tax liability exceeds the amounts established in subdivision (a), all taxpayers whose income derived from, or attributable to, sources within this state is required to be determined by a combined report shall be aggregated and the total aggregate amount shall be considered to be the payment or total tax liability of a single taxpayer. Article 3. Deficiency Assessments 19031. The Franchise Tax Board may proceed under this article or Article 5 (commencing with Section 19081) whether or not it requires a return as an amended return under Section 18622. 19032. As soon as practicable after the return is filed, the Franchise Tax Board shall examine it and shall determine the correct amount of the tax. 19033. If the Franchise Tax Board determines that the tax disclosed by the original or amended return is less than the tax disclosed by its examination, it shall mail notice or notices to the taxpayer of the deficiency proposed to be assessed. 19034. Each notice shall set forth the reasons for the proposed deficiency assessment and the computation thereof. 19035. In the case of a joint return filed by husband and wife, the notice of proposed deficiency assessment may be a single joint notice, except that if the Franchise Tax Board is notified by either spouse that separate residences have been established, it shall mail to each spouse, in lieu of the single joint notice, duplicate originals of the joint notice. 19036. Notwithstanding any provision to the contrary, any interest, penalty or addition to tax, imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part may be assessed and collected in the same manner as if it were a deficiency. 19041. Within 60 days after the mailing of each notice of proposed deficiency assessment the taxpayer may file with the Franchise Tax Board a written protest against the proposed deficiency assessment, specifying in the protest the grounds upon which it is based. 19042. If no protest is filed, the amount of the proposed deficiency assessment becomes final upon the expiration of the 60-day period provided in Section 19041. 19043. (a) For purposes of this part, "deficiency" means the amount by which the tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) exceeds the excess of (1) The sum of (A) The amount shown as the tax by the taxpayer on an original or amended return, if an original or amended return was filed, plus (B) The amounts previously assessed (or collected without assessment) as a deficiency, over (2) The amount of rebates, as defined in paragraph (2) of subdivision (b), made. (b) For purposes of this section (1) The tax imposed and the tax shown on an original or amended return shall both be determined without regard to payments on account of estimated tax, and without regard to the credit under Section 19002. (2) "Rebate" means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) was less than the excess of the amount specified in paragraph (1) of subdivision (a) over the rebates previously made. (3) "Deficiency" includes the amount by which a credit subject to carryover is reduced by any action of the Franchise Tax Board. 19044. If a protest is filed, the Franchise Tax Board shall reconsider the assessment of the deficiency and, if the taxpayer has so requested in his or her protest, shall grant the taxpayer or his or her authorized representatives an oral hearing. The Franchise Tax Board may act on the protest in whole or in part. In the event the Franchise Tax Board acts on the protest in part only, the remaining part of the protest shall continue to be under protest until the Franchise Tax Board acts on that part. 19045. The Franchise Tax Board's action upon the protest, whether in whole or in part, is final upon the expiration of 30 days from the date when it mails notice of its action to the taxpayer, unless within that 30-day period the taxpayer appeals in writing from the action of the Franchise Tax Board to the board. 19046. Two copies of the appeal and two copies of any supporting documents shall be addressed and mailed to the State Board of Equalization at Sacramento, California. Upon receipt of the appeal, the board shall provide one copy of the appeal and one copy of any supporting documents to the Franchise Tax Board at Sacramento, California. 19047. The board shall hear and determine the appeal and thereafter shall forthwith notify the taxpayer and the Franchise Tax Board of its determination and the reasons therefor. 19048. The board's determination becomes final upon the expiration of 30 days from the time of the determination unless within the 30-day period the taxpayer or the Franchise Tax Board files a petition for rehearing with the board. In that event the determination becomes final upon the expiration of 30 days from the time the board issues its opinion on the petition. 19049. When a deficiency is determined and the assessment becomes final, the Franchise Tax Board shall mail notice and demand to the taxpayer for the payment thereof. The deficiency assessed is due and payable at the expiration of 10 days from the date of the notice and demand. 19050. A certificate by the Franchise Tax Board or of the board, as the case may be, of the mailing of the notices specified in this article is prima facie evidence of the assessment of the deficiency and of the giving of the notices. 19051. Any amount of tax in excess of that disclosed by the return, due to a mathematical error, notice of which has been mailed to the taxpayer, is not a deficiency assessment. The taxpayer has no right of protest or appeal based on that notice; however, the amount of tax erroneously omitted in the return may be assessed and collected in the manner provided in this part as in the case of deficiency assessments. 19052. Notwithstanding any provision in this part, denial of credits or refunds claimed in accordance with Section 17053.5 may be made pursuant to Section 19051 except that in such cases claimants shall have the right of protest and appeal provided by this article. 19053. Any tax imposed pursuant to Articles 4 (commencing with Section 23221), 5 (commencing with Section 23251), and 6 (commencing with Section 23281) of Chapter 2 of Part 11 based on the net income as disclosed by the return, shall not be considered a deficiency assessment within the meaning of this article. 19054. (a) If on any return or claim for refund of taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), there is an overstatement of the credit for income tax withheld, or of the amount paid as estimated income tax, the amount so overstated which is allowed against the tax shown on the return or which is allowed as a credit or refund may be assessed by the Franchise Tax Board in the same manner as is provided by Section 19051 in the case of a mathematical error appearing on the return. (b) No unpaid amount of estimated tax under Section 19025 or 19136 shall be assessed. 19057. (a) Except in the case of a fraudulent return and except as otherwise expressly provided in this part, every notice of a proposed deficiency assessment shall be mailed to the taxpayer within four years after the return was filed. No deficiency shall be assessed or collected with respect to the year for which the return was filed unless the notice is mailed within the four-year period or the period otherwise provided. (b) The running of the period of limitations provided in subdivision (a) on mailing a notice of proposed deficiency assessment shall, in a case under Title 11 of the United States Code, be suspended for any period during which the Franchise Tax Board is prohibited by reason of that case from mailing the notice of proposed deficiency assessment and 60 days thereafter. (c) Where, within the 60-day period ending on the day on which the time prescribed in this section for the assessment of any tax imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) for any taxable year would otherwise expire, the Franchise Tax Board receives a written document, other than an amended return or a report required by Section 18622, signed by the taxpayer showing that the taxpayer owes an additional amount of that tax for that taxable year, the period for the assessment of that additional amount shall not expire before the day 60 days after the day on which the Franchise Tax Board receives that document. (d) If a taxpayer determines in good faith that it is an exempt organization and files a return as such under Section 23772, and if the taxpayer is thereafter held to be a taxable organization for the taxable year for which the return is filed, that return shall be deemed the return of the organization for the purposes of this section. 19058. (a) If the taxpayer omits from gross income an amount properly includable therein which is in excess of 25 percent of the amount of gross income stated in the return, a notice of a proposed deficiency assessment may be mailed to the taxpayer within six years after the return was filed. Additionally, in the case of a bank or corporation, a proceeding in court for the collection of the tax may be commenced without assessment at any time within six years after the return was filed. (b) For purposes of this section both of the following shall apply: (1) In the case of a trade or business, the term "gross income" means the total of the amounts received or accrued from the sale of goods or services (if the amounts are required to be shown on the return) prior to diminution by the cost of the sales or service. (2) In determining the amount omitted from gross income, there shall not be taken into account any amount which is omitted from gross income stated in the return if the amount is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the Franchise Tax Board of the nature and amount of the item. 19059. (a) If a taxpayer is required by subdivision (a) of Section 18622 to report a change or correction by the Commissioner of Internal Revenue or other officer of the United States or other competent authority and does report the change or correction within six months after the final federal determination, a notice of proposed deficiency assessment resulting from those adjustments may be mailed to the taxpayer within two years from the date when the notice is filed with the Franchise Tax Board by the taxpayer, or within the periods provided in Section 19057, 19058, or 19065, whichever period expires the later. (b) If a taxpayer is required by subdivision (b) of Section 18622 to file an amended return and does file the return within six months of filing an amended return with the Commissioner of Internal Revenue, a notice of proposed deficiency assessment in excess of the self-assessed tax on the amended return, and resulting from the adjustments may be mailed to the taxpayer within two years from the date when the amended return is filed with the Franchise Tax Board by the taxpayer, or within the periods provided in Section 19057, 19058, or 19065, whichever period expires later. 19060. (a) If a taxpayer fails to report a change or correction by the Commissioner of Internal Revenue or other officer of the United States or other competent authority or fails to file an amended return as required by Section 18622, a notice of proposed deficiency assessment resulting from the adjustment may be mailed to the taxpayer at any time after the change, correction, or amended return is reported to or filed with the federal government. (b) If, after the six-month period required in Section 18622, a taxpayer reports a change or correction by the Commissioner of Internal Revenue or other officer of the United States or other competent authority or files an amended return as required by Section 18622, a notice of proposed deficiency assessment resulting from the adjustment may be mailed to the taxpayer within four years from the date the taxpayer notifies the Franchise Tax Board of that change or correction or files that return. 19061. In case of a deficiency described in Sections 24945 and 24946, and in Sections 1033(a)(2)(C) and 1033(a)(2)(D) of the Internal Revenue Code, the deficiency may be assessed at any time prior to the expiration of the time therein provided. 19062. In the case of a deficiency described in Section 1034 (j) of the Internal Revenue Code, the deficiency may be assessed at any time prior to the expiration of the time therein provided. 19063. (a) In the case of any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) with respect to any person, the period for assessing a deficiency attributable to any partnership item of a federally registered partnership shall not expire before the later of the following: (1) The date which is five years after the date on which the partnership return of the federally registered partnership for the partnership taxable year in which the item arose was filed (or later, if the date prescribed for filing the return). (2) If the name or address of the person does not appear on the partnership return, the date which is one year after the date on which the information is furnished to the Franchise Tax Board in the manner and at the place as it may prescribe. (b) For purposes of this section, "partnership item" means both of the following: (1) Any item required to be taken into account for the partnership taxable year under any provision of subchapter K of Chapter 1 of Title 26 of the Internal Revenue Code to the extent that regulations prescribed by the Franchise Tax Board provide that for purposes of this part that item is more appropriately determined at the partnership level than at the partner level. (2) Any other item to the extent affected by an item described in paragraph (1). (c) The extensions referred to in subsection (c)(4) of Section 6501 of the Internal Revenue Code, insofar as they relate to partnership items, may, with respect to any person, be consented by either of the following: (1) Except to the extent the Franchise Tax Board is otherwise notified by the partnership, by a general partner of the partnership. (2) By any person authorized to do so by the partnership in writing. (d) For purposes of this section, "federally registered partnership" means, with respect to any partnership taxable year, any partnership for which either of the following apply: (1) Interests have been offered for sale at any time during that taxable year or a prior taxable year in any offering required to be registered with the Securities and Exchange Commission. (2) At any time during that taxable year or a prior taxable year, was subject to the annual reporting requirements of the Securities and Exchange Commission which relate to the protection of investors in the partnership. 19064. (a) If any person initiates a motion to quash a subpoena, as provided by Sections 7465 to 7476, inclusive, of the Government Code, and that person is the person with respect to whose liability the subpoena is issued (or is the agent, nominee, or other person acting under the direction or control of that person), then the running of any period of limitations under Section 19057 (relating to deficiency assessments), Section 19087 (relating to false or fraudulent returns), or Section 19704 (relating to criminal prosecutions) with respect to that person shall be suspended for the period during which a proceeding, and appeals therein, with respect to the enforcement of the subpoena is pending. (b) In the absence of the resolution of a response to a subpoena served to a third-party recordkeeper (as defined in Section 7609(a)(3) of the Internal Revenue Code) issued under Section 19504 (power of examination) the running of any period of limitations under Section 19057 (relating to deficiency assessments), Section 19087 (relating to false or fraudulent returns), or Section 19704 (relating to criminal prosecutions) with respect to any person whose liability the subpoena was issued (other than a person taking action as provided by subdivision (a)) shall be suspended for the period beginning on the date which is six months after the service of the subpoena and ending with the final resolution of that response. 19065. If any taxpayer agrees with the United States Commissioner of Internal Revenue for an extension or renewals thereof of the period for proposing and assessing deficiencies in federal income taxes for any year, the period for mailing a notice of a proposed deficiency shall be four years after the return was filed or six months after the date of the expiration of the agreed period for assessing deficiencies in the federal income tax, whichever period expires the later. 19066. (a) For the purposes of Sections 19057, 19058, and 19065, a return of tax imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) except a return required by Article 5 (commencing with Section 18661) of Chapter 2 (relating to withholding), filed before the last day prescribed by law for filing (determined without regard to any extension of time for filing the return), shall be considered as filed on that day. For purposes of Section 19306, payment of any portion of the tax made before the last day prescribed for the payment of the tax shall be considered made on the last day. (b) For purposes of this section, if a return required by Article 5 (commencing with Section 18661) of Chapter 2 (relating to withholding) or a return of tax imposed by Section 13020 of the Unemployment Insurance Code (relating to withholding tax on wages), for any period ending with or within a calendar year is filed before April 15 of the succeeding calendar year, that return shall be considered filed on April 15 of that calendar year. 19067. Where before the expiration of the time prescribed for the mailing of a notice of a proposed deficiency assessment, the taxpayer consents in writing to an assessment after that time, the assessment may be made at any time prior to the expiration of the period agreed upon. The period agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. Article 4. Assessments against Persons Secondarily Liable 19071. The taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) upon any taxpayer other than a transferee for which any person other than the taxpayer is liable may be assessed against that person in the manner provided for the assessment of deficiencies. The taxes may be assessed at any time within which deficiency assessments may be made against the taxpayer; provided, however, the running of the period of limitations upon the assessment of the liability imposed upon any person other than the taxpayer shall, after the mailing of the notice provided for in Section 19033 to the taxpayer, be suspended for the period during which the taxpayer exercises an administrative remedy as provided in Section 19041, 19045, or 19048. 19072. The provisions of this part respecting the collection of taxes apply to the collection of the taxes from the person secondarily liable to the same extent and with the same force and effect as though that person were the taxpayer. 19073. The amounts of the following liabilities, except as hereinafter provided in this section and Section 19074, shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations as in the case of a deficiency (including the provisions in the case of a delinquency in payment after notice and demand, the provisions authorizing proceedings in court for collection, and the provisions prohibiting claims and suits for refunds): (a) The liability, at law or in equity, of a transferee of property of a taxpayer, in respect of the tax (including interest, additional amounts, and additions to the tax provided by law) imposed upon the taxpayer. (b) The liability of a fiduciary under Part 10 (commencing with Section 17001) in respect of the payment of any such tax from the estate of the taxpayer. Any such liability may be either as to the amount of tax shown on the return or as to any deficiency in tax. 19074. The period of limitation for assessment of the liability of any person other than the taxpayer who is a transferee or fiduciary of the taxpayer shall be as follows: (a) In the case of the liability of an initial transferee of the property of the taxpayer, within one year after the expiration of the period of limitation for assessment against the taxpayer. (b) In the case of the liability of a transferee of a transferee of the property of the taxpayer, within one year after the expiration of the period of limitation for assessment against the preceding transferee, but only if within three years after the expiration of the period of limitation for assessment against the taxpayer; except that if before the expiration of the period of limitation for the assessment of the liability of the transferee of a transferee, a court proceeding for the collection of the tax or liability in respect thereof has been begun against the taxpayer or last preceding transferee, respectively, then the period of limitation for assessment of the liability of the transferee of a transferee shall expire one year after the return of execution in the court proceeding. (c) In the case of the liability of a fiduciary, not later than one year after the liability arises or not later than the expiration of the period for collection of the tax in respect of which the liability arises, whichever is the later; (d) Where before the expiration of the time prescribed in subdivision (a), (b) or (c) for the assessment of the liability, both the Franchise Tax Board and the transferee or fiduciary have consented in writing to its assessment after that time, the liability may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. (e) Notwithstanding any of the above subdivisions, the running of the period of limitations upon the assessment of liability against any transferee shall be suspended for the period during which the taxpayer exercises an administrative remedy as provided in Section 19041, 19045, or 19048. Article 5. Jeopardy Assessments 19081. If the Franchise Tax Board finds that the assessment or the collection of a tax or a deficiency for any year, current or past, will be jeopardized in whole or in part by delay, it may mail or issue notice of its findings to the taxpayer, or its transferee or transferees, together with a demand for immediate payment of the tax or the deficiency declared to be in jeopardy, including interest and penalties and additions thereto. Any assessment issued under this article shall also be an assessment issued pursuant to Section 19033, if an assessment has not already been issued pursuant to Section 19033 with respect to that taxable or income year for that amount. 19082. In the case of a tax for a current period, if the Franchise Tax Board finds that the assessment or collection of the tax will be jeopardized in whole or in part by delay, the Franchise Tax Board may declare the income or taxable period of the taxpayer immediately terminated. The Franchise Tax Board shall mail or issue notice of its finding and declaration to the taxpayer, together with a demand for a return and immediate payment of the tax based on the period declared terminated, including therein income accrued and deductions incurred up to the date of termination if not otherwise properly includible or deductible in respect of the period, and the tax shall be immediately due and payable whether or not the time otherwise allowed by law for filing the return and paying the tax has expired. 19083. (a) A jeopardy assessment is immediately due and payable, and proceedings for collection may be commenced at once. (b) The collection of the whole or any amount of a jeopardy assessment may be stayed, at any time before the assessment becomes final, by filing with the Franchise Tax Board: (1) a bond in an amount equal to the amount (together with interest thereon to the date of payment) as to which the stay is desired, conditioned upon the payment of the amount, the collection of which is stayed by the bond, upon notice and demand by the Franchise Tax Board after the assessment becomes final; or (2) other security in the amount as the Franchise Tax Board may deem necessary, not exceeding double the amount (together with interest thereon to the date of payment) as to which the stay is desired. (c) Upon the filing of the bond or other security the collection of so much of the amount assessed as is covered by the bond or other security shall be stayed. The taxpayer shall have the right to waive the stay at any time in respect of the whole or any part of the amount covered by the bond or other security, and if as a result of the waiver any part of the amount covered by the bond or other security is paid, then the bond or other security shall, at the request of the taxpayer, be proportionately reduced. If any portion of the jeopardy assessment is abated, the bond or other security shall, at the request of the taxpayer, be proportionately reduced. (d) The Franchise Tax Board, prior to the time the assessment becomes final, may stay collection of the whole or any amount of a jeopardy assessment if it finds that jeopardy does not exist. (e) Where collection of the whole or any amount of a jeopardy assessment has been stayed under this section, the period of limitation on any action to collect shall be tolled during the time of the stay. 19084. (a) (1) Within five days after the day on which either a notice and demand for payment is mailed or issued pursuant to Section 19081, or notice and demand for a return and payment is mailed or issued pursuant to Section 19082, the Franchise Tax Board shall mail or issue the taxpayer a written statement of the information upon which the Franchise Tax Board relies in issuing that notice and demand. (2) Within 30 days after the day on which the taxpayer is furnished the written statement described in paragraph (1), or within 30 days after the last day of the period within which the statement is required to be furnished, the taxpayer may petition the Franchise Tax Board to review whether its finding pursuant to Section 19081 or 19082 is reasonable under the circumstances, specifying the grounds on which the petition is based. The filing of a petition for review shall not operate to stay collection. Collection may be stayed only as provided in Section 19083. A petition filed pursuant to this paragraph shall also be considered a protest filed pursuant to Section 19041 against the proposed additional tax. (3) If a petition for review under paragraph (2) is not made within the 30-day period set forth in that paragraph, the finding of the Franchise Tax Board pursuant to Section 19081 or 19082 is final. (4) After a petition for review is filed under paragraph (2), the Franchise Tax Board shall determine whether or not the issuance of notice and demand under Section 19081 or 19082 is reasonable under the circumstances. In making this determination, the Franchise Tax Board shall grant the taxpayer or authorized representative an oral hearing if the taxpayer has so requested in the petition. The burden of proof with respect to whether a jeopardy exists as to collection or an assessment is upon the Franchise Tax Board. (5) The Franchise Tax Board shall make the determination under paragraph (4) within 90 days of the filing of the petition for review unless the taxpayer requests, in writing, additional time. (6) In making the determination required by paragraph (4), the Franchise Tax Board shall consider all relevant factors, including, but not limited to, the likelihood that collection will be jeopardized, the assets of the taxpayer, and the amount of the assessment as it relates to whether jeopardy status exists. The burden of proof as to the amount of the assessment for purposes of determining jeopardy status is upon the taxpayer. (b) (1) Within 60 days after the earlier of the following days, the taxpayer may appeal the determination to the State Board of Equalization in the manner provided in Section 19085: (A) The day the Franchise Tax Board notifies the taxpayer of the determination described in paragraph (4) of subdivision (a). (B) One day after the time period prescribed by paragraph (5) of subdivision (a) for the Franchise Tax Board to make its determination. (2) If an appeal is not filed before the expiration of the time periods, the Franchise Tax Board's determination is final. Filing of an appeal shall not operate to stay collection. Collection may be stayed only as provided in Section 19083. (3) Within 60 days after an appeal is filed under paragraph (1), the board shall determine whether the issuance of notice and demand under Section 19081 or 19082 is reasonable under the circumstances. The burden of proof with respect to whether a jeopardy exists as to collection or an assessment is upon the Franchise Tax Board. (4) If the board determines that a jeopardy status does not apply to all or part of the assessment, the board may modify the amount of the assessment to which the jeopardy attaches. If the board does not act within the time period provided in paragraph (3) as modified by paragraph (6), the board will be deemed to have denied the taxpayer's appeal. (5) In making the determination required by paragraph (3), the board shall consider all relevant factors, including, but not limited to, the likelihood that collection will be jeopardized, the assets of the taxpayer, and the amount of the assessment as it relates to whether jeopardy status exists. The burden of proof as to the amount of the assessment for purposes of determining jeopardy status is upon the taxpayer. (6) If either party requests an extension of the 60-day period set forth in paragraph (3) and establishes reasonable grounds why the extension should be granted, the board may grant an extension of not more than 30 additional days. (c) (1) Within 60 days after the earlier of the following days, either party may bring a civil action against the other in superior court for a judicial determination as to whether or not the issuance of the notice and demand under Section 19081 or 19082 is reasonable under the circumstances: (A) The day the board notifies the taxpayer of its determination described in paragraph (3), as modified by paragraph (6), of subdivision (b). (B) If the board fails to make a timely determination, then one day after the time prescribed for the board to make its determination. (2) If a civil action under this subdivision is not commenced within the 60-day period set forth in paragraph (1), the board' s determination is final. The filing of the civil action shall not operate to stay collection. Collection shall be stayed only as provided by Section 19083. (3) Within 60 days after proper service is made, the superior court shall determine whether the issuance of notice and demand under Section 19081 or 19082 is reasonable under the circumstances. The burden of proof with respect to whether a jeopardy exists as to collection or an assessment is upon the Franchise Tax Board. (4) If the court determines that a jeopardy status does not apply to all or part of the assessment, the court may modify the amount of the assessment to which the jeopardy attaches. (5) In making the determination required by paragraph (3), the superior court shall consider all relevant factors, including, but not limited to, the likelihood that collection will be jeopardized, the assets of the taxpayer, and the amount of the assessment as it relates to whether jeopardy status exists. The burden of proof as to the amount of the assessment for purposes of determining jeopardy status is upon the taxpayer. (6) If either party in the action requests an extension of the 60-day period set forth in paragraph (3) of subdivision (c) and establishes reasonable grounds why the extension should be granted, the superior court may grant an extension of not more than 30 additional days. (7) Actions filed pursuant to this section shall be filed in the Superior Court of the County of Los Angeles, the City and County of San Francisco, the County of San Diego, or the County of Sacramento. Sections 19387 and 19389 shall apply to those actions. (8) The determination made by a superior court under this section shall be final and conclusive and shall not be reviewed by any other court. 19085. The taxpayer may appeal to the board from the Franchise Tax Board's action on the petition for review. The appeal shall be made in the manner prescribed by Section 19046. Article 3 (commencing with Section 19031) of Chapter 4 relating to an appeal from the action of the Franchise Tax Board on a protest against an additional tax proposed to be assessed applies to the appeal. 19086. In any proceeding brought to enforce payment of taxes made due and payable by this article, the finding of the Franchise Tax Board under Section 19081, whether made after notice to the taxpayer or not, is for all purposes presumptive evidence that the assessment or collection of the tax or the deficiency was in jeopardy. A certificate of the Franchise Tax Board of the mailing or issuing of the notices specified in this article is presumptive evidence that the notices were mailed or issued. 19087. (a) If any taxpayer fails to file a return, or files a false or fraudulent return with intent to evade the tax, for any taxable year, the Franchise Tax Board, at any time, may require a return or an amended return under penalties of perjury or may make an estimate of the net income, from any available information, and may propose to assess the amount of tax, interest, and penalties due. All the provisions of this part relative to delinquent taxes shall be applicable to the tax, interest, and penalties computed hereunder. (b) When any assessment is proposed under subdivision (a), the taxpayer shall have the right to protest the same and to have an oral hearing thereon if requested, and also to appeal to the board from the Franchise Tax Board's action on the protest; the taxpayer must proceed in the manner and within the time prescribed by Sections 19041 to 19048, inclusive. 19088. (a) On the appointment of a receiver for any taxpayer in any receivership proceeding before any court of the United States or of any state or territory or of the District of Columbia, any deficiency (together with all interest, additional amounts, or additions to the tax provided for by law) determined by the Franchise Tax Board in respect of a tax upon the taxpayer may be immediately assessed. (b) Any deficiency (together with all interest, additional amounts, and additions to the tax provided by law) determined by the Franchise Tax Board in respect of a tax on either of the following: (1) The debtor's estate in a case under Title 11 of the United States Code. (2) The debtor, but only if liability for the tax has become res judicata pursuant to a determination in a case under Title 11 of the United States Code, may be immediately assessed if that deficiency has not previously been assessed in accordance with law. 19089. (a) Every trustee in a case under Title 11 of the United States Code, receiver, assignee for the benefit of creditors or like fiduciary shall give notice of qualification as such to the Franchise Tax Board in the manner and at the time that may be required by regulations of the Franchise Tax Board. The Franchise Tax Board may by regulation provide for any exemptions from the requirements of this section that the Franchise Tax Board deems proper. (b) If the regulations issued pursuant to this section require the giving of any notice by any fiduciary in any case under Title 11 of the United States Code, or by a receiver in any other court proceeding to the Franchise Tax Board of qualification as such, the running of the period for mailing notice of proposed additional assessments shall be suspended for the period from the date of the institution of the proceeding to a date 30 days after the date upon which the notice from the receiver or other fiduciary is received by the Franchise Tax Board; but the suspension under this section shall in no case be for a period in excess of two years. 19090. (a) Claims for the deficiency and such interest, additional amounts and additions to the tax may be presented, for adjudication in accordance with law, to the court before which the receivership proceeding (or case under Title 11 of the United States Code) is pending, despite the pendency of an appeal to the board. (b) In the case of a receivership proceeding, no appeal shall be filed with the board after the appointment of the receiver. 19091. Upon notice and demand from the Franchise Tax Board after termination of the receivership proceeding, the taxpayer shall pay any portion of the claim allowed in the proceeding which is unpaid. The unpaid amount may be collected in the manner provided in this part for the collection of delinquent taxes at any time within six years after termination of the proceeding. 19092. The Franchise Tax Board may prescribe rules and regulations necessary to properly carry out this article. 19093. (a) If the individual who is in physical possession of cash in excess of ten thousand dollars ($10,000) does not claim that cash in any of the capacities specified in paragraphs (1) and (2), then for purposes of Sections 19081 and 19082, it shall be presumed that the cash represents gross income of a single individual for the taxable year in which the possession occurs, and that the collection of tax will be jeopardized by delay: (1) The cash is not claimed as his or hers. (2) The cash is not claimed as belonging to another person whose identity the Franchise Tax Board can readily ascertain and who acknowledges ownership of that cash. (b) In the case of any assessment resulting from the application of subdivision (a), all of the following apply: (1) The entire amount of the cash shall be treated as taxable income for the taxable year in which the possession occurs. (2) That income shall be treated as taxable at the maximum rate under Section 17041. (3) Except as provided in subdivision (c), the possessor of the cash shall be treated (solely with respect to that cash) as the taxpayer for purposes of Chapter 4 (commencing with Section 19001) and Chapter 5 (commencing with Section 19201). (c) If, after an assessment resulting from the application of subdivision (a), that assessment is abated and replaced by an assessment against the owner of the cash, that later assessment shall be treated for purposes of all laws relating to lien, levy, and collection as relating back to the date of the original assessment. (d) For purposes of this section, the following definitions apply: (1) "Cash" includes any cash equivalent. (2) "Cash equivalent" means any of the following: (A) Foreign currency. (B) Any bearer obligation. (C) Any medium of exchange to which both of the following apply: (i) It is of a type which has been frequently used in illegal activities. (ii) It is specified as a cash equivalent for purposes of this part in regulations prescribed by the Franchise Tax Board. (3) Any cash equivalent shall be taken into account in the following manner: (A) In the case of a bearer obligation, at its face amount. (B) In the case of any other cash equivalent, at its fair market value. Article 6. Interest 19101. If the tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), whether assessed by the Franchise Tax Board or the taxpayer, or any portion of the tax is not paid on or before the date prescribed for its payment, interest shall be assessed, collected, and paid in the same manner as the tax upon the unpaid amount at the adjusted annual rate established pursuant to Section 19521 from the date prescribed for its payment until it is paid. 19102. If the time for the payment of the tax or any installment agreement entered into under Section 19008 is extended, interest thereon shall be assessed, collected, and paid in the same manner as the tax at the adjusted annual rate established pursuant to Section 19521 from the date upon which the payment should have been made if no extension had been granted until the date the tax is paid. 19103. The last date prescribed for payment by Section 19102 shall be determined without regard to any notice and demand for payment issued, by reason of jeopardy (as provided in Article 5 (commencing with Section 19081) of this chapter), prior to the last date otherwise prescribed for the payment. 19104. (a) Interest upon the amount assessed as a deficiency shall be assessed, collected, and paid in the same manner as the tax at the adjusted annual rate established pursuant to Section 19521 from the date prescribed for the payment of the tax or, if the tax is paid in installments, from the date prescribed for payment of the first installment, until the date the tax is paid. If any portion of the deficiency is paid prior to the date it is assessed, interest shall accrue on such portion only to the date paid. (b) If the Franchise Tax Board makes or allows a refund or credit which it determines to be erroneous, in whole or in part, the amount erroneously made or allowed may be assessed and collected after notice and demand pursuant to Section 19051 (pertaining to mathematical errors), except that the rights of protest and appeal shall apply with respect to amounts assessable as deficiencies without regard to the running of any period of limitations provided elsewhere in this part. Notice and demand for repayment must be made within two years after the refund or credit was made or allowed, or during the period within which the Franchise Tax Board may mail a notice of proposed deficiency assessment, whichever period expires the later. Interest on amounts erroneously made or allowed shall not accrue until 30 days from the date the Franchise Tax Board mails a notice and demand for repayment as provided by this subdivision. (c) (1) In the case of any assessment of interest, the Franchise Tax Board may abate the assessment of all or any part of that interest for any period in either of the following circumstances: (A) Any deficiency attributable in whole or in part to any error or delay by an officer or employee of the Franchise Tax Board (acting in his or her official capacity) in performing a ministerial act. (B) Any payment of any tax described in Section 19033 to the extent that any delay in that payment is attributable to that officer or employee being dilatory in performing a ministerial act. For purposes of this paragraph, an error or delay shall be taken into account only if no significant aspect of that error or delay can be attributed to the taxpayer involved, and after the Franchise Tax Board has contacted the taxpayer in writing with respect to that deficiency or payment. (2) The Franchise Tax Board shall abate the assessment of all interest on any erroneous refund for which an action for recovery is provided under Section 19411 until 30 days after the date demand for repayment is made, unless either of the following has occurred: (A) The taxpayer (or a related party) has in any way caused that erroneous refund. (B) That erroneous refund exceeds fifty thousand dollars ($50,000). 19105. In the case of an individual or fiduciary, the Franchise Tax Board shall not assess interest charges pursuant to Section 19104 for the period between 45 days after the date of final review of an audit determining an additional amount is owed and the date a notice of proposed deficiency assessment is sent to the taxpayer. 19106. Except as provided in Section 19111, interest shall be imposed under Section 19101 with respect to any assessable penalty, additional amount, or addition to tax imposed under this article, as follows: (a) In the case of a penalty, additional amount, or addition to tax which, when assessed, is due and payable on notice and demand, other than a penalty imposed under Section 19131 (relating to failure to file a return on or before the due date), Section 19132 (relating to underpayment of tax), or Section 19164 (relating to imposition of the accuracy-related penalty), interest shall be imposed from the date of the notice and demand to the date of payment. (b) In the case of a penalty, additional amount, or addition to tax which is initially assessed as a deficiency, other than a penalty imposed under Section 19131 (relating to failure to file a return on or before the due date), Section 19132 (relating to underpayment of tax), or Section 19164 (relating to imposition of the accuracy-related penalty), interest shall be imposed from the date of the notice of proposed assessment to the date of payment. (c) In the case of a penalty or addition to tax imposed by Section 19131 (relating to failure to file a return on or before the due date), Section 19132 (relating to underpayment of tax), or Section 19164 (relating to imposition of the accuracy-related penalty), for the period that (1) Begins on the date on which the return of the tax with respect to which that penalty is imposed is required to be filed (including any extensions), and (2) Ends on the date of payment of that penalty or addition to tax. 19107. Where an overpayment is made by any individual for any year, and a deficiency is owing from the husband or wife of the taxpayer for the same year, and both husband and wife notify the Franchise Tax Board in writing prior to the expiration of the time within which credit for the overpayment may be allowed that the overpayment may be credited against the deficiency, no interest shall be assessed on that portion of the deficiency as is extinguished by the credit for the period of time subsequent to the date the overpayment was made. 19108. (a) Where an overpayment is made by any taxpayer for any year, and a deficiency is owing from the same taxpayer for any other year, the overpayment, if the period within which credit for the overpayment may be allowed has not expired, shall be credited on the deficiency, if the period within which assessment of the deficiency may be proposed has not expired, and the balance, if any, shall be credited or refunded to the taxpayer. No interest shall be assessed on the portion of the deficiency as is extinguished by the credit for the period of time subsequent to the date the overpayment was made. (b) For the purposes of this section the returns of a decedent and his or her estate shall be considered returns of the same taxpayer and the returns for the decedent and his or her estate filed for the year of death shall be considered returns for different taxable years. (c) This section is not intended, nor shall it be construed, as a limitation on the Franchise Tax Board's right to offset or recoup barred assessments against overpayments. 19110. (a) When the correction of an erroneous inclusion or deduction of an item or items in the computation of income of a trust, estate, parent, husband, or wife for any year results in an overpayment for that year by the trust, estate, parent, husband, or wife, and also results in a deficiency for the same year for a grantor of the trust or beneficiary of the estate or trust, or child of the parent, or spouse of the child, or the spouse of the husband or wife, the overpayment, if the period within which credit for the overpayment may be allowed has not expired, shall be credited on the deficiency, if the period within which the deficiency may be proposed has not expired, and the balance, if any, shall be credited or refunded. No interest shall be assessed on the portion of the deficiency as is extinguished by the credit for the period of time subsequent to the date the overpayment was made. (b) When the correction of an erroneous inclusion or deduction of an item or items in the computation of income of a grantor of a trust, beneficiary of an estate or trust, a child, or spouse of the child, or a husband or wife for any year results in an overpayment for that year by the grantor, beneficiary, child or husband or wife, and also results in a deficiency for the same year for the grantor's or beneficiary's trust, the beneficiary's estate, the child's parent, or spouse of the child, or the beneficiary's spouse, the overpayment, if the period within which credit for the overpayment may be allowed has not expired, shall be credited on the deficiency, if the period within which the deficiency may be proposed has not expired, and the balance, if any, shall be credited or refunded. No interest shall be assessed on the portion of the deficiency as is extinguished by the credit for the period of time subsequent to the date the overpayment was made. (c) Subdivisions (a) and (b) are not intended, nor shall they be construed as a limitation on the Franchise Tax Board's right to offset or recoup barred assessments against overpayments. 19111. If notice is made for payment of any amount, and if that amount is paid within 10 days after the date of the notice, interest under this article on the amount so paid shall not be imposed for the period after the date of the notice. 19112. Interest may be waived for any period for which the Franchise Tax Board determines that an individual or fiduciary demonstrates inability to pay that interest solely because of extreme financial hardship caused by significant disability or other catastrophic circumstance. Any waiver under this section shall be withdrawn retroactively if made because of fraud, malfeasance, misrepresentation, or omission of any material fact. 19113. If any portion of a tax is satisfied by credit of an overpayment, then no interest shall be imposed under this article on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been allowable with respect to the overpayment. 19114. Interest prescribed under this article on any tax may be assessed and collected at any time during the period within which the tax to which the interest relates may be collected. 19115. Sections 19101 to 19114, inclusive, shall not apply to any failure to pay estimated tax required by Section 19025 or 19136. Article 7. Penalties and Additions to Tax 19131. (a) If any taxpayer fails to make and file a return required by this part on or before the due date of the return or the due date as extended by the Franchise Tax Board, then, unless it is shown that the failure is due to reasonable cause and not due to willful neglect, 5 percent of the tax shall be added to the tax for each month or fraction thereof elapsing between the due date of the return (determined without regard to any extension of time for filing) and the date on which filed, but the total penalty shall not exceed 25 percent of the tax. In the case of a commencing corporation, the penalty shall apply to all tax accruable on the due date of the return. The penalty so added to the tax shall be due and payable upon notice and demand from the Franchise Tax Board. (b) In the case of an individual or fiduciary who fails to file a return of tax required by this part within 60 days of the date prescribed for filing of that return (determined with regard to any extension of time for filing), unless it is shown that the failure is due to reasonable cause and not due to willful neglect, this penalty shall not be less than the lesser of one hundred dollars ($100) or 100 percent of the amount of tax required to be shown on the return. (c) For purposes of this section, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed upon the return. (d) If any failure to file any return is fraudulent, subdivision (a) shall be applied by: (1) Substituting "15 percent" for "5 percent," and (2) Substituting "75 percent" for "25 percent." (e) This section shall not apply to any failure to pay any estimated tax required by Section 19025 or 19136. 19132. (a) (1) Unless it is shown that the failure is due to reasonable cause and not due to willful neglect, a penalty computed in accordance with paragraph (2) is hereby imposed in the case of failure to pay any of the following: (A) The amount shown as tax on any return on or before the date prescribed for payment of that tax (determined with regard to any extension of time for payment). (B) Any amount in respect of any tax required to be shown on a return which is not so shown (including an assessment made pursuant to Section 19051) within 10 days of the date of the notice and demand therefor. (C) The amount required to be paid by Section 19021, if applicable, that is not paid. (2) The penalty imposed under paragraph (1) shall consist of both of the following: (A) Five percent of the total tax unpaid (as defined in subdivision (c)). (B) An amount computed at the rate of 0.5 percent per month of the "remaining tax" (as defined in subdivision (d)) for each additional month or fraction thereof (not to exceed 40 months) during which the "remaining tax" is greater than zero. (3) The aggregate amount of penalty imposed by this subdivision shall not exceed 25 percent of the total unpaid tax and shall be due and payable upon notice and demand by the Franchise Tax Board. The tender of a check or money order does not constitute payment of the tax for purposes of this section unless the check or money order is paid on presentment. (b) The penalty prescribed by subdivision (a) shall not be assessed if, for the same taxable year, the sum of any penalties imposed under Section 19131 (relating to failure to file return) and Section 19133 (relating to failure to file return after demand) is equal to or greater than the subdivision (a) penalty. In the event the penalty imposed under subdivision (a) is greater than the sum of any penalties imposed under Sections 19131 and 19133, the penalty imposed under subdivision (a) shall be the amount which exceeds the sum of any penalties imposed under Sections 19131 and 19133. (c) For purposes of this section, total tax unpaid means the amount of tax shown on the return reduced by both of the following: (1) The amount of any part of the tax which is paid on or before the date prescribed for payment of the tax. (2) The amount of any credit against the tax which may be claimed upon the return. (d) For purposes of this section, "remaining tax" means total tax unpaid reduced by the amount (if any) of any payment of the tax. (e) If the amount required to be shown as a tax on a return is less than the amount shown as tax on that return, subdivisions (a), (c), and (d) shall be applied by substituting that lower amount. (f) No interest shall accrue on the portion of the penalty described in subparagraph (B) of paragraph (2) of subdivision (a). 19133. If any taxpayer fails or refuses to furnish any information requested in writing by the Franchise Tax Board or fails or refuses to make and file a return required by this part upon notice and demand by the Franchise Tax Board, then, unless the failure is due to reasonable cause and not willful neglect, the Franchise Tax Board may add a penalty of 25 percent of the amount of tax determined pursuant to Section 19087 or of any deficiency tax assessed by the Franchise Tax Board concerning the assessment of which the information or return was required. 19134. (a) The provisions of Section 6657 of the Internal Revenue Code, relating to bad checks, shall apply except as otherwise provided. (b) Section 6657 of the Internal Revenue Code, relating to bad checks, is modified to apply to payments made by credit card remittance or electronic funds transfer (as provided by Section 19029) in addition to payments made by check or money order. (c) For payments received prior to January 1, 1993, this section shall be applied only to payments pertaining to taxable (or income) years beginning on or after January 1, 1990. (d) For payments received on or after January 1, 1993, this section shall be applied to all payments, without regard to taxable (or income) year. 19135. Whenever any foreign corporation which fails to qualify to do business in this state or whose powers, rights, and privileges have been forfeited, or any domestic corporation which has been suspended, and which is doing business in this state, within the meaning of Section 23101, fails to make and file a return as required by this part, the Franchise Tax Board shall impose a penalty of two thousand dollars ($2,000) per income year, unless the failure to file is due to reasonable cause and not willful neglect. The penalty shall be in addition to any other penalty which may be due under this part. The penalty shall be imposed if the return is not filed within 60 days after the Franchise Tax Board sends the taxpayer a notice and demand to file the required tax return. 19136. (a) An amount shall be added to the tax imposed under Section 17041 or 17048 for any underpayment of estimated tax. The amount shall be determined in accordance with Section 6654 of the Internal Revenue Code, except as otherwise provided in this section. (b) The applicable annual rate specified in Section 6654(a) (1) of the Internal Revenue Code shall be the rate determined under Section 19521. (c) (1) For purposes of Section 6654(d) of the Internal Revenue Code, relating to the amount of required installments, any reference to "90 percent" is modified to read "80 percent." (2) Section 6654(d)(2)(C)(ii) of the Internal Revenue Code, relating to applicable percentages, is modified as follows: In the case of the following The applicable required installments: percentage is: 1st ................................... 20 2nd ................................... 40 3rd ................................... 60 4th ................................... 80 (3) The annualized income installment, determined under Section 6654(d)(2) of the Internal Revenue Code, shall not include "alternative minimum taxable income" or "adjusted self-employment income." (d) (1) Section 6654(e)(1) of the Internal Revenue Code, relating to exceptions where the tax is a small amount, shall not apply. (2) No addition to the tax shall be imposed under this section if any of the following apply: (A) The tax imposed under Section 17041 or 17048 for the preceding taxable year, minus the sum of any credits against the tax provided by Part 10 (commencing with Section 17001) or this part, or the tax computed under Section 17041 or 17048 upon the estimated income for the taxable year, minus the sum of any credits against the tax provided by Part 10 (commencing with Section 17001) or this part, is less than one hundred dollars ($100), except in the case of a separate return filed by a married person the amount shall be less than fifty dollars ($50). (B) Eighty percent or more of the tax imposed under Section 17041 or 17048 for the preceding taxable year, less any credits against the tax other than the credit allowed under Section 19002. (C) Eighty percent or more of the estimated tax for the taxable year will be paid by withholding of tax pursuant to Section 18662 or 18666 of this code or Section 13020 of the Unemployment Insurance Code. (D) Eighty percent or more of the adjusted gross income for the taxable year consists of items subject to withholding pursuant to Section 18662 or 18666 of this code or Section 13020 of the Unemployment Insurance Code. (3) Paragraph (2) shall not apply if the employee files a false or fraudulent withholding exemption certificate for the taxable year, or the taxpayer provides a false or fraudulent document or documents to obtain reduced withholding at source for the taxable year. (e) Section 6654(f) of the Internal Revenue Code shall not apply and for purposes of this section the term "tax" means the tax imposed under Section 17041 or 17048, less any credits against the tax provided by Part 10 (commencing with Section 17001) or this part, other than the credit provided by subdivision (a) of Section 19002. (f) The credit for tax withheld on wages, as specified in Section 6654(g) of the Internal Revenue Code, shall be the credit allowed under subdivision (a) of Section 19002. (g) This section shall apply to a nonresident individual. 19141. Upon certification by the Secretary of State pursuant to subdivision (a) of Section 2204 of the Corporations Code, the Franchise Tax Board shall assess a penalty of two hundred fifty dollars ($250). Upon certification by the Secretary of State pursuant to subdivision (a) of Section 6810 or subdivision (a) of Section 8810 of the Corporations Code, the Franchise Tax Board shall assess a penalty of fifty dollars ($50). Any such penalty shall be a final assessment due and payable at the time of assessment but no interest shall accrue thereon. The assessment shall be collected as other taxes, interest, and penalties are collected by the Franchise Tax Board unless the Secretary of State decertifies the name of the corporation as provided in subdivision (e) or (f) of Section 2204, subdivision (e) of Section 6810, or subdivision (e) of Section 8810 of the Corporations Code. 19141.5. (a) (1) The provisions of Section 6038A of the Internal Revenue Code, relating to information with respect to certain foreign-owned corporations, shall apply. (2) A penalty shall be imposed under this part for failure to furnish information or maintain records and that penalty shall be determined in accordance with the provisions of Section 6038A of the Internal Revenue Code. (3) The provisions of Section 11314 of Public Law 101-508, relating to application of amendments made by Section 7403 of the Revenue Reconciliation Act of 1989 to taxable years beginning on or before July 10, 1989, shall apply. (4) Section 6038A(e) of the Internal Revenue Code, relating to enforcement of requests for certain records, is modified as follows: (A) Each reference to Section 7602, 7603, or 7604 of the Internal Revenue Code shall instead refer to Section 19504. (B) Each reference to "summons" shall instead refer to "subpoena duces tecum." (C) Section 6038A(e)(4)(C) of the Internal Revenue Code shall refer to "superior courts of the State of California for the Counties of Los Angeles, Sacramento, and San Diego, and for the City and County of San Francisco," instead of "United States district court for the district in which the person (to whom the summons is issued) resides or is found." (b) (1) The provisions of Section 6038B of the Internal Revenue Code, relating to notice of certain transfers to foreign persons, shall apply. (2) A penalty shall be imposed under this part for failure to furnish information or maintain records and that penalty shall be determined in accordance with the provisions of Section 6038B of the Internal Revenue Code. (c) (1) The provisions of Section 6038C of the Internal Revenue Code, relating to information with respect to foreign corporations engaged in United States business, shall apply. (2) A penalty shall be imposed under this part for failure to furnish information or maintain records and that penalty shall be determined in accordance with the provisions of Section 6038C of the Internal Revenue Code. (3) Section 6038C(d) of the Internal Revenue Code, relating to enforcement of requests for certain records, is modified as follows: (A) Each reference to Section 7602, 7603, or 7604 of the Internal Revenue Code shall instead refer to Section 19504. (B) Each reference to "summons" shall instead refer to "subpoena duces tecum." (d) For purposes of this part, the information required to be filed with the Franchise Tax Board pursuant to this section shall be a copy of the information filed with the Internal Revenue Service. 19142. Except as provided in Sections 19147 and 19148, in the case of any underpayment of tax imposed under Part 11 (commencing with Section 23001) there shall be added to the tax for the income year an amount determined at the rate established under Section 19521 on the amount of the underpayment for the period of the underpayment. 19144. For the purposes of Section 19142 the amount of the underpayment shall be the excess of (a) (1) The amount of the installment which would be required to be paid if the estimated tax were equal to 95 percent of the tax shown on the return for the income year, or (2) in the case of the tax imposed by Article 3 (commencing with Section 23181) of Chapter 2 of Part 11 an amount equal to 95 percent of the lesser of the tax computed at the rate provided by Section 19024 (but otherwise on the basis of the facts shown on the return and the law applicable to the income year), or the tax shown on the return for the income year as prescribed by Section 19021, or (3) if no return was filed, 95 percent of the tax for that year, over (b) The amount, if any, of the installment paid on or before the last date prescribed for payment. 19145. For purposes of Section 19142, the period of the underpayment shall run from the date the installment was required to be made to whichever of the following date is the earlier: (a) The 15th day of the third month following the close of the income year, except in the case of a corporation which is subject to the tax imposed under Section 23731, in which case "fifth" shall be substituted for "third." (b) With respect to any portion of the underpayment, the date on which that portion is paid. For purposes of this subdivision, a payment of estimated tax on any installment date shall be considered a payment of any previous underpayment only to the extent the payment exceeds the amount of the installment determined under subdivision (a) of Section 19144 for the installment date. 19147. (a) Notwithstanding Sections 19142 to 19145, inclusive, the addition to the tax with respect to any underpayment of any installment shall not be imposed if the total amount of all payments of estimated tax paid on or before the last date prescribed for the payment of the installment equals or exceeds the amount which would have been required to be paid on or before that date if the estimated tax were whichever of the following is the lesser: (1) (A) The tax shown on the return of the taxpayer for the preceding income year if a return showing a liability for tax was filed by the taxpayer for the preceding year and that preceding year was a year of 12 months. The tax shown on the return, in the case of the tax imposed by Article 3 (commencing with Section 23181) of Chapter 2 of Part 11, means the amount of tax shown on the return for the income year as prescribed in Section 19021. (B) In the case of a large corporation, subparagraph (A) shall not apply, except as provided in clauses (i) and (ii). (i) Subparagraph (A) shall apply for purposes of determining the amount of the first required installment for any income year. (ii) Any reduction in the first required installment by reason of clause (i) shall be recaptured by increasing the amount of the next required installment by the amount of that reduction. (2) (A) An amount equal to 95 percent of the tax for the income year computed by placing on an annualized basis the taxable income: (i) For the first three months of the income year, in the case of the installment required to be paid in the fourth month, (ii) For the first three months or for the first five months of the income year, in the case of the installment required to be paid in the sixth month, (iii) For the first six months or for the first eight months of the income year in the case of the installment required to be paid in the ninth month, and (iv) For the first nine months or for the first 11 months of the income year, in the case of the installment required to be paid in the 12th month of the taxable year. (B) For purposes of this paragraph, the taxable income shall be placed on an annualized basis by (i) Multiplying by 12 the taxable income referred to in subparagraph (A), and (ii) Dividing the resulting amount by the number of months in the income year referred to in subparagraph (A). "Taxable income" as used in this paragraph means, "net income" includable in the measure of tax or "alternative minimum taxable income" (as defined by Section 23455). (C) In the case of any corporation which is subject to the tax imposed under Section 23731, each of the following shall apply: (i) Any reference to taxable income shall be treated as including a reference to unrelated business taxable income. (ii) Clauses (i) and (ii) of subparagraph (A) shall be applied by substituting "two months" for "three months." (iii) Clause (ii) of subparagraph (A) shall be applied by substituting "four months" for "five months." (iv) Clause (iii) of subparagraph (A) shall be applied by substituting "seven months" for "eight months." (v) Clause (iv) of subparagraph (A) shall be applied by substituting "ten months" for "eleven months." (3) Ninety-five percent or more of the tax for the income year was paid by withholding of tax pursuant to Section 18662. (4) Ninety-five percent or more of the net income for the income year consists of items from which an amount was withheld pursuant to Section 18662 and the amount of the first installment, including payments applied pursuant to subdivision (c) of Section 19025, equals at least the minimum franchise tax specified in Section 23153. (b) (1) For purposes of this section, "large corporation" means any corporation or bank if that corporation or bank (or any predecessor corporation or bank) had taxable income (computed without regard to net operating loss deductions) of one million dollars ($1,000,000) or more for any income year during the testing period. (2) For purposes of this subdivision, "testing period" means the three income years immediately preceding the income year involved. 19148. (a) Notwithstanding Sections 19142 to 19147, inclusive, the addition to the tax with respect to any underpayment of any installment shall not be imposed if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment of that installment equals or exceeds 95 percent of the amount determined under subdivision (b). (b) The amount determined under this subdivision for any installment shall be determined in the following manner: (1) Take the net income for all months during the income year preceding the filing month, (2) Divide that amount by the base period percentage for all months during the income year preceding the filing month, (3) Determine the tax on the amount determined under paragraph (2), and (4) Multiply the tax computed under paragraph (3) by the base period percentage for the filing months and all months during the income year preceding the filing month. (c) For purposes of this subdivision: (1) The base period percentage for any period of months shall be the average percent which the net income for the corresponding months in each of the three preceding income years bears to the net income for the three preceding income years. (2) "Filing month" means the month in which the installment is required to be paid. (3) This subdivision shall only apply if the base period percentage for any six consecutive months of the income year equals or exceeds 70 percent. (4) The Franchise Tax Board may by regulations provide for the determination of the base period percentage in the case of reorganizations, new corporations, and other similar circumstances. 19149. (a) Notwithstanding any other provision of Sections 19142 to 19151, inclusive, if the amount of estimated tax due and payable under Section 19025 is only the minimum franchise tax imposed by Section 23153, then the addition to the tax with respect to any underpayment of any installment imposed by Section 19142 shall be calculated only on the basis of the amount of the minimum franchise tax. (b) This section shall not apply to a large corporation as defined in subdivision (b) of Section 19147. 19150. The application of Sections 19142 to 19151, inclusive, to income years of less than 12 months shall be in accordance with regulations prescribed by the Franchise Tax Board. 19151. Notwithstanding Sections 19142 to 19150, inclusive, the addition to the tax with respect to underpayment of any installment shall not be imposed on an exempt corporation whose exemption is retroactively revoked unless the corporation has notice that the estimated tax should have been paid. The denial of the organization's exemption application or the revocation of its exemption by the Internal Revenue Service normally satisfies the notice requirement. 19161. (a) No addition to the tax shall be made under Section 19132, 19136, or 19142 for failure to make timely payment of tax with respect to a period during which a case is pending under Title 11 of the United States Code in either of the following situations: (1) If that tax was incurred by the estate and the failure occurred pursuant to an order of the court finding probable insufficiency of funds of the estate to pay administrative expenses. (2) If: (A) That tax was incurred by the debtor before the earlier of the order for relief or (in the involuntary case) the appointment of a trustee, and (B) (i) The petition was filed before the due date prescribed by law (including extensions) for filing a return of that tax, or (ii) The date for making the addition to the tax occurs on or after the day on which the petition was filed. (b) Subdivision (a) shall not apply to any liability for an addition to the tax which arises from the failure to pay or deposit a tax withheld or collected from others and required to be paid to the State of California. 19164. (a) (1) An accuracy-related penalty shall be imposed under this part and shall be determined in accordance with the provisions of Section 6662 of the Internal Revenue Code, relating to imposition of accuracy-related penalty. (2) With respect to banks and corporations, this subdivision shall apply to all of the following: (A) All income years beginning on or after January 1, 1990. (B) Any other income year for which an assessment is made after July 16, 1991. (b) A fraud penalty shall be imposed under this part and shall be determined in accordance with the provisions of Section 6663 of the Internal Revenue Code, relating to imposition of fraud penalty. (c) The provisions of Section 6664 of the Internal Revenue Code, relating to definitions and special rules, shall apply. (d) The provisions of Section 6665 of the Internal Revenue Code, relating to applicable rules, shall apply. 19166. A penalty shall be imposed for understatement of any taxpayer's liability by a tax return preparer. The penalty shall be determined in accordance with Section 6694 of the Internal Revenue Code, except that Section 6694(c) of the Internal Revenue Code shall not be applicable and, in lieu thereof, the following shall apply: (a) If, within 30 days after the day on which notice and demand of any penalty under Section 6694(a) or 6694(b) of the Internal Revenue Code is made against any person who is an income tax return preparer, that person pays an amount which is not less than 15 percent of the amount of that penalty and files a claim for refund of the amount so paid, no levy or proceeding in court for the collection of the remainder of that penalty shall be made, begun, or prosecuted until the final resolution of a proceeding begun as provided in subdivision (b). Notwithstanding Section 19381, the beginning of that proceeding or levy during the time that prohibition is in force may be enjoined in a proceeding in the superior court. (b) If, within 30 days after the day on which a claim for refund of any partial payment of any penalty under Section 6694 (a) or 6694(b) of the Internal Revenue Code is denied (or, if earlier, within 30 days after the expiration of six months after the day on which the claim for refund has been filed), the income tax return preparer fails to begin a proceeding in the superior court for the determination of his or her liability for that penalty, subdivision (a) shall cease to apply with respect to that penalty, effective on the day following the close of the applicable 30-day period referred to in this subdivision. (c) The running of the period of limitations provided in Section 19371 on the collection by levy or by a proceeding in court in respect of any penalty described in subdivision (a) shall be suspended for the period during which the Franchise Tax Board is prohibited from collecting by levy or a proceeding in court. 19167. A penalty shall be imposed under this section for any of the following: (a) In accordance with Section 6695(a) of the Internal Revenue Code, for failure to furnish a copy of the return to the taxpayer, as required by Section 19255. (b) In accordance with Section 6695(c) of the Internal Revenue Code, for failure to furnish an identifying number, as required by Section 19254. (c) In accordance with Section 6695(d) of the Internal Revenue Code, for failure to retain a copy or list, as required by Section 19255. 19168. The following rules shall apply to any penalty imposed under Section 19166 or 19167: (a) The penalties shall be in addition to any other penalties provided by law. (b) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not be applicable. 19169. (a) In addition to the criminal penalty provided by Section 19712, any tax preparer who endorses or otherwise negotiates (directly or through an agent) any warrant made in respect of the taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) which is issued to a taxpayer (other than the tax preparer) shall pay a penalty of two hundred fifty dollars ($250) with respect to each warrant. The preceding sentence shall not apply with respect to the deposit by a bank (as defined by Section 581 of the Internal Revenue Code) of the full amount of the warrant in the taxpayer's account in that bank for the benefit of the taxpayer. (b) For purposes of subdivision (a), "tax preparer" means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) or any claim for refund of tax imposed by Part 10 or Part 11. For purposes of the preceding sentence, the preparation of a substantial portion of a return or claim for refund shall be treated as if it were the preparation of that return or claim for refund. A person shall not be a "tax preparer" merely because the person does any of the following: (1) Furnishes typing, reproducing, or other mechanical assistance. (2) Prepares a return or claim for refund of the employer (or of an officer or employee of the employer) by whom that person is regularly and continuously employed. (3) Prepares as a fiduciary a return or claim for refund for any person. (c) This section shall not apply where the tax preparer has advanced the taxpayer an amount of money equal to or greater than the amount of the taxpayer's refund. 19172. (a) In addition to the penalty imposed by Section 19706 (relating to willful failure to file return, supply information, or pay tax), if any partnership required to file a return under Section 18633 for any taxable year does either of the following: (1) Fails to file the return at the time prescribed therefor (determined with regard to any extension of time for filing). (2) Files a return which fails to show the information required under Section 18633, that partnership shall be liable for a penalty determined under subdivision (b) for each month (or fraction thereof) during which that failure continues (but not to exceed five months), unless it is shown that the failure is due to reasonable cause. (b) For purposes of subdivision (a), the amount determined under this subdivision for any month is the product of the following: (1) Ten dollars ($10), multiplied by (2) The number of persons who were partners in the partnership during any part of the taxable year. (c) The penalty imposed by subdivision (a) shall be assessed against the partnership. (d) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a). 19173. (a) In addition to the penalty imposed by Section 19701 (relating to willful failure to file a return or supply information), if any person required to file a return under Section 18648 for any calendar year does any of the following: (1) fails to file a return within 60 days of a request, (2) files a return which fails to show the information required under Section 18648, or (3) fails to furnish the required statement to each investor, that person shall be liable for a penalty determined under subdivision (b), unless it is shown that such a failure is due to reasonable cause. (b) For purposes of subdivision (a), the amount determined under this subdivision is the product of one thousand dollars ($1,000), multiplied by the number of investors required to be shown on the return. If the number of investors cannot be determined by the Franchise Tax Board, the amount determined under this subdivision shall be one hundred thousand dollars ($100,000). (c) The penalty imposed by subdivision (a) shall be assessed against that person required to file a return under Section 18648. (d) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a). 19174. (a) Any person who has a duty to file returns under Section 18648 and fails to keep the records required by subdivision (d) of Section 18648 shall pay a penalty for each calendar year for which there is any failure to keep those records, unless it is shown that the failure is due to reasonable cause. (b) The penalty for any person for any calendar year shall be one thousand dollars ($1,000), multiplied by the number of investors with respect to whom that failure occurs in the calendar year reporting period. If the number of investors cannot be determined by the Franchise Tax Board, the amount determined under this subdivision for any calendar year reporting period shall be one hundred thousand dollars ($100,000). (c) The penalty under this section shall be assessed against the person required to file a return under Section 18648. (d) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a). 19175. (a) In addition to the penalty imposed by Section 19183 (relating to failure to file information returns), if any person or entity fails to report amounts paid as remuneration for personal services as required under Section 13050 of the Unemployment Insurance Code or Sections 18637 and 18638 on the date prescribed therefor (determined with regard to any extension of time for filing), that person or entity may be liable for a penalty determined under subdivision (b). (b) For purposes of subdivision (a), the amount determined under this subdivision is the maximum rate under Section 17041 multiplied by the unreported amounts paid as remuneration for personal services. (c) The penalty imposed by subdivision (a) shall be assessed against that person or entity required to file a return under Section 13050 of the Unemployment Insurance Code or Section 18637 or 18638. (d) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a). (e) The penalty imposed under subdivision (a) shall be in lieu of the penalty imposed under Section 13052.5 of the Unemployment Insurance Code (relating to unreported compensation). In the event that a penalty is imposed under this section and Section 13052.5 of the Unemployment Insurance Code, only the penalty imposed under Section 13052.5 of the Unemployment Insurance Code shall apply. 19176. (a) In addition to any criminal penalty provided by law if: (1) Any individual makes a statement under Section 13040, 13041, or 13042 of the Unemployment Insurance Code which results in a decrease in the amounts deducted and withheld under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code; and (2) As of the time the statement was made, there was no reasonable basis for the statement, the individual shall pay a penalty of five hundred dollars ($500) for the statement. Any penalty so imposed shall be paid upon notice and demand from the Franchise Tax Board and shall be collected as a tax. (b) The Franchise Tax Board may waive (in whole or in part) the penalty imposed under subdivision (a) if the taxes imposed under Part 10 (commencing with Section 17001) with respect to the individual for the taxable year are equal to or less than the sum of both of the following: (1) The credits against those taxes allowed by Chapter 2 (commencing with Section 17041) of Part 10 and Section 19002. (2) The payments of estimated tax which are considered payments on account of those taxes. (c) This section supersedes Section 13101 of the Unemployment Insurance Code and shall apply to acts and failures to act after December 31, 1981. 19177. A penalty shall be imposed for promoting abusive tax shelters. The penalty shall be determined in accordance with the provisions of Section 6700 of the Internal Revenue Code. 19178. A penalty shall be imposed for aiding and abetting understatement of tax liability. The penalty shall be determined in accordance with Section 6701 of the Internal Revenue Code. 19179. A penalty shall be imposed for filing a frivolous return. The penalty shall be determined in accordance with Section 6702 of the Internal Revenue Code, except that it shall be applied to returns required to be filed under this part. 19180. (a) In any proceeding involving the issue of whether or not any person is liable for a penalty under Section 19177, 19178, or 19179, the burden of proof with respect to that issue shall be on the Franchise Tax Board. (b) Sections 19041 to 19049, inclusive, (relating to deficiency procedures) shall not apply with respect to the assessment or collection of the penalties provided by Section 19177, 19178, or 19179. (c) (1) If, within 30 days after the day on which notice and demand of any penalty under Section 19177, 19178, or 19179 is made against any person, that person pays an amount which is not less than 15 percent of the amount of that penalty and files a claim for refund of the amount so paid, no levy or proceeding in court for the collection of the remainder of that penalty shall be made, begun, or prosecuted until the final resolution of a proceeding begun as provided in paragraph (2). Notwithstanding Section 19381, the beginning of that proceeding or levy during the time that prohibition is in force may be enjoined by a proceeding in the superior court. (2) If, within 30 days after the day on which the claim for refund of any partial payment of any penalty under Section 19177, 19178, or 19179 is denied (or, if earlier, within 30 days after the expiration of six months after the day on which a claim for refund was filed), the person fails to begin a proceeding in the superior court for the determination of the liability for that penalty, paragraph (1) shall cease to apply with respect to that penalty, effective on the day following the close of the applicable 30-day period referred to in this paragraph. (3) The running of the period of limitations provided in Section 19371 on the collection by levy or by a proceeding in court in respect of any penalty described in paragraph (1) shall be suspended for the period during which the Franchise Tax Board is prohibited from collecting by levy or a proceeding in court. 19181. A penalty shall be imposed for failing to meet the requirements of Section 18649, relating to original issue discount reporting requirements with respect to any person subject to tax under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). The penalty shall be determined in accordance with Section 6706 of the Internal Revenue Code. 19182. (a) A penalty shall be imposed for failure to furnish information pursuant to Section 18547 and the penalty amount shall be determined in accordance with Section 6707 of the Internal Revenue Code. (b) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not apply in respect of the assessment or collection of any penalty imposed under this section. 19183. (a) (1) A penalty shall be imposed for failure to file correct information returns, as required by this part, and that penalty shall be determined in accordance with Section 6721 of the Internal Revenue Code. (2) Section 6721(e) of the Internal Revenue Code is modified as follows: (A) To refer to subdivision (a) of Section 18641 in lieu of Section 6045(a) of the Internal Revenue Code. (B) The reference to Section 6041A(b) of the Internal Revenue Code shall not apply. (b) (1) A penalty shall be imposed for failure to furnish correct payee statements as required by this part, and that penalty shall be determined in accordance with Section 6722 of the Internal Revenue Code. (2) Section 6722(c) of the Internal Revenue Code is modified as follows: (A) To refer to subdivision (b) of Section 18641 in lieu of Section 6045(b) of the Internal Revenue Code. (B) The references to Sections 6041A(b) and 6041A(e) of the Internal Revenue Code shall not apply. (c) A penalty shall be imposed for failure to comply with other information reporting requirements under this part, and that penalty shall be determined in accordance with Section 6723 of the Internal Revenue Code. (d) (1) The provisions of Section 6724 of the Internal Revenue Code relating to waiver, definitions, and special rules, shall apply, except as otherwise provided. (2) Section 6724(d)(1) is modified as follows: (A) The following references are substituted: (i) Section 18637, in lieu of Section 6041(a) of the Internal Revenue Code. (ii) Section 18638, in lieu of Section 6041A(a) of the Internal Revenue Code. (iii) Subdivision (a) of Section 18640, in lieu of Section 6044(a)(1) of the Internal Revenue Code. (iv) Subdivision (a) of Section 18641, in lieu of Section 6045(a) of the Internal Revenue Code. (v) Subdivision (a) of Section 18644, in lieu of Section 6050A(a) of the Internal Revenue Code. (vi) Subdivision (a) of Section 18647, in lieu of Section 6052(a) of the Internal Revenue Code. (B) References to Sections 4093(c)(4), 4093(e), 4101(d), 6041 (b), 6041A(b), 6045(d), 6051(d), and 6053(c)(1) of the Internal Revenue Code shall not apply. (3) Section 6724(d)(2) is modified as follows: (A) The following references are substituted: (i) Subdivision (b) of Section 18505, in lieu of Section 6034A of the Internal Revenue Code. (ii) Subdivision (a) of Section 18636, in lieu of Section 6039(a) of the Internal Revenue Code. (iii) Subdivision (b) of Section 18640, in lieu of Section 6044(e) of the Internal Revenue Code. (iv) Subdivision (b) of Section 18641, in lieu of Section 6045(b) of the Internal Revenue Code. (v) Subdivision (b) of Section 18644, in lieu of Section 6050A(b) of the Internal Revenue Code. (vi) Subdivision (b) of Section 18647, in lieu of Section 6052(b) of the Internal Revenue Code. (B) References to Sections 4093(c)(4)(B), 6031(b), 6037(b), 6041A(e), 6045(d), 6051(d), 6053(b), and 6053(c) of the Internal Revenue Code shall not apply. (e) In the case of each failure to provide a written explanation as required by Section 402(f) of the Internal Revenue Code, at the time prescribed therefor, unless it is shown that the failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Franchise Tax Board and in the same manner as tax, by the person failing to provide that written explanation, an amount equal to ten dollars ($10) for each failure, but the total amount imposed on that person for all those failures during any calendar year shall not exceed five thousand dollars ($5,000). (f) Any penalty imposed by this part shall be paid on notice and demand by the Franchise Tax Board and in the same manner as tax. 19184. (a) The person required by subdivision (c) of Section 17507 to file a report regarding an individual retirement account or individual retirement annuity shall pay a penalty of fifty dollars ($50) for each failure, unless it is shown that the failure is due to reasonable cause. (b) (1) Any individual who: (A) Is required to furnish information under Section 17508 as to the amount designated nondeductible contributions made for any taxable year, and (B) Overstates the amount of those contributions made for that taxable year, shall pay a penalty of one hundred dollars ($100) for each overstatement unless it is shown that the overstatement is due to reasonable cause. (2) Any individual who fails to file a form required to be filed by the Franchise Tax Board under Section 17508 shall pay a penalty of fifty dollars ($50) for each failure unless it is shown that the failure is due to reasonable cause. (c) Article 3 (commencing with Section 19031) of this chapter (relating to deficiency assessments) shall not apply in respect of the assessment or collection of any penalty imposed under this section. CHAPTER 5. COLLECTION OF TAX Article 1. Judgment for Tax 19201. If any amount due under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or any amount that may be collected by the Franchise Tax Board as though it were a tax, is not paid, the Franchise Tax Board may file in the Office of the County Clerk of Sacramento County, or any other county, a certificate specifying the amount due, the name and last known address of the taxpayer liable for the amount due, and the fact that the Franchise Tax Board has complied with all provisions of the law in the computation and levy of the amount due, and a request that judgment be entered against the taxpayer in the amount set forth in the certificate. 19202. The county clerk immediately upon the filing of the certificate shall enter a judgment for the people of the State of California against the taxpayer in the amount set forth in the certificate. The county clerk may file the judgment in a loose-leaf book entitled "Personal Income Tax Judgments" or "Bank and Corporation Tax Judgments," as appropriate. 19203. An abstract or a copy of the judgment may be recorded with the county recorder of any county. From the time of the recording, the amount set forth constitutes a lien upon all real property of the taxpayer in the county, owned by the taxpayer or afterward and before the lien expires acquired by the taxpayer. Such lien has the force, effect, and priority of a judgment lien and continues for 10 years from the date of the recording unless sooner released or otherwise discharged. 19204. Within 10 years from the date of the recording or within 10 years from the date of the last extension of the lien in the manner provided in this section, the lien may be extended by recording in the office of the county recorder of any county an abstract or copy of the judgment. From the time of the recording the lien extends to the property in the county for 10 years unless sooner released or otherwise discharged. 19205. Execution shall issue upon the judgment upon request of the Franchise Tax Board in the same manner as execution may issue upon other judgments, and sales shall be held under the execution as prescribed in the Code of Civil Procedure. 19206. The Franchise Tax Board may, at any time, release all or any portion of the property subject to any lien provided for in this article from the lien or subordinate the lien to other liens if it determines that the taxes are sufficiently secured by a lien on other property of the taxpayer or that the release or subordination of the lien will not endanger or jeopardize the collection of the taxes. 19207. The Franchise Tax Board may release any lien imposed under Section 19203 or 19204 if it finds that the liability represented by the lien, including any interest accrued thereon, is legally unenforceable. 19208. A certificate by the Franchise Tax Board to the effect that any property has been released from a lien or that the lien has been subordinated to other liens is conclusive evidence that the property has been released or that the lien has been subordinated as provided in the certificate. 19209. If the Franchise Tax Board records a certificate of release pursuant to Section 19206 or 19207, the cost of recording is an obligation of the taxpayer and may be collected from the taxpayer in any manner provided in this part for the collection of the tax. Article 2. Lien of Tax 19221. (a) If any taxpayer or person fails to pay any liability imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) at the time that it becomes due and payable, the amount thereof, (including any interest, additional amount, addition to tax, or penalty, together with any costs that may accrue in addition thereto) shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts of any liability disclosed on a return filed on or before the date payment is due (with regard to any extension of time to pay), the date the amount is established on the records of the Franchise Tax Board, except that in no case will it be prior to the day after such payment due date; (2) For amounts of any liability disclosed on a return filed after the date payment is due (with regard to any extension of time to pay), the date the amount is established on the records of the Franchise Tax Board; (3) For amounts of any liability determined under Section 19081 or 19082 (pertaining to jeopardy assessments), the date the notice of the Franchise Tax Board's finding is mailed or issued; (4) For all other amounts of liability, the date the assessment is final. 19222. For the purposes of this section, if any certified, treasurer's, or cashier's check (or other guaranteed draft), or any money order received in payment of any liability imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part is not duly paid, the state shall, in addition to its right to exact payment from the party originally indebted therefor, have a perfected and enforceable state tax lien for the amount of that check (or draft) upon all the assets of the financial institution on which drawn or for the amount of that money order upon all the assets of the issuer thereof. The lien referred to in the preceding sentence shall be subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. 19223. Upon recordation or filing of a notice of state tax lien pursuant to Section 7171 of the Government Code by the Franchise Tax Board for any taxes due from the grantor of a trust on income of the trust which is taxable to the grantor under Part 10 (commencing with Section 17001), and upon its giving notice of the recording or filing pursuant to Section 7171 of the Government Code to the fiduciary of the trust, or in case there is more than one fiduciary to any one of the fiduciaries, the amount of the taxes constitutes a lien upon all the real or personal property of the trust in the county owned by the trust or afterwards and before the lien expires acquired by the trust. The lien has the force, effect, and priority of a lien created pursuant to Section 19221. 19224. The notice required to be given by Section 19223 may be served upon the fiduciary personally, or by mail; if by mail, service shall be made pursuant to Section 1013 of the Code of Civil Procedure and shall be addressed to the fiduciary at his or her address as it appears in the records of the Franchise Tax Board. Article 3. Warrant for Collection of Tax 19231. The Franchise Tax Board or its authorized representative may issue a warrant for the collection of any tax, interest, or penalty and for the enforcement of any lien. 19232. The warrant shall be directed to any sheriff, constable, marshal, or the California State Police and shall have the same force and effect as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner and with the same force and effect as a levy of and sale pursuant to a writ of execution. 19233. The Franchise Tax Board shall pay or advance to the sheriff, constable, marshal, or the California State Police the same fees, commissions, and expenses as are provided by law for similar services pursuant to a writ of execution. The Franchise Tax Board, and not the court, shall approve the fees for publication in a newspaper. 19234. The fees, commissions, and expenses are an obligation of the taxpayer and may be collected from the taxpayer by virtue of the warrant or in any other manner provided in this part for the collection of a tax. 19235. Whenever property is levied upon by warrant pursuant to Section 19231, the reasonable costs associated with the sale of that property, including, but not limited to, appraisers' fees, auctioneers' fees, and advertising fees are an obligation of the taxpayer and may be collected from the taxpayer by virtue of the warrant or in any other manner provided in this part for the collection of tax. Article 4. Miscellaneous Provisions 19251. The remedies of the state provided for in this chapter are cumulative, and no action taken by the Franchise Tax Board constitutes an election by the state to pursue any remedy to the exclusion of any other remedy for which provision is made in this part. 19252. In all proceedings under this chapter the Franchise Tax Board may act on behalf of the people of the State of California. 19253. The amounts required to be paid by any person under this part together with interest and penalties shall be satisfied first in any of the following cases: (a) Whenever the person is insolvent. (b) Whenever the person makes a voluntary assignment of assets. (c) Whenever the estate of the person in the hands of executors, administrators, or heirs is insufficient to pay all the debts due from the deceased. (d) Whenever the estate and effects of an absconding, concealed, or absent person required to pay any amount under this part are levied upon by process of law. This section does not give the state a preference over any lien or security interest which was recorded or perfected prior to the time when the state records or files its lien as provided in Section 7171 of the Government Code. The preference given to the state by this section shall be subordinate to the preferences given to claims for personal services by Sections 1204 and 1206 of the Code of Civil Procedure. 19254. (a) (1) If any person fails to pay any amount of tax, penalty, addition to tax, interest, or other liability imposed and delinquent under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, a collection cost recovery fee shall be imposed if the Franchise Tax Board has mailed notice to that person for payment that advises that continued failure to pay the amount due may result in collection action, including the imposition of a collection cost recovery fee. The collection cost recovery fee shall be in the amount of: (A) In the case of an individual, partnership, or fiduciary, eighty-eight dollars ($88) or an amount as adjusted under subdivision (b). (B) In the case of a bank or corporation, one hundred sixty-six dollars ($166) or an amount as adjusted under subdivision (b). (2) If any person fails or refuses to make and file a tax return required by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, within 25 days after formal legal demand to file the tax return is mailed to that person by the Franchise Tax Board, the Franchise Tax Board shall impose a filing enforcement cost recovery fee in the amount of: (A) In the case of an individual, partnership, or fiduciary, fifty-one dollars ($51) or an amount as adjusted under subdivision (b). (B) In the case of a bank or corporation, one hundred nineteen dollars ($119) or an amount as adjusted under subdivision (b). (b) For fees imposed under this section during the fiscal year 1993-94 and fiscal years thereafter, the amount of those fees shall be set to reflect actual costs and shall be specified in the annual Budget Act. (c) Interest shall not accrue with respect to the cost recovery fees provided by this section. (d) The amounts provided by this section are obligations imposed by this part and may be collected in any manner provided under this part for the collection of a tax. (e) Subdivision (a) is operative with respect to the notices for payment or formal legal demands to file, either of which is mailed on or after September 15, 1992. (f) The Franchise Tax Board shall determine the total amount of the cost recovery fees collected or accrued through June 30, 1993, and shall notify the Controller of that amount. The Controller shall transfer that amount to the Franchise Tax Board, and that amount is hereby appropriated to the board for the 1992-93 fiscal year for reimbursement of its collection and filing enforcement efforts. 19256. The Franchise Tax Board may, in the allowance of any amount as a credit or refund, or in the collection of any amount as a deficiency or underpayment, of any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), disregard a fractional part of a dollar unless it amounts to fifty cents ($0.50) or more, in which case it shall be increased to one dollar ($1). 19262. (a) At any time within which an action can be brought to collect any delinquent amounts as provided in Article 2 (commencing with Section 19371) of Chapter 6, the Franchise Tax Board may collect the tax, together with penalties and interest, in the following manner: The Franchise Tax Board shall seize any personal property owned by the taxpayer against whom the tax is assessed, and thereafter sell at public auction the property so seized, or a sufficient portion thereof, to pay the tax due hereunder, together with any interest, and any penalty or penalties imposed hereby for that delinquency, and any and all costs that may have been incurred on account of the seizure and sale. Notice of the intended sale and the time and place thereof, shall be given to the delinquent taxpayer and to all persons appearing of record to have an interest in the property, in writing, at least 10 days before the date set for the sale by enclosing the notice in an envelope addressed to the taxpayer at its last known place of business in this state if any, and, in the case of any person appearing of record to have an interest in the property, addressed to that person at the last known place of residence, if any, and depositing the same in the United States mail, postage prepaid, and by publication for at least 10 days before the date set for the sale in a newspaper of general circulation published in the county in which the property seized is to be sold; provided, however, that if there be no newspaper of general circulation in that county then by the posting of the notice in three public places in the county for the 10-day period. The notice shall contain a description of the property to be sold, together with a statement of the amount of the taxes, interest, penalties, and costs, the name of the taxpayer, and the further statement that, unless the taxes, interest, penalties, and costs are paid on or before the time fixed in the notice for the sale, the property, or so much thereof as may be necessary, will be sold in accordance with law and the notice. (b) For purposes of this section, the term tax shall include any liability imposed pursuant to Article 7 (commencing with Section 19131) of Chapter 4, and any interest imposed thereon. 19263. At any sale authorized by Section 19262, the property shall be sold by the Franchise Tax Board or its duly authorized agent in accordance with law and the notice of sale, and the Franchise Tax Board shall deliver to the purchaser a bill of sale for the property so sold and the bill of sale shall vest title in the purchaser. The unsold portion of any property so seized may be left at the place of sale at the risk of the taxpayer. If, upon any sale, the moneys so received exceed the amount of all taxes, interest, penalties and costs due the state from the taxpayer, any excess shall be returned to the taxpayer and a receipt therefor obtained. However, if any person having an interest in or lien upon the property has filed with the Franchise Tax Board prior to any sale notice of the interest or lien, the Franchise Tax Board shall withhold any excess pending a determination of the rights of the respective parties thereto by a court of competent jurisdiction. If, for any reason, the receipt of the taxpayer is not available, the Franchise Tax Board shall deposit the excess moneys with the Treasurer, as trustee for the owner, subject to the order of the taxpayer or his or her trust or estate, or in the case of a bank or corporation, its successor through reorganization, merger, or consolidation, or its stockholders upon dissolution. Article 5. Collection of Child Support 19271. (a) When a child support delinquency is reported to the State Department of Social Services pursuant to Title 5.5 (commencing with Section 4750) of Part 5 of Division 4 of the Civil Code, the county district attorney reporting that delinquency may refer, pursuant to the guidelines prescribed by the State Department of Social Services and the Franchise Tax Board for purposes of implementing this article, the delinquency to the Franchise Tax Board for collection. For the period from January 1, 1993, to December 31, 1995, inclusive, for purposes of the manageable implementation and evaluation of the program authorized by this article, requests for referral shall only be made from district attorneys representing six counties, selected upon application, which may include two rural counties, two suburban counties, and two urban counties. These counties shall be selected by the State Department of Social Services and the Franchise Tax Board in consultation with county representatives. (b) (1) When a delinquency is referred to the Franchise Tax Board pursuant to subdivision (a), the amount of the child support delinquency, and any interest accruing under subdivision (c), shall be collected from obligated parents by the Franchise Tax Board in any manner authorized under this part for the collection of a delinquent personal income tax liability. (2) Any compensation, fee, commission, expense, or any other fee for service incurred by the Franchise Tax Board in the collection of a child support delinquency authorized under this article shall not be an obligation of, or collected from, the obligated parent. A referred child support delinquency shall be final and due and payable to the State of California upon written notice to the obligated parent by the Franchise Tax Board. (3) For purposes of administering this article: (A) This chapter and Chapter 7 (commencing with Section 19501) shall apply, except as otherwise provided by this article. (B) Any services, information, or enforcement remedies available to a district attorney or the Title IV-D agency in collecting support delinquencies or locating absent or noncustodial parents shall be available to the Franchise Tax Board for purposes of collecting child support delinquencies under this article. (C) A request by the Franchise Tax Board for information from a financial institution shall be treated in the same manner and to the same extent as a request for information from a district attorney referring to a support order pursuant to Section 11475.1 of the Welfare and Institutions Code for purposes of Chapter 20 (commencing with Section 7460) of Division 7 of Title 1 of the Government Code (relating to governmental access to financial records), notwithstanding any other provision of law which is inconsistent or contrary to this paragraph. (D) "Earnings" may include the items described in subdivision (c) of Section 4390 of the Civil Code. (c) Interest on the delinquency shall be computed pursuant to Section 685.010 of the Code of Civil Procedure and shall be computed from the day the Franchise Tax Board receives the delinquency from the county. When notice of the amount due, including interest, is mailed by the Franchise Tax Board, and that amount is paid within 10 days after the date of the notice from the Franchise Tax Board, interest shall not be imposed for the period after the date of the notice. (d) In the event the collection action would cause undue financial hardship to the obligated parent, would threaten the health or welfare of the obligated parent or his or her family, or would cause undue irreparable loss to the obligated parent, the obligated parent may notify the Franchise Tax Board, which shall upon being notified refer the obligated parent to the referring county district attorney, unless the Franchise Tax Board is directed otherwise by the county district attorney for purposes of more effectively administering this article. (e) (1) In no event shall a collection under this article be construed to be a payment of income taxes imposed under this part. (2) In the event an obligated parent overpays a liability imposed under this part, the overpayment shall not be credited against any delinquency collected pursuant to this article. In the event an overpayment of a liability imposed under this part is offset and distributed to a referring county district attorney pursuant to Sections 12419.3 and 12419.5 of the Government Code or Section 708.740 of the Code of Civil Procedure, and thereby reduces the amount of the referred delinquency, the referring county district attorney shall immediately notify the Franchise Tax Board of that reduction, unless otherwise directed for purposes of more effectively administering this article. (f) Except as otherwise provided in this article, any child support delinquency referred to the Franchise Tax Board pursuant to this article shall be treated as a child support delinquency for all other purposes, and any collection action by the county district attorney or the Franchise Tax Board with respect to any delinquency referred pursuant to this article shall have the same priority against attachment, execution, assignment, or other collection action as is provided by any other provision of state law. (g) For purposes of this article, "child support" means support of a child, spouse, or family as provided in subdivision (h) of Section 4390 of the Civil Code. (h) Nothing in this article shall be construed to modify the tax intercept provisions of Article 8 (commencing with Section 708.710) of Chapter 6 of Division 2 of Part 2 of the Code of Civil Procedure. (i) The child support collection activities authorized by this article shall not interfere with the primary mission of the Franchise Tax Board to fairly and efficiently administer the Revenue and Taxation Code for which it is responsible. 19272. (a) Any child support delinquency collected by the Franchise Tax Board, including those amounts that result in overpayment of a child support delinquency, shall be distributed as specified by interagency agreement executed by the Franchise Tax Board and the State Department of Social Services, with the concurrence of the Controller. (b) When a child support delinquency, or any portion thereof, has been collected by the Franchise Tax Board pursuant to this article, the district attorney shall be notified that the delinquency or some portion thereof has been collected and shall be provided any other necessary relevant information requested. (c) The referring county district attorney shall receive credit for no less than 50 percent of the amount of collections made pursuant to the referral, and shall receive no less than 50 percent of the applicable child support enforcement incentives pursuant to Section 15200.85 of the Welfare and Institutions Code. Pursuant to guidelines prescribed by the State Department of Social Services and the Franchise Tax Board, the referring county district attorney's percentage of the incentive credit may exceed 50 percent, depending upon the type of case referred to the Franchise Tax Board for collection, provided that state operations costs are recovered from incentive payments or other federal reimbursement. The remainder of the child support enforcement incentives, if any, shall be received by the Franchise Tax Board for reimbursement of the board's collection costs. 19273. (a) For the collection pursuant to this article of any child support delinquency from any obligated parent who is out of state, the Franchise Tax Board may utilize the procedures and mechanisms currently available for collection of taxes owed from out-of-state taxpayers, pursuant to Section 19376. As necessary, the Franchise Tax Board shall seek reciprocal agreements with other states to improve its ability to collect child support payments from out-of-state obligated parents on behalf of custodial parents residing in California. The Franchise Tax Board shall also share with the Internal Revenue Service any tax return information with respect to the location of the obligated parent, and may pursue agreements with the Internal Revenue Service, as permitted by federal law, to improve collections of child support delinquencies from out-of-state obligated parents through cooperative agreements with the service. (b) The Statewide Automated Child Support System, established pursuant to Section 10815 of the Welfare and Institutions Code, shall, for purposes of this article, include the capacity to interface and exchange information with the Franchise Tax Board, and if feasible, the Internal Revenue Service, to enable the immediate reporting and tracking of obligated parent information. (c) The State Department of Social Services and the Franchise Tax Board shall enter into any interagency agreements that are necessary for the implementation of this article. 19274. (a) This article shall remain in effect only until January 1, 1996, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1996, deletes this date. (b) Notwithstanding the repeal of this article, any collections attributable to this article prior to its repeal shall continue to be transferred and disbursed in accordance with this article as in effect immediately prior to that repeal. CHAPTER 6. OVERPAYMENTS AND REFUNDS Article 1. Claim for Refund 19301. (a) If the Franchise Tax Board or the board, as the case may be, finds that there has been an overpayment of any liability imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part by a taxpayer for any year for any reason, the amount of the overpayment may be credited against any amount then due from the taxpayer and the balance shall be refunded to the taxpayer. (b) In the case of a joint return filed under Section 18521, the amount of the overpayment may be credited against the amount then due from both taxpayers and the balance shall be refunded to both taxpayers in the names under which the return was paid. (c) In the case of a bank or corporation, the balance shall be refunded to the taxpayer or its successor through reorganization, merger, or consolidation, or to its shareholders upon dissolution. 19302. (a) Except as provided in subdivision (b), if the Franchise Tax Board determines that the taxpayer paid an amount not required to be paid under this part, the Franchise Tax Board without obtaining the approval of the State Board of Control, shall set forth that fact in its records and may either credit the amount on any amounts then due and payable under this part from the taxpayer by whom the amount was paid or refund the amount or the balance to the taxpayer or the taxpayer's successors, administrators, or executors. (b) No refund exceeding fifty thousand dollars ($50,000) shall be allowed or made until approved by the State Board of Control. Notwithstanding the preceding sentence, State Board of Control approval shall not be required with respect to a refund resulting from withholding, payment of estimated tax, or prepayment of taxes, or a rate determination pursuant to Section 23186.1 (relating to bank and financial corporation rates) for the taxable year, or from a settlement approved pursuant to Section 19442. 19306. No credit or refund shall be allowed or made after four years from the last day prescribed for filing the return (determined without regard to any extension of time for filing the return) or after one year from the date of the overpayment, whichever period expires the later, unless before the expiration of the period a claim therefor is filed by the taxpayer, or unless before the expiration of the period the Franchise Tax Board allows a credit, makes a refund, mails a notice of proposed overpayment on a preprinted form prescribed by the Franchise Tax Board, or certifies the overpayment to the State Board of Control for approval of the refunding thereof. 19307. For purposes of Section 19306, a return filed within four years from the last day prescribed for filing the return showing a credit allowable by Section 19002 or estimated tax paid pursuant to Section 19023, 19024, or 19136 in excess of the tax due, shall be considered a claim for refund of the excess if the amount thereof is more than one dollar ($1). No refund of tax withheld or estimated tax paid shall be allowed to an employee or taxpayer who fails to file a return for the taxable year in respect of which the tax withheld or estimated tax was allowable as a credit. 19308. The period within which a claim for credit or refund may be filed, or credit or refund allowed or made if no claim is filed, shall be the period within which the Franchise Tax Board may mail a notice of proposed deficiency assessment under the same circumstances, if either of the following apply: (a) The taxpayer has, within the period prescribed in Section 19306, agreed in writing, under Article 3 (commencing with Section 19031) of Chapter 4, to extend the time within which the Franchise Tax Board may propose a deficiency assessment. (b) The taxpayer has agreed with the United States Commissioner of Internal Revenue for an extension (or renewals thereof) of the period for proposing and assessing deficiencies in federal income tax for any year. 19309. Section 19306 shall apply to any claim filed, or credit or refund allowed or made, before the execution of an agreement pursuant to Section 19308. 19311. (a) If a change or correction is made or allowed by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or an amended return is required under Section 18622 and is filed timely, a claim for credit or refund resulting from the adjustment may be filed by the taxpayer within two years from the date of the final federal determination, or within the period provided in Section 19306, 19307, or 19308, whichever period expires later. (b) This section shall apply to any federal determination that becomes final on or after January 1, 1993. 19312. Insofar as the claim for credit or refund relates to an overpayment on account of the deductibility, under Section 24348 of this code or Section 166 of the Internal Revenue Code, of a debt as one which became worthless, or a loss from worthlessness of a security under Section 24347 or 24348 of this code or Section 165(g) or 166 of the Internal Revenue Code, or an erroneous inclusion of an amount attributable to the recovery of a bad debt, prior tax or delinquency amount, under Section 111 of the Internal Revenue Code due to an adjustment of a bad debt deduction under Section 24348 of this code or Section 166 of the Internal Revenue Code, or a loss deduction from worthlessness of a security under Section 24347 of this code or Section 165(g) of the Internal Revenue Code, in lieu of the period of limitations prescribed in Section 19306, the period shall be seven years from the date prescribed by law for filing the return for the year with respect to which the claim is made. 19313. (a) In the case of any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) with respect to any person, the period for filing a claim for credit or refund of any overpayment attributable to any partnership item of a federally registered partnership shall not expire before the later of the following: (1) The date which is five years after the date prescribed by law (including extensions thereof) for filing the partnership return for the partnership taxable year in which the item arose. (2) If an agreement under Section 6501(c)(4) of the Internal Revenue Code of 1954 extending the period for the assessment of any deficiency attributable to the partnership item is made before the date specified in paragraph (1), the date six months after the expiration of the extension. In any case to which the preceding sentence applies, the amount of the credit or refund may exceed the portion of the tax paid within the period provided in Section 19306 or 19308, whichever is applicable. (b) For purposes of this subdivision, "partnership item" and "federally registered partnership" have the same meanings as when used in Section 19063. 19314. (a) Notwithstanding any statute of limitations otherwise provided for in this part, any overpayment due a taxpayer for any year, shall be allowed as an offset in computing any deficiency in tax, for the same or any other year, if the overpayment results from any of the following: (1) A transfer of items of income or deductions or both to or from another year for the same taxpayer. (2) A transfer of items of income or deductions or both for the same year for a related taxpayer described in Section 19110. (3) A transfer of items of income or deductions, or both, to or from another taxpayer for the same or different years if the items of income or deductions are transferred between affiliated taxpayers whose tax is determined under Chapter 17 (commencing with Section 25101) of Part 11. (b) The offset provided under subdivision (a) shall not be allowed after the expiration of seven years from the due date of the return or returns on which the overpayment is determined. (c) No refund shall be allowed under subdivision (a) unless before the period set forth in Section 19306 a claim therefor is filed by the taxpayer or unless before the expiration of that period the Franchise Tax Board has allowed a credit, made a refund, or certified the overpayment to the State Board of Control for approval of the refunding thereof. 19321. A refund claim upon which action has become final shall not thereafter be considered a refund claim within the meaning of Section 19306 except to the extent it has been allowed. 19322. Every claim for refund shall be in writing, shall be signed by the taxpayer or the taxpayer's authorized representative, and shall state the specific grounds upon which it is founded. A claim filed for or on behalf of a class of taxpayers shall do all of the following: (a) Be accompanied by written authorization from each taxpayer sought to be included in the class. (b) Be signed by each taxpayer or taxpayer's authorized representative. (c) State the specific grounds on which the claim is founded. 19323. If the Franchise Tax Board disallows any claim for refund, it shall notify the taxpayer accordingly. 19324. (a) Except as provided in subdivision (b), at the expiration of 90 days from the mailing of the notice, the Franchise Tax Board's action upon the claim is final unless within the 90-day period the taxpayer appeals in writing from the action of the Franchise Tax Board to the board. (b) If within the period set forth in Section 19384 for filing a suit for refund the Franchise Tax Board receives information which it determines clearly establishes that a disallowed claim should have been allowed, in whole or in part, the Franchise Tax Board shall credit the amount of the overpayment against any taxes due from the taxpayer under this part and the balance shall be refunded to the taxpayer. 19325. No interest shall be allowed or paid with respect to a claim for credit or refund based upon an overpayment which is the result of federal law, including treaties, which reduces taxes for taxable years prior to the enactment date of the federal law or the approval date of the treaty. 19331. If the Franchise Tax Board fails to mail notice of action on any refund claim within six months after the claim is filed, the taxpayer may prior to mailing of notice of action on the refund claim consider the claim disallowed and appeal to the board. For substitution of the 120-day period for the six-month period contained in this section in a Title 11 case, see Section 505(a)(2) of Title 11 of the United States Code. 19332. Two copies of the appeal and two copies of any supporting documents shall be addressed and mailed to the State Board of Equalization at Sacramento, California. Upon receipt of the appeal, the board shall provide one copy of the appeal and one copy of any supporting documents to the Franchise Tax Board at Sacramento, California. 19333. The board shall hear and determine the appeal and thereafter shall forthwith notify the taxpayer and the Franchise Tax Board of its determination and the reasons therefor. 19334. The determination of the board is final upon the expiration of 30 days from the date of the determination unless within the 30-day period, the taxpayer or Franchise Tax Board files a petition for rehearing with the board. In that event the determination becomes final upon the expiration of 30 days from the date the board issues its opinion on the petition. 19335. If, with or after the filing of a protest or an appeal to the State Board of Equalization pursuant to Article 3 (commencing with Section 19031) of Chapter 4, a taxpayer pays the tax protested before the Franchise Tax Board acts upon the protest, or the board upon the appeal, the Franchise Tax Board or board shall treat the protest or the appeal as a claim for refund or an appeal from the denial of a claim for refund filed under this article. 19340. Interest shall be allowed and paid on any overpayment in respect of any tax, at the adjusted annual rate established pursuant to Section 19521 as follows: (a) In the case of a credit, from the date of the overpayment to the due date of the amount for which the credit is allowed. Any interest allowed on any credit shall first be credited on any taxes due from the taxpayer under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). (b) In the case of a refund, including a refund in excess of tax liability as prescribed in subdivision (j) of Section 17053.5, from the date of the overpayment to a date preceding the date of the refund warrant by not more than 30 days, the date to be determined by the Franchise Tax Board. 19341. (a) Except as provided in subdivisions (b), (c), and (d), if any overpayment of tax is refunded or credited within 90 days after the return is filed, or within 90 days after the last day prescribed for filing the return of tax (determined without regard to any extension of time for filing the return), whichever is later, no interest shall be allowed under Section 19340 on the overpayment. For the purposes of this section, "overpayment of tax" includes a refund in excess of tax liability as prescribed in subdivision (j) of Section 17053.5. (b) In the case of returns which set forth no determination or amount of tax liability, or credits other than that allowed under Section 17053.5, and which are filed solely for the purpose of claiming the renter credit, no interest shall be allowed on refunds made within 90 days from the date on which the return is filed, or within 90 days after the last day prescribed for filing the return, whichever is later. This subdivision applies only when communication with the claimant or other verification is necessary to determine entitlement to the claimed credit. (c) In the case of an individual or fiduciary taxable under Part 10 (commencing with Section 17001), for the 1982 taxable year and each taxable year thereafter, the 90-day time periods specified in subdivision (a) shall be 45 days. (d) In the case of a return of tax which is filed after the last date prescribed for filing the return (determined with regard to extensions), no interest shall be allowed or paid for any day before the date on which the return is filed. 19342. If the Franchise Tax Board disallows interest on any claim for refund, it shall notify the taxpayer accordingly. 19343. At the expiration of 90 days from the mailing of the notice specified in Section 19342, the Franchise Tax Board's action upon the disallowance of the interest shall be final unless within the 90-day period, the taxpayer appeals in writing from the action of the Franchise Tax Board to the board. 19344. Two copies of the appeal and two copies of any supporting documents shall be addressed and mailed to the State Board of Equalization at Sacramento, California. Upon receipt of the appeal, the board shall provide one copy of the appeal and one copy of any supporting documents to the Franchise Tax Board at Sacramento, California. 19345. The board shall hear and determine the same and thereafter shall forthwith notify the taxpayer and the Franchise Tax Board of its determination and the reasons therefor. 19346. The determination is final upon the expiration of 30 days from the date of the determination unless within the 30-day period, the taxpayer or Franchise Tax Board files a petition for rehearing with the board. In that event the determination becomes final upon the expiration of 30 days from the date the board issues its opinion upon the petition. 19347. Within 90 days after the mailing of the notice of the Franchise Tax Board's action disallowing interest upon any refund claim, or, in the case of an appeal to the board from the disallowance of interest on any refund claim, within the 90 days after the mailing of the notice of the board's determination of the appeal, the taxpayer may bring an action against the Franchise Tax Board on the grounds set forth for interest in the claim for the recovery of the interest. 19348. If the Franchise Tax Board fails to mail notice of action of disallowance of interest on any refund claim within six months after the interest was claimed, the taxpayer may, prior to mailing notice of action of disallowance of interest on the refund claim, consider the interest disallowed and bring an action against the Franchise Tax Board on the grounds set forth for interest in the claim for the recovery of the interest. 19349. A payment not made incident to a bona fide and orderly discharge of an actual liability or one reasonably assumed to be imposed by law, is not an overpayment for the purposes of Section 19340 and interest is not payable thereon. 19350. If a credit or refund of any part of an overpayment would be barred under Section 19306, except for Section 19312, no interest shall be allowed or paid with respect to that part of the overpayment for any period beginning after the expiration of the period of limitation provided in Section 19306 for filing claim for credit or refund of that part of the overpayment and ending at the expiration of six months after the date on which the claim was filed or, in case no claim was filed and the overpayment was found by the board, ending at the time the appeal was filed with the board. 19351. The provisions of Section 19066, which are applicable in determining the period of limitation on credit or refund, shall be applicable in determining the date of payment for purposes of Sections 19340, 19341, 19363, and 19391. 19354. If the amount allowable as a credit under Section 19002 (relating to credit for tax withheld) exceeds the tax imposed by Part 10 (commencing with Section 17001), against which the credit is allowable, the amount of the excess shall be considered an overpayment. 19355. Any action of the Franchise Tax Board in refunding the excess of tax withheld under Section 18662 or 18666 or estimated tax paid pursuant to Section 19136 or any action of the Employment Development Department in refunding to the employer the excess tax withheld under Section 13020 of the Unemployment Insurance Code shall not constitute a determination of the correctness of the return of the taxpayer for purposes of this part. 19361. In the case of an overpayment of tax imposed by Section 18662 or 18666, refund or credit shall be made to the employer or to the withholding agent, as the case may be, only to the extent that the amount of the overpayment was not deducted and withheld by the employer or withholding agent. No interest shall be allowed on the overpayment. 19362. The Franchise Tax Board is authorized to prescribe regulations providing for the crediting against the estimated tax for any taxable year of the amount determined by the taxpayer or the Franchise Tax Board to be an overpayment of the tax for a preceding taxable year. 19363. Credits or refunds of overpayments of estimated tax shall be made by the Franchise Tax Board as provided in this article. Any amount paid as estimated tax for any taxable year shall be deemed to have been paid on the last day prescribed for filing the return for the income or taxable year (determined without regard to any extension of time for filing the return). Article 2. Suit for Tax 19371. (a) At any time within 10 years after the determination of liability for any tax, penalties, and interest, or within the period during which a lien is in force as the result of the recording of an abstract under Section 19203 or of the recording or filing of a notice of state tax lien under Section 7171 of the Government Code, the Franchise Tax Board may bring an action in the courts of this state, of any other state, or of the United States in the name of the people of the State of California to recover the amount of any taxes, penalties, and interest due and unpaid under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part. (b) The amendments made by Sections 41 and 108 of Chapter 117 of the Statutes of 1991 shall apply to any of the following: (1) Taxes assessed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part after July 16, 1991. (2) Taxes assessed on or before July 16, 1991, under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, if the period specified in subdivision (a), determined without regard to those amendments, has not expired on July 16, 1991. 19372. The Attorney General or the counsel for the Franchise Tax Board shall prosecute the action. The action shall be tried in the County of Sacramento unless the court with the consent of the prosecutor orders a change of place of trial. 19373. In the action a writ of attachment may be issued in the manner provided by Chapter 5 (commencing with Section 485.010) of Title 6.5 of Part 2 of the Code of Civil Procedure without the showing required by Section 485.010 of the Code of Civil Procedure. 19374. In the action a certificate by the Franchise Tax Board showing the delinquency shall be prima facie evidence of the levy of the tax, penalties and interest of the delinquency, and of the compliance by the Franchise Tax Board and the board with all the provisions of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), and this part in relation to the computation and levy of the tax. 19375. The Franchise Tax Board may bring an appropriate action, whether in the form of a common law action of debt or indebitatus assumpsit or a code or other action, in any court of competent jurisdiction in the United States or in a foreign country, in the name of the people of the State of California, to recover the amount of any tax, penalties, and interest due. The Attorney General or the counsel for the Franchise Tax Board shall prosecute the action. 19376. (a) For the purpose of collecting taxes, interest, additions to tax, and penalties, the Franchise Tax Board may enter into agreement with one or more private persons, companies, associations, or corporations providing debt collection services outside this state with respect to the collection of taxes, interest, additions to tax, and penalties. That agreement may provide, at the discretion of the Franchise Tax Board, the rate of payment and the manner in which compensation for services shall be paid. The compensation may be added to the amount of the tax, interest, additions to tax, and penalties, and collected as a part thereof, by the contractor from the tax debtor. The Franchise Tax Board shall provide the necessary information for the contractor to fulfill its obligation under this agreement. (b) At the discretion of the Franchise Tax Board, the contractor may, as part of the collection process, refer the tax debt for litigation by its legal representatives in the name of the Franchise Tax Board. 19377. (a) The Franchise Tax Board may enter into agreement with one or more persons for the purpose of collecting delinquent accounts with respect to amounts assessed or imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, provided the agreements do not cause the net displacement of civil service employees. The agreement may provide for the rate and manner of payment for the contracted collection services. However, the consideration payable by the Franchise Tax Board under the agreement shall not be included in the amounts to be collected from the tax debtor by the contractor providing collection services. (b) For purposes of this section, "displacement" includes layoff, demotion, involuntary transfer to a new class, involuntary transfer to a new location requiring a change of residence, and time base reductions. "Displacement" does not include changes in shifts or days off, nor does it include reassignment to any other position within the same class and general location. 19378. (a) The Franchise Tax Board shall determine the total amount collected under Section 19377, and shall notify the Controller of the amount to be transferred to the Delinquent Tax Collection Fund. In addition, the Franchise Tax Board shall determine the amount of each of the following: (1) The costs of implementing and administering Section 19377. (2) The contracting costs incurred under Section 19377. The Franchise Tax Board shall notify the Controller of these amounts. (b) The Controller shall transfer these amounts from the Delinquent Tax Collection Fund to the Franchise Tax Board for reimbursement of its implementation and administrative costs and for the contracting costs. The moneys remaining in the Delinquent Tax Collection Fund after disbursements shall be transferred to the Personal Income Tax Fund or the Bank and Corporation Tax Fund, as appropriate, by the Controller upon notification by the Franchise Tax Board. Notwithstanding Section 13340 of the Government Code, the moneys transferred pursuant to this section are hereby continuously appropriated, without regard to fiscal years. (c) The funds generated through this section shall not be used in place of funds from other sources which are available for appropriation to the Franchise Tax Board. (d) This section shall remain in effect only until July 1, 1993, and as of that date is repealed. 19378. (a) The Franchise Tax Board shall determine the amount of the contracting costs incurred under Section 19377 and notify the Controller of that amount which shall be transferred from the Personal Income Tax Fund or the Bank and Corporation Tax Fund to the Delinquent Tax Collection Fund, which is hereby created. (b) The Controller shall transfer that amount determined pursuant to subdivision (a) from the Delinquent Tax Collection Fund to the Franchise Tax Board for reimbursement of its contracting costs. The moneys remaining in the Delinquent Tax Collection Fund after disbursements shall be transferred to the Personal Income Tax Fund or the Bank and Corporation Tax Fund by the Controller upon notification by the Franchise Tax Board. Notwithstanding Section 13340 of the Government Code, the moneys transferred pursuant to this section are hereby continuously appropriated, without regard to fiscal years. (c) The funds generated through this section shall not be used in place of funds from other sources that are available for appropriation to the Franchise Tax Board. (d) This section shall become operative on July 1, 1993. Article 3. Suit for Refund 19381. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against this state or against any officer of this state to prevent or enjoin the assessment or collection of any tax under this part; provided, however, that any individual after protesting a notice or notices of deficiency assessment issued because of his or her alleged residence in this state and after appealing from the action of the Franchise Tax Board to the State Board of Equalization, may within 60 days after the action of the State Board of Equalization becomes final commence an action, on the grounds set forth in his or her protest, in the Superior Court of the County of Sacramento, in the County of Los Angeles or in the City and County of San Francisco against the Franchise Tax Board to determine the fact of his or her residence in this state during the year or years set forth in the notice or notices of deficiency assessment. No tax based solely upon the residence of such an individual shall be collected from that individual until 60 days after the action of the State Board of Equalization becomes final and, if he or she commences an action pursuant to this section, during the pendency of the action, other than by way of or under the jeopardy assessment provisions of this part. 19382. Except as provided in Section 19385, after payment of the tax and denial by the Franchise Tax Board of a claim for refund, any taxpayer claiming that the tax computed and assessed is void in whole or in part may bring an action, upon the grounds set forth in that claim for refund, against the Franchise Tax Board for the recovery of the whole or any part of the amount paid. 19383. The credit of an overpayment of any tax in satisfaction of any tax liability shall, for the purpose of any suit for refund of the tax liability so satisfied, be deemed to be a payment in respect of the tax liability at the time the credit is allowed. 19384. The action provided by Section 19382 shall be filed within four years from the last date prescribed for filing the return or within one year from the date the tax was paid, or within 90 days after (a) notice of action by the Franchise Tax Board upon any claim for refund, or (b) final notice of action by the State Board of Equalization on an appeal from the action of the Franchise Tax Board on a claim for refund, whichever period expires the later. 19385. If the Franchise Tax Board fails to mail notice of action on any refund claim within six months after the claim was filed, the taxpayer may, prior to mailing of notice of action on the refund claim, consider the claim disallowed and bring an action against the Franchise Tax Board on the grounds set forth in the claim for the recovery of the whole or any part of the amount claimed as an overpayment. For substitution of the 120-day period for the six-month period contained in this section in a Title 11 case, see Section 505(a)(2) of Title 11 of the United States Code. 19387. Whenever an action is commenced against the Franchise Tax Board under this article, a copy of the complaint and the summons shall be served upon the Franchise Tax Board or the executive officer. A second copy of the complaint and the summons shall be furnished to the Franchise Tax Board, but this requirement is not jurisdictional. 19388. Any action against the Franchise Tax Board under this article shall be commenced and tried in any city or city and county in which the Attorney General maintains an office. 19389. The Attorney General or the counsel for the Franchise Tax Board of California shall defend the action. 19390. Failure to begin an action within the time specified in this article shall be a bar against the recovery of taxes. 19391. In any judgment of any court rendered for any overpayment, interest shall be allowed at the adjusted annual rate established pursuant to Section 19521 upon the amount of the overpayment, from the date of the payment or collection thereof to the date of allowance of credit on account of the judgment or to a date preceding the date of the refund warrant by not more than 30 days, the date to be determined by the Franchise Tax Board. 19392. If judgment is rendered against the Franchise Tax Board, the amount thereof shall first be credited against any taxes and interest due from the taxpayer and the remainder refunded to the taxpayer or his or her trust or estate, or in the case of a bank or corporation, its successor through reorganization, merger, or consolidation, or its stockholders upon dissolution, by the Treasurer on warrants drawn by the Controller. Article 4. Recovery of Erroneous Refunds 19411. The Franchise Tax Board may recover any refund or credit or any portion thereof which is erroneously made or allowed, together with interest at the adjusted annual rate established pursuant to Section 19521 from the date demand for recovery was made, in an action brought in a court of competent jurisdiction in the County of Sacramento in the name of the people of the State of California within whichever of the following period expires the later: (a) Two years after the refund or credit was made. (b) During the period within which the Franchise Tax Board may mail a notice of proposed additional assessment. (c) In the case of a bank or corporation, interest shall be computed from the date the refund was made or the credit allowed, instead of the date a demand for recovery was made. 19412. The action shall be tried in the County of Sacramento unless the court with the consent of the prosecutor orders a change of place of trial. 19413. The Attorney General or the counsel for the Franchise Tax Board shall prosecute the action, and the provisions of the Code of Civil Procedure relating to service of summons, pleadings, proofs, trials, and appeals are applicable to the proceedings. Article 5. Cancellations 19431. If a tax has been illegally levied against a taxpayer, the Franchise Tax Board shall set forth on its records the reasons therefor and thereafter shall authorize the cancellation of the tax. Article 6. Closing Agreements 19441. (a) The Franchise Tax Board or any person authorized in writing by the Franchise Tax Board is authorized to enter into an agreement in writing with any person (or of the person or estate for whom that person acts) in respect of any tax, interest, penalty, or addition to tax levied under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part for any taxable period. (b) If the agreement is approved by the State Board of Control, within the time as may be stated in the agreement, or later agreed to, the agreement shall be final and conclusive, and except upon a showing of fraud or malfeasance, or misrepresentation of a material fact: (1) The case shall not be reopened as to the matters agreed upon or the agreement modified, by any officer, employee, or agent of the state, and (2) In any suit, action, or proceeding, the agreement, or any determination, assessment, collection, payment, abatement, refund, or credit made in accordance therewith, shall not be annulled, modified, set aside, or disregarded. 19442. (a) (1) Subject to paragraph (2), the executive officer or chief counsel, if authorized by the executive officer, of the Franchise Tax Board may recommend to the Franchise Tax Board, itself, a settlement of any civil tax matter disputes. (2) No recommendation of settlement shall be submitted to the Franchise Tax Board unless and until that recommendation has been submitted by the executive officer or chief counsel to the Attorney General. Within 30 days of receiving that recommendation, the Attorney General shall review the recommendation and advise in writing the executive officer or chief counsel of the Franchise Tax Board of his or her conclusions as to whether the recommendation is reasonable from an overall perspective. The executive officer or chief counsel shall, with each recommendation of settlement submitted to the Franchise Tax Board, also submit the Attorney General's written conclusions obtained pursuant to this paragraph. (3) The members of the Franchise Tax Board shall not participate in the settlement of these tax matters, except as provided in subdivision (c). (b) Whenever a reduction of tax in excess of five hundred dollars ($500) is approved pursuant to this section, there shall be placed on file in the office of the executive officer of the Franchise Tax Board a public record with respect to that settlement. The public record shall include all of the following information: (1) The name or names of the taxpayers who are parties to the settlement. (2) The total amount involved. (3) The amount payable or refundable pursuant to the settlement. (4) A summary of the reasons why the settlement is in the best interests of the State of California. (5) The Attorney General's conclusion as to whether the recommendation of settlement was reasonable from an overall perspective. The public record shall not include any information that relates to any trade secret, patent, process, style of work, apparatus, business secret, or organizational structure, that if disclosed, would adversely affect the taxpayer or the national defense. (c) (1) Any recommendation for settlement shall be approved or disapproved by the Franchise Tax Board, itself, within 45 days of the submission of that recommendation to the board. Any recommendation for settlement that is not either approved or disapproved by the board within 45 days of the submission of that recommendation shall be deemed approved. Upon approval of a recommendation for settlement, the matter shall be referred back to the executive officer or chief counsel in accordance with the decision of the Franchise Tax Board. (2) Disapproval of a recommendation for settlement shall be made only by a majority vote of the Franchise Tax Board. Where the Franchise Tax Board disapproves a recommendation for settlement, the matter shall be remanded to board staff for further negotiation, and may be resubmitted to the Franchise Tax Board, in the same manner and subject to the same requirements as the initial submission, at the discretion of the executive officer or chief counsel. (d) All settlements entered into pursuant to this section shall be final and nonappealable, except upon a showing of fraud or misrepresentation with respect to a material fact. (e) Any proceedings undertaken by the Franchise Tax Board itself pursuant to a settlement as described in this section shall be conducted in a closed session or sessions. Except as provided in subdivision (b), any settlement entered into pursuant to this section shall constitute confidential tax information for purposes of Article 2 (commencing with Section 19542) of Chapter 7. (f) This section shall apply only to civil tax matter disputes existing on July 1, 1992, with respect to which recommendations for settlement, pursuant to paragraph (2) of subdivision (a), are first submitted to the Attorney General no later than June 30, 1993, and are first submitted to the Franchise Tax Board no later than September 15, 1993. (g) The Legislature finds that it is essential for fiscal purposes that the settlement program authorized by this section be expeditiously implemented. Accordingly, Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any determination, rule, notice, or guideline established or issued by the Franchise Tax Board in implementing and administering the settlement program authorized by this section. CHAPTER 7. ADMINISTRATION OF TAX Article 1. Powers and Duties of Franchise Tax Board 19501. The Franchise Tax Board shall administer and enforce Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part. For this purpose, it may divide the state into a reasonable number of districts, in each of which a branch office or offices may be maintained during all or part of the time as may be necessary. 19502. In the establishment of the districts and offices, the Franchise Tax Board shall give due consideration to the matter of economy of administration and service to the taxpayers. 19503. The Franchise Tax Board shall prescribe all rules and regulations necessary for the enforcement of Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part and may prescribe the extent to which any ruling or regulation shall be applied without retroactive effect. 19504. (a) The Franchise Tax Board, for the purpose of administering its duties under this part, including ascertaining the correctness of any return; making a return where none has been made; determining or collecting the liability of any person in respect of any liability imposed by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part (or the liability at law or in equity of any transferee in respect of that liability); shall have the power to require by demand, that an entity of any kind including, but not limited to, employers, persons, or financial institutions provide information or make available for examination or copying at a specified time and place, or both, any book, papers, or other data which may be relevant to that purpose. Any demand to a financial institution shall comply with the California Right to Financial Privacy Act set forth in Chapter 20 (commencing with Section 7460) of Division 7 of Title 1 of the Government Code. Information which may be required upon demand includes, but is not limited to, any of the following: (1) Addresses and telephone numbers of persons designated by the Franchise Tax Board. (2) Information contained on Federal Form W-2 (Wage and Tax Statement), Federal Form W-4 (Employee's Withholding Allowance Certificate), or State Form DE-4 (Employee's Withholding Allowance Certificate). (b) The Franchise Tax Board may require the attendance of the taxpayer or of any other person having knowledge in the premises and may take testimony and require material proof for its information and administer oaths to carry out this part. (c) The Franchise Tax Board may issue subpoenas or subpoenas duces tecum, which subpoenas must be signed by any member of the Franchise Tax Board and may be served on any person for any purpose. (d) Obedience to subpoenas or subpoenas duces tecum issued in accordance with this section may be enforced by application to the superior court as set forth in Article 2 (commencing with Section 11180) of Chapter 2 of Part 1 of Division 3 of Title 2 of the Government Code. 19505. The Franchise Tax Board may appoint and remove, in the manner provided by law, those officers, agents, branch office income tax deputies, and other employees as it deems necessary. They shall have the duties and powers as the Franchise Tax Board from time to time prescribes. 19506. The Franchise Tax Board may appoint one or more deputies or assistants to conduct hearings, prescribe regulations, or perform any other duty imposed by this part or other laws of the state upon the Franchise Tax Board. 19507. Any temporary appointments of branch office income tax deputies and other branch office employees shall be made from eligible residents of the district in which the branch office is located. 19508. The salaries of the personnel required by the Franchise Tax Board shall be such as it may prescribe, in the manner provided by law, and the Franchise Tax Board and its personnel shall be allowed reasonable and necessary traveling and other expenses incurred in the performance of their duties. 19509. The Franchise Tax Board may require officers, agents, deputies, and other employees designated by it to give bond for the faithful performance of their duties in the sum and with the sureties as it may determine. It shall pay all premiums on the bonds out of moneys appropriated for the administration of this part. 19511. The Franchise Tax Board and officers and employees designated by it may administer an oath to any person or take the acknowledgment of any person in respect of any return or report required by this part or the rules and regulations of the Franchise Tax Board. 19512. Any person acting in a fiduciary capacity shall assume the duties and, upon giving notice to the Franchise Tax Board, shall assume the rights and privileges of the taxpayers in respect of any tax, additions to tax, penalties, and interest imposed by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part except as otherwise specifically provided, until he or she gives notice that his or her fiduciary has terminated. He or she shall give notice under this section pursuant to rules and regulations prescribed by the Franchise Tax Board. 19513. (a) If assets of an estate are distributable to one or more nonresident beneficiaries, the final account of the fiduciary shall not be allowed by the probate court unless the fiduciary obtains from the Franchise Tax Board and files with the court a certificate to the effect that all taxes, additions to tax, penalties, and interest imposed by Part 10 (commencing with Section 17001) or this part upon the estate or decedent which have become payable have been paid, and that all taxes, additions to tax, penalties, and interest which may become due are secured by bond, deposit or otherwise. (b) This section only applies if the value of the assets of the estate at the death of the decedent and the value of the assets distributable to one or more nonresidents exceed amounts prescribed by regulations promulgated by the Franchise Tax Board. 19514. Within 30 days after receiving a request for a certificate, the Franchise Tax Board shall either issue the certificate or notify the person requesting the certificate of the amount that shall be paid or the amount of bond, deposit, or other security that shall be furnished as a condition of issuance of the certificate. 19515. The certificate of the Franchise Tax Board does not relieve the estate for which the fiduciary acts of liability for any amounts which are due and unpaid at the time the certificate is issued or which may become due from the decedent or estate after the issuance of the certificate. It also does not relieve the fiduciary of the liability imposed by Section 19516. 19516. Every fiduciary who pays in whole or in part any claim, other than claims for taxes, expenses of administration, funeral expenses, expenses of last illness, family allowance, or wage claims as defined in Section 11402 of the Probate Code, against the person, estate, or trust for whom or for which the fiduciary acts, or who makes any distribution of the assets of the person, estate, or trust, before satisfaction and payment of taxes, interest, and penalties, except penalties due from a decedent, which are imposed by Part 10 (commencing with Section 17001) or this part on the person, estate, or trust for whom or for which the fiduciary acts, or which constitute a claim against the person, estate, or trust, or which are a lien or charge on or against the assets of the person, estate, or trust, is personally liable to the state for the taxes, interest, and penalties to the extent of the payments and distributions. 19517. (a) In the case of income received or accrued during the lifetime of a decedent, or by his or her estate during the period of administration, or by a trust, the Franchise Tax Board shall mail notices proposing to assess the tax, and shall commence any proceeding in court without assessment for the collection of the tax, within 18 months after written request therefor (filed after the return is made) by the fiduciary of the estate or trust or by any other person liable for the tax or any portion thereof. (b) After filing a request pursuant to subdivision (a), a fiduciary may consent in writing to waive the limitation prescribed by subdivision (a). 19518. (a) The trustee of a trust described in Section 401 (a) of the Internal Revenue Code which is exempt from tax under Section 17631 to which contributions have been paid under a plan on behalf of any owner-employee (as defined in Section 401(c) (3) of the Internal Revenue Code), and each insurance company or other person which is the issuer of a contract purchased by such a trust, or purchased under a plan described in Section 403 (a) of the Internal Revenue Code, contributions for which have been paid on behalf of any owner-employee, shall file the returns (in the form and at the times), keep the records, make the identification of contracts and funds (and accounts within the funds), and supply the information, as the Franchise Tax Board shall by forms or regulations prescribe. (b) Every individual on whose behalf contributions have been paid as an owner-employee (as defined in Section 401(c)(3) of the Internal Revenue Code) (1) To a trust described in Section 401(a) of the Internal Revenue Code which is exempt from tax under Section 17631, or (2) To an insurance company or other person under a plan described in Section 403(a) of the Internal Revenue Code, shall furnish the trustee, insurance company, or other person, as the case may be, the information at the times and in the form and manner as the Franchise Tax Board shall prescribe by forms or regulations. 19519. The Franchise Tax Board shall transmit to the Director of Employment Development claims for credit or refund allowed pursuant to Section 17061 of this code and subdivision (a) of Section 1176.5 of the Unemployment Insurance Code. 19521. (a) The rate established under this section (referred to in other code sections as "the adjusted annual rate") shall be determined in accordance with Section 6621 of the Internal Revenue Code, except that: (1) The overpayment rate specified in Section 6621(a)(1) of the Internal Revenue Code shall be modified to be equal to the underpayment rate determined under Section 6621(a)(2) of the Internal Revenue Code; and (2) The determination specified in Section 6621(b) of the Internal Revenue Code shall be modified to be determined semiannually as follows: (A) The rate for January shall apply during the following July through December, and (B) The rate for July shall apply during the following January through June. (b) (1) For purposes of this part, Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), and any other provision of law referencing this method of computation, in computing the amount of any interest required to be paid by the state or by the taxpayer, or any other amount determined by reference to that amount of interest, that interest and that amount shall be compounded daily. (2) Paragraph (1) shall not apply for purposes of computing the amount of any addition to tax under Section 19136 or 19142. (c) Section 6621(c) of the Internal Revenue Code, relating to increase in underpayment rate for large corporate underpayments, is modified as follows: (1) The applicable date shall be the 30th day after the earlier of either of the following: (A) The date on which the proposed deficiency assessment is issued. (B) The date on which the notice and demand is sent. (2) This subdivision shall apply for purposes of determining interest for periods after December 31, 1991. 19522. (a) (1) (A) On or before the 10th of January each year, the Franchise Tax Board shall submit to the Legislature a report on all changes to the Internal Revenue Code enacted into law in the prior year. To the extent possible, the report shall contain an estimate of the revenue effect of conforming California law to each of those changes. (B) In the event that changes to the Internal Revenue Code are enacted after September 15 of any year, the report described in subparagraph (A) shall be submitted to the Legislature within 120 days after signature by the President of the United States, rather than the 10th of January. (2) The report required by this section shall be made available to the public. (3) It is the intent of the Legislature that the policy committee of each house of the Legislature hold at least one public hearing on the report required by this section. (b) For any introduced bill which proposes changes in any of the dates in Section 17024.5, the Franchise Tax Board shall prepare a complete analysis of the bill which describes all changes to state law which will automatically occur by reference to federal law as of the changed date. The Franchise Tax Board shall immediately update and supplement that analysis upon any amendment to the bill. That analysis shall be made available to the public and shall be submitted to the Legislature for publication in the daily journal of each house of the Legislature. The digest of the Legislative Counsel shall indicate that an analysis of the bill shall be prepared by the Franchise Tax Board and printed in the daily journal of each house of the Legislature. 19523. If the Secretary of the Treasury has, under the authority of Section 330(c) of Title 31 of the United States Code: (a) Assessed a penalty under Section 6701(a) of the Internal Revenue Code, and (b) Provided that appraisals by an appraiser shall not have any probative effect in any administrative proceeding before the Department of the Treasury or the Internal Revenue Service, and (c) Barred that appraiser from presenting evidence or testimony in that proceeding, then appraisals by that person shall be presumed to have no probative effect in any administrative proceeding before the State Board of Equalization or the Franchise Tax Board. 19524. (a) The Franchise Tax Board shall prescribe regulations providing standards for determining which returns shall be filed on magnetic media or in other machine-readable form. The Franchise Tax Board shall not require returns of any tax imposed by Part 10 (commencing with Section 17001) on individuals, estates, and trusts to be other than on paper forms supplied by the Franchise Tax Board. In prescribing those regulations, the Franchise Tax Board shall take into account, among other relevant factors, the ability of the taxpayer to comply at a reasonable cost with that filing requirement. (b) Subdivision (a) is applicable only to taxpayers required to file returns on magnetic media or in other machine-readable form pursuant to Section 6011(e) of the Internal Revenue Code and the regulations adopted thereto. In addition, the regulations under subdivision (a) shall not require that returns filed on magnetic media or in other machine-readable form contain more information than is required to be included in similar returns filed with the Internal Revenue Service under Section 6011(e) of the United States Internal Revenue Code and the regulations adopted thereto. (c) In lieu of the magnetic media or other machine-readable form returns required by this section, a copy of the similar magnetic media or other machine-readable form returns filed with the Internal Revenue Service pursuant to Section 6011(e) of the Internal Revenue Code, and the regulations adopted thereto, may be filed with the Franchise Tax Board. 19525. The Franchise Tax Board, under regulations prescribed by the Franchise Tax Board, may establish a reward program for information resulting in the identification of underreported or unreported income subject to taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). Any reward may not exceed 10 percent of the taxes collected as a result of the information provided. Any person employed by or under contract with any state or federal tax collection agency shall not be eligible for a reward provided for pursuant to this section. 19526. The Franchise Tax Board shall develop and maintain a taxpayer cross-reference file which shall be used as a part of a nonwage earner filing enforcement program. The taxpayer cross-reference file may include information from taxpayer identification information available from tax returns, application forms, other documents, and any other files as already exist and are maintained by the state's major revenue agencies. The taxpayer cross-reference file shall only be used for the purposes of tax law enforcement and administration. 19528. (a) Notwithstanding any other provision of law, the Franchise Tax Board may require any board, as defined in Section 22 of the Business and Professions Code, and the State Bar, the Department of Real Estate, and the Insurance Commissioner (hereinafter referred to as licensing board) to provide to the Franchise Tax Board the following information with respect to every licensee: (1) Name. (2) Address or addresses of record. (3) Federal employer identification number (if the entity is a partnership) or social security number (for all others). (4) Type of license. (5) Effective date of license or renewal. (6) Expiration date of license. (7) Whether license is active or inactive, if known. (8) Whether license is new or renewal. (b) The Franchise Tax Board may do the following: (1) Send a notice to any licensee failing to provide the identification number or social security number as required by subdivision (a) of Section 30 of the Business and Professions Code and subdivision (a) of Section 1666.5 of the Insurance Code, describing the information that was missing, the penalty associated with not providing it, and that failure to provide the information within 30 days will result in the assessment of the penalty. (2) After 30 days following the issuance of the notice described in paragraph (1), assess a one hundred dollar ($100) penalty, due and payable upon notice and demand, for any licensee failing to provide either its federal employer identification number (if the licensee is a partnership) or his or her social security number (for all others) as required in Section 30 of the Business and Professions Code and Section 1666.5 of the Insurance Code. (c) Notwithstanding Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code, the information furnished to the Franchise Tax Board pursuant to Section 30 of the Business and Professions Code or Section 1666.5 of the Insurance Code shall not be deemed to be a public record and shall not be open to the public for inspection. 19530. The Franchise Tax Board shall preserve reports and tax returns for three years from the due dates thereof and thereafter until it orders them to be destroyed. Information returns and other documents filed pursuant to Article 4 (commencing with Section 18631) or Article 5 (commencing with Section 18661) of Chapter 2 shall be preserved until the Franchise Tax Board orders them to be destroyed. 19531. (a) The Franchise Tax Board may charge fees for its "Tax News" publication and its "California Package X." The fees shall include preparation and production costs and other related costs, including, but not limited to handling of requests, printing, and postage. (b) This section shall not apply to documents distributed to public distribution sites. (c) Fees received under this section shall be handled in accordance with Section 19605. Article 2. Disclosure of Information 19542. Except as otherwise provided in this article, it is a misdemeanor for the Franchise Tax Board or any member thereof, or any deputy, agent, clerk, or other officer or employee of the state (including its political subdivisions), or any former officer or employee or other individual, who in the course of his or her employment or duty has or had access to returns, reports, or documents required to be filed under this part, to disclose or make known in any manner information as to the amount of income or any particulars (including the business affairs of a bank or corporation) set forth or disclosed therein. 19543. (a) "Business affairs," as used in this article means the details relative to the business activities of the entity as disclosed by the return but shall exclude extraneous matters, such as the exact corporate title, corporate number, the date of commencement of business in this state, taxable year adopted, filing date of return, name, date and title of individuals signing affidavit to the return, due date of taxes, taxes unpaid, entity's address, private address of officers and directors. (b) Extraneous matters shall not be disclosed unless the request for the information states the names of the entities as to which information is desired and only if there is no reason to believe that the information will be used for commercial list purposes. 19544. Nothing in Section 19542, or in any other provision of law, shall be construed to require the disclosure of standards used or to be used for the selection of returns for examination, or data used or to be used for determining those standards, if the Franchise Tax Board determines that the disclosure will seriously impair assessment, collection, or enforcement under this part. 19545. A return or return information may be disclosed in a judicial or administrative proceeding pertaining to tax administration, if any of the following apply: (a) The taxpayer is a party to the proceeding, or the proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of the taxpayer's civil liability with respect to any tax imposed under this part. (b) The treatment of an item reflected on the return is directly related to the resolution of an issue in the proceeding. (c) The return or return information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer which directly affects the resolution of an issue in the proceeding. 19546. Upon request of a committee appointed by either the Assembly or the Senate, or both, any information may be furnished to the committee, but it is a misdemeanor for the committee or any member, clerk, or other officer or employee thereof to disclose in any manner any particulars of the information so furnished except to law enforcement officers for the purpose of aiding the detection or prosecution of crimes committed in violation of this part. 19547. In a matter involving tax administration under this part, a return or return information shall be open to inspection by the Attorney General or other legal representatives of the state, if any of the following apply: (a) The taxpayer is or may be a party to the proceeding, or the proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of the taxpayer's civil liability with respect to any tax imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). (b) The treatment of an item reflected on the return is or may be related to the resolution of an issue in the proceeding or investigation. (c) The return or return information relates or may relate to a transactional relationship between a person who is a party to the proceeding and the taxpayer, which affects or may affect, the resolution of an issue in the proceeding or investigation. In addition, the Attorney General may inspect any report or return required under this part when required in the enforcement of any public or charitable trust or in compelling adherence to any charitable purposes for which any nonprofit corporation is formed. 19548. (a) The Franchise Tax Board, upon request by the California Parent Locator Service, may disclose to the California Parent Locator Service, pursuant to Sections 11478 and 11478.5 of the Welfare and Institutions Code, any taxpayer return information that may be of assistance in locating alleged abducting or absent parents, spouses, or former spouses, in enforcing their liability for child support or the liability for spousal support, in establishing a parent and child relationship, and in locating and returning abducted children to their parents. (b) Information disclosed to the California Parent Locator Service pursuant to subdivision (a) shall be disseminated by the California Parent Locator Service only as provided for by, and only for the purposes specified in, Sections 11478 and 11478.5 of the Welfare and Institutions Code. 19549. For purposes of this article: (a) "Return" means any tax or information return, or claim for refund required by, or provided for or permitted under, the provisions of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part which is filed with the Franchise Tax Board by, on behalf of, or with respect to any person, estate, or trust, and any amendment or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or part of, the return so filed. (b) "Return information" means a taxpayer's identity, the nature, source, or amount of his, her, or its income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments, whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by the Franchise Tax Board with respect to a return or with respect to the determination of the existence, or possible existence, of liability, or the amount thereof, of any person under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part for any tax, addition to tax, penalty, interest, fine, forfeiture, or other imposition, or offense. (c) "Taxpayer return information" means return information as defined in subdivision (b) which is filed with, or furnished to, the Franchise Tax Board by or on behalf of the taxpayer to whom the return information relates. (d) "Tax administration" means the administration, management, conduct, direction, and supervision of the execution and application of Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part. 19551. (a) The Franchise Tax Board may permit the Commissioner of Internal Revenue of the United States, or other tax officials of this state, or the Multistate Tax Commission, or the proper officer of any state imposing an income tax or a tax measured by income, or the authorized representative of any officer, to inspect the income tax returns of any taxpayer or partnership, or may furnish to the commission, or the officer or the authorized representative thereof an abstract of the return or supply thereto information concerning any item of income contained in any return or disclosed by the report of any investigation of the income or return. That information shall be furnished to the Multistate Tax Commission, the federal or state officer or his or her representative for tax purposes only. Except when furnished pursuant to a written agreement, information furnished pursuant to this section shall be furnished only if the request is in the form of an affidavit under penalty of perjury stating that the purpose for the request relates to an investigation of the tax specified in the request and that the information will be used in the ordinary performance of the applicant's official duties. (b) Notwithstanding subdivision (a), tax officials of political subdivisions of this state shall request information from the Franchise Tax Board by affidavit only. At the time a tax official makes the request, he or she shall provide the affected person with a copy of the affidavit and, upon request, make the information obtained available to that person. 19552. Except as otherwise provided by this article, the information furnished or secured pursuant to either this article or the express provisions of law, shall be used solely for the purpose of administering the tax laws or other laws administered by the person or agency obtaining it. Any unwarranted disclosure or use of the information by the person or agency, or the employees and officers thereof, is a misdemeanor. 19553. (a) Subject to the limitations of subdivision (b) of this section and federal law, the Franchise Tax Board may permit the Director of Social Services or deputy directors to inspect the income tax returns of applicants for aid, recipients of aid, or responsible relatives, or in lieu of the inspection, the State Franchise Tax Board may provide the director or deputy directors an abstract of the income tax return requested, or supply information concerning any item of income contained in the return or disclosed by the report of any investigation of the income or return of the applicant for aid, recipient of aid or responsible relative. (b) The right of the director or deputy directors to inspect income tax records or obtain the other information as provided in this section shall be limited to the records for the current year and the year preceding inspection of applicants or recipients of assistance under Division 9 (commencing with Section 10000) of the Welfare and Institutions Code, and the responsible relatives of the applicants or recipients. The information obtained pursuant to this section shall be used or disclosed only for the purpose of enabling the Director of Social Services or his or her deputy directors to verify or determine the eligibility or entitlement of an applicant for, or recipient of, public social services or the obligation of a responsible relative. (c) The counties are authorized to request the information as provided in this section from the Director of Social Services or deputy directors. The director may release the information to the director of a county from which the applicant or recipient receives aid and the information shall be used or disclosed by the director of the county only for the purpose specified in subdivision (b). (d) The applicant or recipient or responsible relative whose income tax records have been requested of the Franchise Tax Board shall be notified by mail that the request has been made at the time of the request. 19554. (a) Subject to the limitations of this section and federal law, the Franchise Tax Board may provide the Controller with the address or other identification or location information from income tax returns or other records which is necessary for the Controller to locate owners of unclaimed property pursuant to Title 10 (commencing with Section 1300) of Part 3 of the Code of Civil Procedure. (b) Neither the Controller nor any officer, employee, or agent, or former officer, employee, or agent of the Controller may disclose or use any information obtained from the Franchise Tax Board pursuant to this section except for the purpose of locating owners of unclaimed property as provided in subdivision (a) of this section. 19555. (a) Notwithstanding any other provision of law, the State Department of Social Services and the State Department of Health Services shall inform the Franchise Tax Board of the names and social security numbers of applicants for or recipients of public social services programs under Division 9 (commencing with Section 10000) of the Welfare and Institutions Code. (b) The Franchise Tax Board, upon receipt of this information, may inform the departments of any such applicant or recipient who received unearned income within the most recent available tax year, as reflected on magnetic tape information returns supplied to the Franchise Tax Board by payers, or on the magnetic tape prepared by the Franchise Tax Board which reflects paper information returns supplied to the Franchise Tax Board by payers. In addition, the Franchise Tax Board may provide, from those sources, the departments with the payee's name, social security number, and address; the payer's name and federal employer identification number, including branch code numbers, if applicable, and address; the dollar amount and type of unearned income; and any identifying account numbers. (c) The Franchise Tax Board shall return all information received from the departments after completing the exchange of information. (d) This section shall be implemented only to the extent it is funded in the annual Budget Act. 19556. (a) Notwithstanding any other provision of law, each city which maintains a computerized recordkeeping system or has access to a computerized recordkeeping or information system and which assesses a business tax shall annually furnish to the Franchise Tax Board the information specified in subdivision (b) for all businesses subject to the tax in the preceding fiscal year. (b) The information required shall include all of the following: (1) Business name. (2) Business address. (3) Federal employer identification number (if the business is a partnership or corporation, or owner's name and social security number (for all others). (4) Type of business activity. (5) Amount of annual business tax. (6) Any other information which the Franchise Tax Board may require. (c) The reports required under this section shall be filed on magnetic media or in other machine-readable form, according to standards prescribed by forms and instructions by the Franchise Tax Board. (d) Cities shall begin providing to the Franchise Tax Board the information required by this section as soon as economically feasible, but no later than December 31, 1990. The information shall be furnished annually at a time and in the form which the Franchise Tax Board may prescribe by forms and instructions. (e) (1) Notwithstanding Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code, the information furnished pursuant to this section shall not be deemed to be public records and shall not be open to the public for inspection. (2) Any deputy, agent, clerk, officer, or employee of any entity described in subdivision (a), or any former officer or employee or other individual who in the course of his or her employment or duty has or had access to the information required to be furnished under this section, shall not disclose or make known in any manner that information, except to the Franchise Tax Board. (f) It is the intent of the Legislature in enacting this section to utilize the social security account numbers or federal employer identification numbers for the sole purposes of establishing the identification of individuals affected by state tax laws and, to that end, the information furnished pursuant to this section shall be used exclusively for state tax enforcement purposes. 19557. (a) Notwithstanding any other provision of law, the California Student Aid Commission may annually inform the Franchise Tax Board of the names and social security numbers of the following persons who have, as part of the Student Aid Application for California, signed an authorization in a form and manner mutually agreeable to the Franchise Tax Board and the California Student Aid Commission for the release by the Franchise Tax Board of tax information to the California Student Aid Commission: (1) All applicants for, or recipients of, student financial aid. (2) Parents of dependent applicants for, or recipients of, student financial aid. (3) Spouses of applicants for, or recipients of, student financial aid. (b) The California Student Aid Commission shall submit the names and social security numbers as authorized in subdivision (a) in the form and manner prescribed by the Franchise Tax Board. (c) Upon receipt of this information, the Franchise Tax Board may provide the California Student Aid Commission, from state tax returns of individuals described in subdivision (a), their California adjusted gross income and the California income adjustments as are necessary to calculate their federal adjusted gross income, or any other information from their state tax return, that can be provided by the Franchise Tax Board through its automated process, that the California Student Aid Commission needs to administer the program for which the authorization was given. (d) All versions of the Student Aid Application for California shall include the authorization described in subdivision (a). The Franchise Tax Board may from time to time audit these authorizations. All processors of the Student Aid Application for California shall provide the Franchise Tax Board with access to any records necessary for completing these audits. The Franchise Tax Board shall report all audit findings to the California Student Aid Commission. (e) Any unwarranted disclosure or use of the tax information described in subdivision (c) by the California Student Aid Commission, or its employees and officers thereof, is a misdemeanor as provided in Section 19552. 19558. (a) Subject to the limitations of this section and federal law, the Franchise Tax Board may provide the Public Employees' Retirement System with the names and addresses or other identification or location information from income tax returns or other records required under Part 10 (commencing with Section 17001) or this part, solely for the purposes of disbursing unclaimed benefits pursuant to Chapter 9 (commencing with Section 21200) of Part 3 of Division 5 of Title 2 of the Government Code and distributing member statements on an annual basis. (b) Neither the Public Employees' Retirement System, nor its agents, nor any of its current or former officers or employees, shall disclose or use any information obtained pursuant to this section except as provided in this section. Any disclosure not authorized by this section is a misdemeanor. (c) The Franchise Tax Board may from time to time review the use of information provided to the Public Employees' Retirement System pursuant to this section and the Public Employees' Retirement System shall provide the Franchise Tax Board with access for that purpose. The reviews shall be limited to ensuring that the Public Employees' Retirement System uses the information provided by the Franchise Tax Board only in the manner specified in subdivision (a). The Franchise Tax Board shall report all findings to the Public Employees' Retirement System. 19561. (a) Notwithstanding any other section of law, the Franchise Tax Board may charge a fee for providing persons with copies of their tax returns. The fee shall include the costs of handling requests, copying documents, and postage. (b) Fees received under this section shall be handled in accordance with Section 19605. 19562. Whenever under this part or any act heretofore or hereafter enacted, the Franchise Tax Board is required or permitted to disclose information, to furnish abstracts, or to permit access to its records, to or by any official, department, bureau, or agency of this state (including its political subdivisions), or any other state, or the United States, it may charge the official, department, bureau, or agency for the reasonable cost of its services. 19563. This article does not prohibit the publication of statistics, so classified as to prevent the identification of particular reports or returns and the items thereof, or the publication of the percentage of dividends paid by any bank or corporation which is deductible by the recipient under Part 11 (commencing with Section 23001). 19564. The Franchise Tax Board shall publish on or before December 31, 1978, and each December 31 thereafter, information on the amount of tax paid by individual taxpayers with high total incomes. Total income for this purpose is to be calculated and set forth by adding to adjusted gross income any items of tax preference excluded from, or deducted in arriving at, adjusted gross income, and by subtracting any investment expenses incurred in the production of that income to the extent of the investment income. These data are to include the number of those individuals with total income over two hundred thousand dollars ($200,000) who owe no state income tax (after credits) and the deductions, exclusions, or credits used by them to avoid tax. 19565. (a) If an organization is exempt from taxation under Section 23701 for any income year, the application filed by the organization with respect to which the Franchise Tax Board made its determination that the organization was entitled to exemption under Section 23701, together with any papers submitted in support of the application, and any letter or other document issued by the Franchise Tax Board, with respect to the application, shall be open to public inspection. Any inspection under this subdivision may be made at the times, and in the manner, as the Franchise Tax Board shall by regulations prescribe. After the application of any organization has been opened to public inspection under this subdivision, the Franchise Tax Board shall, on the request of any person with respect to the organization, furnish a statement indicating the section which it has been determined describes the organization. (b) Upon request of the organization submitting any supporting papers described in subdivision (a), the Franchise Tax Board shall withhold from public inspection any information contained therein which it determines relates to any trade secret, patent, process, style of work, or apparatus, of the organization, if it determines that public disclosure of the information would adversely affect the organization. The Franchise Tax Board shall withhold from public inspection any information contained in supporting papers described in subdivision (a) the public disclosure of which it determines would adversely affect the national defense. (c) The Franchise Tax Board may impose a reasonable charge for supplying any information the disclosure of which is permitted under this section. Article 3. Tax Forms 19581. In enacting the California Personal Income Tax Fairness, Simplification, and Conformity Act of 1987, the Legislature finds and declares that for most taxpayers in most ordinary circumstances, the burden of preparing tax returns could be greatly reduced by the availability of state tax forms which would allow taxpayers to copy numbers from the federal return, make simple adjustments, look up the tax in published tax tables, subtract state tax credits, and either pay the amount due or file for a refund. 19582. For taxable years beginning on or after January 1, 1987, the Franchise Tax Board shall make available to taxpayers tax forms that are as simple as possible for taxpayers to prepare. These forms shall be designed to provide for taxpayers to copy figures from, or attach a copy of, their federal return or portions thereof, or both, and to make any necessary adjustments. The Franchise Tax Board shall, in preparing tax forms, make every effort to ease taxpayers' compliance burden, including, but not limited to, (a) designing forms so that, to the maximum extent possible, items already entered on the federal return may be copied to the state form, (b) reducing the number of state schedules by attaching copies of comparable federal schedules to the state return, where appropriate, and (c) choosing a weight and quality of paper, color of ink, and general form design which will facilitate the preparation of returns. 19583. The Franchise Tax Board shall, in preparing tax forms, include the following statement adjacent to the signature line of any income tax return required to be filed by a married individual: "It is unlawful to forge a spouse's signature." CHAPTER 8. DISPOSITION OF PROCEEDS Article 1. Transfers to General Fund 19601. The Franchise Tax Board shall transmit promptly to the Treasurer all moneys and remittances received by it under this part. It shall at the same time furnish copies of the schedules covering the transmittals to the Controller. 19602. Except for fees collected or accrued under Sections 19531 and 19561, all moneys and remittances received by the Franchise Tax Board as tax imposed under Part 10 (commencing with Section 17001), and related penalties, additions to tax, and interest imposed under this part, and amounts received pursuant to Article 5 (commencing with Section 19271) of Chapter 5, shall be deposited, after clearance of remittances, in the State Treasury and credited to the Personal Income Tax Fund. 19603. The balance of the moneys in the Personal Income Tax Fund shall, upon order of the Controller, be drawn therefrom for the purpose of making refunds under this part or be transferred to the General Fund. All undelivered refund warrants shall be redeposited in the Personal Income Tax Fund upon receipt by the Controller. 19604. (a) Except for fees received for services under Section 23305e through June 30, 1993, all moneys and remittances received by the Franchise Tax Board as tax imposed under Part 11 (commencing with Section 23001), and related penalties, additions to tax, and interest imposed under this part, shall be deposited in a special fund in the State Treasury, to be designated the Bank and Corporation Tax Fund. The moneys in the fund shall, upon the order of the Controller, be drawn therefrom for the purpose of making refunds under this part or be transferred into the General Fund. All undelivered refund warrants shall be redeposited into the Bank and Corporation Tax Fund upon receipt by the Controller. Fees received for services under Section 23305e through June 30, 1993, shall be treated as reimbursement of the Franchise Tax Board's costs and shall be deposited into the General Fund. (b) Notwithstanding Section 13340 of the Government Code, all moneys in the Bank and Corporation Tax Fund are hereby continuously appropriated, without regard to fiscal year, to the Franchise Tax Board for purposes of making all payments as provided in this section. 19605. All moneys and remittances received by the Franchise Tax Board as fees imposed under Section 19531 or 19561 through June 30, 1993, shall be treated as reimbursement of the Franchise Tax Board's costs and shall be deposited into the General Fund. Article 2. Tax Relief and Refund Account 19611. (a) The Tax Relief and Refund Account is hereby created in the General Fund. Notwithstanding Section 13340 of the Government Code, all moneys in the Tax Relief and Refund Account are hereby continuously appropriated, without regard to fiscal year, to the Franchise Tax Board for purposes of making all payments as provided in this section. (b) Notwithstanding any other provision of law, all payments required to be made to taxpayers or other persons from the Personal Income Tax Fund shall be paid from the Tax Relief and Refund Account. (c) The Controller shall transfer, as needed, to the Tax Relief and Refund Account: (1) From the unexpended balance of the annual Budget Act appropriation for Item 9100-101-001, Schedule 80-Renter's Tax Relief, an amount determined by the Franchise Tax Board to be equivalent to the total amount of renters' assistance credits and refunds allowed under Section 17053.5. (A) If there is no unexpended balance of the appropriation, as provided for in paragraph (1), the Controller shall transfer sufficient moneys from the Personal Income Tax Fund to make the renters' assistance credits and refunds until there is an unexpended balance. (B) Subsequent to there being no unexpended balance of the appropriation, as provided for in paragraph (1), and there being a transfer of moneys from the Personal Income Tax Fund to make the renters' assistance credits and refunds, reimbursement shall be made from the unexpended balance of the appropriation as provided for in paragraph (1) to the Personal Income Tax Fund. However, if no such appropriation is subsequently made, reimbursement shall be made from the General Fund. (2) From the disability fund, the amount transferable to the General Fund pursuant to subdivision (a) of Section 1176.5 of the Unemployment Insurance Code. (3) From the Personal Income Tax Fund, such additional amounts as determined by the Franchise Tax Board to be necessary to make the payments required under this section. CHAPTER 9. VIOLATIONS 19701. Any person who does any of the following is liable for a penalty of not more than five thousand dollars ($5,000): (a) With or without intent to evade any requirement of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part or any lawful requirement of the Franchise Tax Board, fails to file any return or to supply any information required, or who, with or without such intent, makes, renders, signs, or verifies any false or fraudulent return or statement, or supplies any false or fraudulent information. (b) Aids, abets, advises, encourages, or counsels any person to evade the tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) by not filing any return or supplying any information required under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, or, by making, rendering, signing, or verifying any false or fraudulent return or statement, or by supplying false or fraudulent information. (c) Under this part, is required to pay any estimated tax or tax, who willfully fails to pay that estimated tax or tax, at the time or times required by law or regulations. The penalty shall be recovered in the name of the people in any court of competent jurisdiction. Counsel for the Franchise Tax Board may, upon request of the district attorney or other prosecuting attorney, assist the prosecuting attorney in presenting the law or facts to recover the penalty at the trial of a criminal proceeding for violation of this section. That person is also guilty of a misdemeanor and shall upon conviction be fined not to exceed five thousand dollars ($5,000) or be imprisoned not to exceed one year, or both, at the discretion of the court, together with costs of investigation and prosecution. (d) For purposes of subdivision (a), the president of a bank or corporation, or the chief operating officer, is the person presumed to be responsible for filing any return or supplying information required from that bank or corporation. 19701.5. (a) Any person who signs his or her spouse's name on any income tax return, or any schedules or attachments thereto, without the consent of the spouse as provided in subdivision (b), is guilty of a misdemeanor and shall upon conviction be fined an amount not to exceed five thousand dollars ($5,000) or be imprisoned for a term not to exceed one year, or both, at the discretion of the court, together with costs of investigation and prosecution. (b) Notwithstanding subdivision (a), any person who signs his or her spouse's name shall not be guilty of a misdemeanor when one spouse is physically unable by reason of disease or injury to sign a joint return, and the other spouse, with the oral consent of the one who is incapacitated, signs the incapacitated spouse's name in the proper place on the return followed by the words "By ____, Husband (or Wife)," and by the signature of the signing spouse in his or her own right, provided that a dated statement signed by the spouse who is signing the return is attached to and made a part of the return stating each of the following: (1) The name of the return being filed. (2) The taxable year. (3) The reason for the inability of the spouse who is incapacitated to sign the return. (4) That the spouse who is incapacitated consented to the signing of the return and that the taxpayer and his or her agent, if any, are responsible for the return as made and incur liability for the penalties provided for erroneous, false, or fraudulent returns. (c) The penalties provided by this section are cumulative and shall not be construed as restricting any other penalty provided by law based upon the same facts, including any penalty under Section 470 of the Penal Code. However, an act or omission which is made punishable in different ways by this section and different provisions of the Penal Code shall not be punished under more than one provision. 19702. The prosecutor may, with the consent of the Franchise Tax Board, compromise any penalty for which he or she may bring action under this chapter. The penalties provided by this chapter are additional to all other penalties provided in this part. 19703. The certificate of the Franchise Tax Board to the effect that a return has not been filed or that information has not been supplied as required by this part is prima facie evidence that the return has not been filed or that the information has not been supplied. 19704. Any action or prosecution under this chapter shall be instituted within six years after commission of the offense. 19705. (a) Any person who does any of the following shall be guilty of a felony and, upon conviction thereof, shall be fined not more than twenty thousand dollars ($20,000) or imprisoned not more than three years, or both, together with the costs of prosecution: (1) Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he or she does not believe to be true and correct as to every material matter. (2) Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the Personal Income Tax Law or the Bank and Corporation Tax Law, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not that falsity or fraud is with the knowledge or consent of the person authorized or required to present that return, affidavit, claim, or document. (3) Simulates or falsely or fraudulently executes or signs any bond, permit, entry, or other document required by the provisions of the Personal Income Tax Law or the Bank and Corporation Tax Law, or by any regulation made in pursuance thereof, or procures the same to be falsely or fraudulently executed or advises, aids in, or connives at that execution thereof. (4) Removes, deposits, or conceals, or is concerned in removing, depositing, or concealing, any goods or commodities for or in respect whereof any tax is or shall be imposed, or any property upon which levy is authorized by Chapter 5 (commencing with Section 19201) of this part; or Chapter 5 (commencing with Section 706.010) of Division 2 of, and Chapter 8 (commencing with Section 688.010) of Division 1 of, Title 9 of the Code of Civil Procedure, with intent to evade or defeat the assessment or collection of any tax, additions to tax, penalty, or interest imposed by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part. (5) In connection with any settlement under Section 19442, or offer of that settlement, or in connection with any closing agreement under Section 19441 or offer to enter into any such agreement, willfully does any of the following: (A) Conceals from any officer or employee of this state any property belonging to the estate of a taxpayer or other person liable in respect of the tax. (B) Receives, withholds, destroys, mutilates, or falsifies any book, document, or record, or makes any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax. (b) In the case of a bank or corporation, the twenty thousand dollars ($20,000) limitation specified in subdivision (a) shall be increased to one hundred thousand dollars ($100,000). (c) The fact that an individual's name is signed to a return, statement, or other document filed shall be prima facie evidence for all purposes that the return, statement, or other document was actually signed by him or her. (d) For purposes of this section "person" means the taxpayer, any member of the taxpayer's family, any corporation, agent, fiduciary, or representative of, or any other individual or entity acting on behalf of, the taxpayer, or any other corporation or entity owned or controlled by the taxpayer, directly or indirectly, or which owns or controls the taxpayer, directly or indirectly. 19706. Any person or any officer or employee of any bank or corporation who, within the time required by or under the provisions of this part, willfully fails to file any return or to supply any information with intent to evade any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), or who, willfully and with like intent, makes, renders, signs, or verifies any false or fraudulent return or statement or supplies any false or fraudulent information, is punishable by imprisonment in the county jail not to exceed one year, or in the state prison, or by fine of not more than twenty thousand dollars ($20,000), or by both the fine and imprisonment, at the discretion of the court. 19707. The place of trial for the offenses enumerated in this chapter of this code shall be in the county of residence or principal place of business of the defendant or defendants; provided, that if the defendant has no residence or principal place of business in this state, the trial shall be held in the County of Sacramento. 19708. Any person required under this part to collect, account for, and pay over any tax or amount required to be withheld who willfully fails to collect or truthfully account for and pay over the tax or amount shall, in addition to other penalties provided by law, be guilty of a felony, and, upon conviction thereof, shall be fined not more than two thousand dollars ($2,000) or imprisoned in the state prison, or both. 19709. Any person who, with or without intent to evade, fails to withhold, pursuant to Section 18662 or 18666, or pay over any tax withheld, is guilty of a misdemeanor, and, upon conviction be fined an amount not to exceed one thousand dollars ($1,000) or imprisoned for not more than one year, or both, at the discretion of the court. 19710. If a taxpayer fails to file a return within 60 days after the Franchise Tax Board issues a notice and demand for the return, the Franchise Tax Board may petition the court for a writ of mandate to require the taxpayer to file a return. The judgment shall include costs in favor of the prevailing party. 19711. Any individual required to supply information to his or her employer under Section 13040, 13041, or 13042 of the Unemployment Insurance Code, who willfully supplies false or fraudulent information, or who willfully fails to supply information thereunder which would require an increase in the tax to be withheld under Section 13020 of the Unemployment Insurance Code, shall, in addition to any other penalty otherwise provided by law, upon conviction thereof, be fined not more than one thousand dollars ($1,000), or imprisoned not more than one year, or both. 19712. Any tax preparer, as defined in subdivision (b) of Section 19169, who endorses or otherwise negotiates (directly or through an agent) any warrant made in respect of the taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) which is issued to a taxpayer (other than the tax preparer) shall, in addition to other penalties provided by law, be guilty of a misdemeanor, and upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned not more than one year, or both, together with the costs of prosecution. This section shall not apply where the tax preparer has advanced the taxpayer an amount of money equal to or greater than the amount of the taxpayer's tax refund. 19713. (a) Any person or employer who fails to comply with subdivision (b) of Section 19009 shall, in addition to any other penalties provided by law, be guilty of a misdemeanor, and, upon conviction thereof, shall be fined no more than five thousand dollars ($5,000), or imprisoned not more than one year, or both, together with the costs of prosecution. (b) This section shall not apply: (1) To any person or employer, if that person or employer shows that there was reasonable doubt as to (A) whether the law required collection of the tax, or (B) who was required by law to collect the tax. (2) To any person or employer, if that person or employer shows that the failure to comply with the provisions of subdivision (b) of Section 19009 was due to circumstances beyond his or her control. (c) For purposes of paragraph (2), a lack of funds existing immediately after the payment of wages (whether or not created by the payment of the wages) shall not be considered to be circumstances beyond the control of a person or employer. 19714. Whenever it appears to the State Board of Equalization or any court of record of this state that proceedings before it under this part have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in the proceedings is frivolous or groundless, or that the taxpayer unreasonably failed to pursue available administrative remedies, a penalty in an amount not in excess of five thousand dollars ($5,000) shall be imposed. Any penalty so imposed shall be paid upon notice and demand from the Franchise Tax Board and shall be collected as a tax. 19715. (a) A civil action in the name of the State of California to enjoin any person from further engaging in conduct subject to penalty under Section 19177 (relating to the penalty for promoting abusive tax shelters, etc.) or 19178 (relating to penalty for aiding and abetting understatement of tax liability) may be commenced at the request of the Franchise Tax Board. Any action under this section shall be brought in accordance with Section 19707. The court may exercise its jurisdiction over that action separate and apart from any other action brought by the State of California against that person. (b) In any action under subdivision (a), the court may enjoin the person from engaging in the conduct or in any other activity subject to penalty under Section 19177 or 19178, if the court finds both of the following: (1) That the person has engaged in any conduct subject to penalty under Section 19177 (relating to penalty for promoting abusive tax shelters, etc.) or 19178 (relating to penalty for aiding and abetting understatement of tax liability). (2) That injunctive relief is appropriate to prevent recurrence of that conduct. 19717. (a) In the case of any civil proceeding which is (1) Brought by or against the State of California in connection with the determination, collection, or refund of any tax, interest, or penalty under this part, and (2) Brought in a court of record of this state, the prevailing party may be awarded a judgment for reasonable litigation costs incurred in that proceeding. (b) (1) A judgment for reasonable litigation costs shall not be awarded under subdivision (a) unless the court determines that the prevailing party has exhausted the administrative remedies available to that party under this part. (2) An award under subdivision (a) shall be made only for reasonable litigation costs which are allocable to the State of California and not to any other party to the action or proceeding. (3) (A) No award for reasonable litigation costs may be made under subdivision (a) with respect to any declaratory judgment proceeding. (B) Subparagraph (A) shall not apply to any proceeding which involves the revocation of a determination that the organization is described in Section 23701d. (4) No award for reasonable litigation costs may be made under subdivision (a) with respect to any portion of the civil proceeding during which the prevailing party has unreasonably protracted that proceeding. (c) For purposes of this section: (1) "Reasonable litigation costs" includes any of the following: (A) Reasonable court costs. (B) Based upon prevailing market rates for the kind or quality of services furnished any of the following: (i) The reasonable expenses of expert witnesses in connection with the civil proceeding, except that no expert witness shall be compensated at a rate in excess of the highest rate of compensation for expert witnesses paid by the State of California. (ii) The reasonable cost of any study, analysis, engineering report, test, or project which is found by the court to be necessary for the preparation of the party's case. (iii) Reasonable fees paid or incurred for the services of attorneys in connection with the civil proceeding, except that those fees shall not be in excess of seventy-five dollars ($75) per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceeding, justifies a higher rate. (2) (A) "Prevailing party" means any party to any proceeding described in subdivision (a) (other than the State of California or any creditor of the taxpayer involved) that: (i) Establishes that the position of the State of California in the civil proceeding was not substantially justified, and (ii) (I) Has substantially prevailed with respect to the amount in controversy, or (II) Has substantially prevailed with respect to the most significant issue or set of issues presented. (B) Any determination under subparagraph (A) as to whether a party is a prevailing party shall be made (i) By the court, or (ii) By agreement of the parties. (3) The term "civil proceeding" includes a civil action. (d) For purposes of this section, in the case of (1) Multiple actions which could have been joined or consolidated, or (2) A case or cases involving a return or returns of the same taxpayer (including joint returns of married individuals) which could have been joined in a single proceeding in the same court, the actions or cases shall be treated as one civil proceeding regardless of whether the joinder or consolidation actually occurs, unless the court in which the action is brought determines, in its discretion, that it would be inappropriate to treat the actions or cases as joined or consolidated for purposes of this section. (e) An order granting or denying an award for reasonable litigation costs under subdivision (a), in whole or in part, shall be incorporated as a part of the decision or judgment in the case and shall be subject to appeal in the same manner as the decision or judgment. (f) For purposes of this section, "position of the State of California" includes either of the following: (1) The position taken by the State of California in the civil proceeding. (2) Any administrative action or inaction by the Franchise Tax Board (and all subsequent administrative action or inaction) upon which that proceeding is based. 19718. Any employer or agent of an employer who provides a wage statement or similar document to any undocumented worker or former undocumented worker at that person's request for the purpose of documenting that person's eligibility for legalization pursuant to the federal Immigration Reform and Control Act (Public Law 99-603), shall not be liable for any penalty or criminal or civil violation under this part relative to the undocumented worker or former undocumented worker based on any facts disclosed in the wage statement or similar document so provided. Nothing in this section shall be construed to limit the liability under any provision of law of any person who engages in the procurement or production of false or fraudulent wage statements or similar documents to any person for purposes of legalization under the federal Immigration Reform and Control Act. This section does not apply to penalties assessed or criminal actions filed prior to May 1, 1987. This section does not apply where the Employment Development Department, through independent means, discovers that an employer has withheld personal income tax and disability insurance contributions from workers' paychecks and has not remitted those moneys to the department. The immunity from liability pursuant to this section shall apply only to facts disclosed in the wage statement or similar document provided on or after the effective date of this section and only until the date of the termination of the legalization provisions for agricultural and nonagricultural workers of the federal Immigration Reform and Control Act. However, the immunity from liability pursuant to this section shall continue until the cause of action is tolled by the applicable statute of limitations. 19719. Any person who attempts or purports to exercise the powers, rights, and privileges of a bank or corporation which has been suspended pursuant to Section 23301 or who transacts or attempts to transact intrastate business in this state on behalf of a foreign bank or corporation, the rights and privileges of which have been forfeited pursuant to the section, is punishable by a fine of not less than two hundred fifty dollars ($250) and not exceeding one thousand dollars ($1,000), or by imprisonment not exceeding one year, or both fine and imprisonment. CHAPTER 10. RES JUDICATA 19801. In the determination of any issue of law or fact under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, neither the Franchise Tax Board nor any officer or agency having any administrative duties under this part nor any court is bound by the determination of any other officer or administrative agency of the state. 19802. (a) In the determination of any case arising under this part, the rule of res judicata is applicable only if the liability involved is for the same year as was involved in another case previously determined. (b) Notwithstanding the holding in Pope Estate Company v. Johnson, 43 Cal. App. 2d 170, in any action filed pursuant to Section 19382 (relating to taxpayer suits for refund), in addition to the defenses or relief sought in the action, the Franchise Tax Board shall assert in defense only those unpaid liabilities of the taxpayer for the same year which are evidenced by any of the following: (1) A final proposed assessment. (2) A notice of tax due. (3) A final notice of action. In addition, any refund claim of a taxpayer for the same year resulting from a federal audit adjustment made subsequent to the filing of the action need not be asserted by the taxpayer in that action. SEC. 27. Section 21022 of the Revenue and Taxation Code is amended to read: 21022. (a) A taxpayer shall be granted an extension of time for filing a return pursuant to Section 18567 if the taxpayer qualified for a federal extension. (b) An extension of time granted pursuant to this section or Section 18567 is not an extension of time for payment of tax required to be paid on or before the due date of the return without regard to extension. Underpayment of tax penalties shall be imposed as provided by law without regard to any extension granted under this section or Section 18567. (c) This section shall apply to returns required to be filed on or after April 15, 1992. SEC. 28. Section 23036 of the Revenue and Taxation Code is amended to read: 23036. (a) (1) The term "tax" includes any of the following: (A) The tax imposed under Chapter 2 (commencing with Section 23101). (B) The tax imposed under Chapter 3 (commencing with Section 23501). (C) The tax on unrelated business taxable income, imposed under Section 23731. (D) The tax on S corporations imposed under Section 23802. (2) The term "tax" does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667. (b) For purposes of Article 5 (commencing with Section 18661) of Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4, Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7 (commencing with Section 19501) of Part 10.2, and for purposes of Sections 18601, 19001, and 19005, the term "tax" shall also include all of the following: (1) The tax on limited partnerships, imposed under Section 23081. (2) The alternative minimum tax imposed under Chapter 2.5 (commencing with Section 23400). (3) The tax on built-in gains of S corporations, imposed under Section 23809. (4) The tax on excess passive investment income of S corporations, imposed under Section 23811. (c) Notwithstanding any other provision of this part, credits shall be allowed against the "tax" in the following order: (1) Credits which do not contain carryover provisions. (2) Credits which, when the credit exceeds the "tax," allow the excess to be carried over to offset the "tax" in succeeding taxable years. The order of credits within this paragraph shall be determined by the Franchise Tax Board. (3) The minimum tax credit allowed by Section 23453. (4) Credits for taxes withheld under Section 18662. (d) Notwithstanding any other provision of this part, each of the following shall be applicable: (1) No credit shall reduce the "tax" below the tentative minimum tax (as defined by paragraph (1) of subdivision (a) of Section 23455), except the following credits, but only after allowance of the credit allowed by Section 23453 (A) The credit allowed by former Section 23601 (relating to solar energy). (B) The credit allowed by former Section 23601.4 (relating to solar energy). (C) The credit allowed by Section 23601.5 (relating to solar energy). (D) The credit allowed by Section 23609 (relating to research expenditures). (E) The credit allowed by Section 23609.5 (relating to clinical testing expenses). (F) The credit allowed by Section 23610.5 (relating to low-income housing). (G) Credits for taxes withheld under Section 18662. (2) No credit against the tax shall reduce the minimum franchise tax imposed under Chapter 2 (commencing with Section 23101). (e) Any credit which is partially or totally denied under subdivision (d) shall be allowed to be carried over to reduce the "tax" in the following year, and succeeding years if necessary, if the provisions relating to that credit include a provision to allow a carryover of the unused portion of that credit. (f) Unless otherwise provided, any remaining carryover from a credit which has been repealed or made inoperative shall continue to be allowed to be carried over and applied against the "tax" until the credit has been exhausted. (g) Unless otherwise provided, if two or more taxpayers share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to its respective share of the costs paid or incurred. SEC. 29. Section 23058 of the Revenue and Taxation Code is amended to read: 23058. Unless otherwise specifically provided therein, the provisions of any act: (a) That affect the imposition or computation of taxes, additions to tax other than Sections 19142 to 19151, inclusive, penalties, or the allowance of credits against the tax, shall be applied to income years beginning on or after January 1 of the year in which the act takes effect. (b) That change the provisions of Sections 19023 to 19027, inclusive, (relating to payment of estimated tax) or Sections 19142 to 19151, inclusive, (relating to underpayment of estimated tax) shall be applied to income years beginning on or after January 1 of the year immediately following the year in which the act takes effect. (c) That otherwise affect the provisions of this part shall be applied on and after the date the act takes effect. SEC. 30. Section 23060 of the Revenue and Taxation Code is amended to read: 23060. Provisions in other codes or General Law Statutes which are related to this part include all of the following: (a) Chapter 20.6 (commencing with Section 9891) of Division 3 of the Business and Professions Code, relating to tax preparers. Sections 1502, 2204 to 2206, inclusive, 6210, 6810, 8210, and 8810 of the Corporations Code, relating to the corporation officer statement penalty. (c) Section 2104 of the Corporations Code, that prevents the application of any provision of this part against any foreign lending institution whose activities in this state are limited to those described in Section 191(d) of the Corporations Code. (d) Sections 15700 to 15702.1, inclusive, of the Government Code, relating to the Franchise Tax Board. (e) Part 10 (commencing with Section 17001), relating to the Personal Income Tax Law. (f) Part 10.2 (commencing with Section 18401), relating to the Administration of Franchise and Income Taxes. (g) Part 10.7 (commencing with Section 21001), relating to the Taxpayers' Bill of Rights. (h) Part 18 (commencing with Section 38001), relating to the Multistate Tax Compact. SEC. 31. Section 23081 of the Revenue and Taxation Code is amended to read: 23081. (a) For taxable years beginning on or after January 1, 1988, every limited partnership doing business in this state (as defined by Section 23101) and required to file a return under Section 18633 shall pay annually to this state a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified in Section 23153 for the current taxable year. The tax imposed under this section shall be due and payable on the date the return is required to be filed under Section 18633. (b) For purposes of this section, "limited partnership" means any partnership formed by two or more persons under the laws of this state or any other jurisdiction and having one or more general partners and one or more limited partners. SEC. 32. Section 23101.5 of the Revenue and Taxation Code is amended to read: 23101.5. (a) The Franchise Tax Board may determine that a corporation is not doing business in this state for purposes of this chapter or deriving income from sources within this state for purposes of Chapter 3 (beginning with Section 23501) if its only activities within this state are either or both of the following: (1) The purchase of personal property or services solely for its own use or use by its affiliate outside this state if the corporation does not have more than 100 employees in this state, and their duties are limited to solicitation, negotiation, liaison, monitoring, auditing, and inspecting the property or services acquired, or providing technical advice with respect to its requirements. (2) The presence of employees in this state only for the purpose of attending a public or private school, college or university. (b) A corporation may petition the Franchise Tax Board for a determination in accord with procedures established by the Franchise Tax Board. The filing of that petition shall be deemed a waiver of the confidentiality provisions of Section 19542 with respect to the facts alleged in the petition and any additional evidence produced with respect to those facts. (c) If such determination is made, it shall remain in force for five years as long as the corporation continues to meet the above criteria; provided that, with respect to corporations meeting the above criteria on or before January 1, 1978, the determination shall remain in force indefinitely so long as the corporation continues to meet the above criteria. SEC. 32.5. Section 23101.5 of the Revenue and Taxation Code is amended to read: 23101.5. (a) The Franchise Tax Board may determine that a corporation is not doing business in this state for purposes of this chapter or deriving income from sources within this state for purposes of Chapter 3 (commencing with Section 23501) if its only activities within this state consist of either or both of the following: (1) The purchase of personal property or services solely for its own use or use by its affiliate outside this state if: (A) The corporation does not have more than 100 employees in this state, whose duties are limited to solicitation, negotiation, liaison, monitoring, auditing, and inspecting the property or services acquired, or providing technical advice with respect to its requirements, and (B) The corporation does not have more than 200 employees in this state, whose duties are limited to solicitation, negotiation, liaison, monitoring, auditing, and inspecting the property or services acquired, or providing technical advice with respect to its requirements, and the personal property or services purchased by the corporation or its affiliate are used for the construction or modification of a physical plant or facility located outside the state, and (C) The combined number of employees in this state pursuant to paragraphs (A) and (B) does not exceed 200. (2) The presence of employees in this state only for the purpose of attending a public or private school, college or university. (b) A corporation may petition the Franchise Tax Board for a determination in accord with procedures established by the Franchise Tax Board. The filing of that petition shall be deemed a waiver of the confidentiality provisions of Section 19542 with respect to the facts alleged in the petition and any additional evidence produced with respect to those facts. (c) If the determination is made, it shall remain in force for five years as long as the corporation continues to meet the above criteria. However, with respect to corporations meeting the above criteria on or before January 1, 1978, the determination shall remain in force indefinitely so long as the corporation continues to meet the above criteria. (d) The corporation shall annually confirm with the Franchise Tax Board within two months and 15 days after the close of its fiscal year, in the manner as the Franchise Tax Board may prescribe, that the facts relevant to the granting of the determination then in effect remain unchanged or shall state and explain any changes that have occurred since the preceding report was filed. (e) Where a corporation applying for or relying on the determination is engaged in a unitary business, the limitation of 100 or 200 employees, as applicable, that is specified in paragraph (1) of subdivision (a) shall apply to the aggregation of all corporations within the unitary group. SEC. 33. Section 23184.5 of the Revenue and Taxation Code is amended to read: 23184.5. Litigation is pending regarding the application of Section 23182 with respect to business license taxes imposed by charter cities on financial corporations. If the final court determination is that charter cities may impose those taxes, then to the extent those taxes were imposed and paid, an offset is properly allowable pursuant to Section 23184 as if Chapter 1150 of the Statutes of 1979 had never been enacted. Pending that determination, the Franchise Tax Board shall issue proposed deficiency assessments disallowing those offsets claimed on returns for income years beginning in 1983 and thereafter. However, final action on the proposed deficiencies shall be deferred pending the final court determination. If the final court determination upholds the imposition of those taxes, then the proposed deficiencies shall be withdrawn. If the final court determination does not uphold the imposition of those taxes, the proposed deficiencies shall become final upon written notice thereof by the Franchise Tax Board and the deficiency assessments shall be due and payable within 30 days of the date of that notice by the Franchise Tax Board. If full payment is made within that 30-day period, interest shall not be imposed for the period after the date of the notice. Interest on those deficiency assessments shall accrue from the due date of the return without regard to any extensions. The period for making the proposed deficiency assessments provided by this section shall either be the period specified in Section 19057 or one year after the final court determination, whichever period is later. SEC. 34. Section 23225 of the Revenue and Taxation Code is amended to read: 23225. The adjusted tax, as provided in Sections 23222 to 23224.5, inclusive, for any taxable year in excess of the prepayment for that year, shall be due and payable as provided in Article 2 (commencing with Section 18601) of Chapter 2 of Part 10.2. SEC. 35. Section 23301 of the Revenue and Taxation Code is amended to read: 23301. Except for the purposes of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect that application or to set forth a new name, the corporate powers, rights and privileges of a domestic taxpayer may be suspended, and the exercise of the corporate powers, rights and privileges of a foreign taxpayer in this state may be forfeited, if any of the following conditions occur: (a) If any tax, penalty, or interest, or any portion thereof, that is due and payable under Chapter 4 (commencing with Section 19001) of Part 10.2, or under this part, either at the time the return is required to be filed or on or before the 15th day of the ninth month following the close of the income year, is not paid on or before 6 p.m. on the last day of the 12th month after the close of the income year. (b) If any tax, penalty, or interest, or any portion thereof, due and payable under Chapter 4 (commencing with Section 19001) of Part 10.2, or under this part, upon notice and demand from the Franchise Tax Board, is not paid on or before 6 p.m. on the last day of the 11th month following the due date of the tax. (c) If any liability, or any portion thereof, which is due and payable under Article 7 (commencing with Section 19131) of Chapter 4 of Part 10.2, is not paid on or before 6 p.m. on the last day of the 11th month following the date that the tax liability is due and payable. SEC. 36. Section 23305e of the Revenue and Taxation Code is amended to read: 23305e. (a) The Franchise Tax Board may provide letters of good standing, verifying a corporation's status for doing business in California, at a charge reflecting the reasonable costs to the department of responding to these requests. (b) Fees received under this section shall be handled in accordance with Section 19604. SEC. 37. Section 23333 of the Revenue and Taxation Code is amended to read: 23333. (a) A taxpayer subject to Section 23186 shall, if it dissolves or withdraws prior to the date the rate is determined under Section 23186, pay a tax under Section 23332 at the maximum rate prescribed by Section 23186. If the rate is subsequently determined to be less than the maximum prescribed by Section 23186, a refund shall, within 30 days of that determination, be made as prescribed by Chapter 6 (commencing with Section 19301) of Part 10.2. (b) That part of the tax thus determined which is in excess of the rate specified in Section 23151 shall be collected as a demand for second installment under Chapter 4 (commencing with Section 19001) of Part 10.2. SEC. 38. Section 23335 of the Revenue and Taxation Code is amended to read: 23335. (a) Any return filed pursuant to subdivision (c) or (d) of Section 18601 that the taxpayer designates in the appropriate place on the form provided by the Franchise Tax Board as the taxpayer's final return as the result of a dissolution or withdrawal shall be treated as a request for a certificate issued by the Franchise Tax Board pursuant to Section 23334 unless the taxpayer has otherwise filed a request with the Franchise Tax Board for that certificate. (b) If a taxpayer has filed a return that is a request for a tax clearance certificate as described in subdivision (a), the Franchise Tax Board shall provide the taxpayer with information, including forms and instructions, regarding all documents that are required by this article to be filed with the Franchise Tax Board and the Secretary of State. SEC. 39. Section 23455 of the Revenue and Taxation Code is amended to read: 23455. For purposes of this part, Section 55 of the Internal Revenue Code is modified as follows: (a) Section 55(b)(1) of the Internal Revenue Code, relating to tentative minimum tax, is modified by requiring the tentative minimum tax for the taxable year to be imposed as follows: (1) With respect to corporations subject to tax under Chapter 2 (commencing with Section 23101), other than financial corporations, according to or measured by net income, for the privilege of doing business within this state, at a rate of 7 percent upon the basis of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount. (2) With respect to corporations subject to tax under Chapter 3 (commencing with Section 23501), on net income from sources within this state, at a rate of 7 percent upon the basis of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount. (3) With respect to corporations subject to tax under Article 2 of Chapter 4 (commencing with Section 23731), on the unrelated business income from sources within this state, at a rate of 7 percent upon the basis of so much of the alternative taxable income for the taxable year as exceeds the exemption amount. (4) With respect to banks subject to tax under Section 23181, according to or measured by net income, for the privilege of doing business within this state, in an amount equal to the sum of the following: (A) At a rate of 7 percent upon the basis of so much of the alternative minimum taxable income as exceeds the exemption amount, and (B) At the rate determined under Section 23186, less the rate prescribed by Section 23151, upon the basis of net income for the taxable year. (5) With respect to financial corporations subject to tax under Section 23183, according to or measured by net income, for the privilege of doing business within this state, in an amount equal to the sum of the following: (A) At a rate of 7 percent upon the basis of so much of the alternative minimum taxable income as exceeds the exemption amount, and (B) At the rate determined under Section 23186, less the rate prescribed by Section 23151, upon the basis of net income for the taxable year. The offset prescribed by Section 23184 shall be applied to the tentative minimum tax in the same manner and to the same extent as that offset is applied to the tax imposed under Chapter 2 (commencing with Section 23101). (b) Section 55(b)(2) of the Internal Revenue Code, relating to the definition of alternative minimum taxable income, is modified as follows: (1) For corporations whose net income is determined under Chapter 17 (commencing with Section 25101), alternative minimum taxable income shall be allocated and apportioned in the same manner as net income is allocated and apportioned for purposes of the regular tax. (2) With respect to taxpayers subject to Article 4 (commencing with Section 23221) of Chapter 2, Articles 4 (commencing with Section 23221) to 9 (commencing with Section 23361), inclusive, shall apply to the tax imposed by this section except that Section 23221 shall not apply. (3) For purposes of computing the alternative minimum tax for taxable years in which a taxpayer commenced doing business, dissolves, withdraws, or ceases doing business, Sections 18601, 23151, 23151.1, 23151.2, 23181, 23183, 23183.1, 23183.2, 23201 to 23204, inclusive, 23222 to 23224.5, inclusive, 23282, 23332.5, and 23504 shall be applied with due regard for the rate and alternative minimum taxable income prescribed by this chapter. (c) Section 55(c) of the Internal Revenue Code, relating to the definition of regular tax, is modified to read: (1) For purposes of this chapter, the term "regular tax" means the amount of tax imposed under Chapter 2 (commencing with Section 23101) or Chapter 3 (commencing with Section 23501) or Article 2 (commencing with Section 23731) of Chapter 4, but does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667. (2) The tax specified in paragraph (1) shall be the amount determined prior to reduction by any credits against the tax. SEC. 40. Section 23701r of the Revenue and Taxation Code is amended to read: 23701r. (a) A political organization. However, a political organization shall be subject to tax under this part with respect to its "political organization taxable income" and such income shall be subject to tax as provided by Chapter 3 (commencing with Section 23501). (b) For purposes of this section, the political organization taxable income of any organization for any taxable year is an amount equal to the excess over one hundred dollars ($100) (if any) of (1) The gross income for the taxable year (excluding any exempt function income), over (2) The deductions allowed by this part which are directly connected with the production of the gross income (excluding exempt function income). (c) For purposes of this section, the term "exempt function income" means any amount received as (1) A contribution of money or other property, (2) Membership dues, a membership fee or assessment from a member of the political organization, or (3) Proceeds from a political fundraising or entertainment event, or proceeds from the sale of political campaign materials, which are not received in the ordinary course of any trade or business, to the extent such amount is segregated for use only for the exempt function of the political organization. (d) For purposes of this part, if any political organization (1) Contributes any amount to or for the use of any political organization which is treated as exempt from tax under subdivision (a) of this section, (2) Contributes any amount to or for the use of any organization described in paragraph (1) or (2) of Section 509(a) of the Internal Revenue Code of 1954, which is exempt from tax under Section 23701, or (3) Deposits any amount in the General Fund or the Treasury of the United States or in the General Fund of any state or local government, such amount shall be treated as an amount not diverted for the personal use of the candidate or any other person. No deduction shall be allowed under this part for the contribution or deposit of any amount described in the preceding sentence. (e) For purposes of this section (1) The term "political organization" means a party, committee, association, fund, (including the trust of an individual candidate) or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. (2) The term "exempt function" means the function of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, or local public office or office in a political organization, or the election of Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. The term includes the making of expenditures relating to an office described in the preceding sentence which, if incurred by the individual, would be allowable as a deduction under Section 162 (a) of the Internal Revenue Code. (3) The term "contributions" has the meaning given to such term by paragraph (2) of subdivision (b) of Section 24434. (4) The term "expenditures" has the meaning given to such term by paragraph (3) of subdivision (b) of Section 24434. (f) For purposes of paragraph (1) of subdivision (e), a separate segregated fund (within the meaning of Section 610 of Title 18 of the United States Code or of any similar state statute, or within the meaning of any state statute which permits the segregation of dues money for exempt functions, within the meaning of paragraph (2) of subdivision (e)) which is maintained by an organization described in Sections 23701a through 23701p or Section 23701s which is exempt from tax under Section 23701 shall be treated as a separate organization. (g) (1) For purposes of this section, a fund established and maintained by an individual who holds, has been elected to, or is a candidate (within the meaning of paragraph (3)) for nomination or election to, any federal, state, or local elective public office for use by such individual exclusively for the preparation and circulation of such individual's newsletter shall, except as provided in paragraph (2), be treated as if such fund constituted a political organization. (2) In the case of any fund described in paragraph (1) the exempt function shall be only the preparation and circulation of the newsletter. (3) For purposes of paragraph (1), "candidate" means with respect to any federal, state, or local elective public office, an individual who does both of the following: (A) Publicly announces that he or she is a candidate for nomination or election to that office. (B) Meets the qualifications prescribed by law to hold that office. (h) The requirements set forth in subdivisions (a), (b) and (c) of Section 23701 shall not apply to a political organization or newsletter fund described in this section. However, in the case of a corporation incorporated or organized in this state or qualified to do business in this state, such corporation shall either pay the minimum tax provided in Section 23153 or obtain a certificate of exemption from the Franchise Tax Board before the corporation files with the Secretary of State its articles of incorporation or a duly certified copy thereof. (i) The requirements set forth in Section 23772 or Section 23774 shall not apply to a political organization or newsletter fund. Further, the requirements set forth in Sections 18505, 18506, and 18601 shall not apply to a political organization or newsletter fund described in this section, except that if it has political organization taxable income for any taxable year, the political organization shall be required to file income tax returns or statements as determined by the Franchise Tax Board under Chapter 3 (commencing with Section 23501). SEC. 41. Section 23772 of the Revenue and Taxation Code is amended to read: 23772. (a) For the purposes of this part (1) Except as provided in paragraph (2) every organization exempt from taxation under Section 23701 and every trust treated as a private foundation because of Section 4947(a)(1) of the Internal Revenue Code shall file an annual return, stating specifically the items of gross income, receipts, and disbursements, and such other information for the purpose of carrying out the laws under this part as the Franchise Tax Board may by rules or regulations prescribe, and shall keep such records, render under oath such statements, make such other returns, and comply with such rules and regulations as the Franchise Tax Board may from time to time prescribe. The return shall be filed on or before the 15th day of the fifth full calendar month following the close of the income year. (2) Exceptions from filing (A) Mandatory exceptions Paragraph (1) shall not apply to (i) Churches, their integrated auxiliaries, and conventions or association of churches, (ii) Any organization (other than a private foundation as defined in Section 23709), the gross receipts of which in each taxable year are normally not more than twenty-five thousand dollars ($25,000), or (iii) The exclusively religious activities of any religious order, (B) Discretionary exceptions The Franchise Tax Board may permit the filing of a simplified return for organizations based on either gross receipts or total assets or both gross receipts and total assets, or may permit the filing of an information statement (without fee), or may permit the filing of a group return for incorporated or unincorporated branches of a state or national organization where it determines that an information return is not necessary to the efficient administration of this part. (3) An organization that is required to file an annual information return shall pay a filing fee of ten dollars ($10) on or before the due date for filing the annual information return (determined with regard to any extension of time for filing the return) required by this section. In case of failure to pay the fee on or before such due date unless it is shown that such failure is due to reasonable cause, the filing fee shall be twenty-five dollars ($25). All collection remedies provided in Article 5 (commencing with Section 18661) of Chapter 2 of Part 10.2 shall be applicable to collection of the filing fee. However, the filing fee shall not apply to the organization described in paragraph (4). (4) Paragraph (3) shall not apply to: (A) a religious organization exempt under Section 23701d; (B) an educational organization exempt under Section 23701d, if such organization normally maintains a regular faculty and curriculum and normally has a regularly organized body of pupils or students in attendance at the place where its educational activities are regularly carried on; (C) a charitable organization, or an organization for the prevention of cruelty to children or animals, exempt under Section 23701d, if such organization is supported, in whole or in part, by funds contributed by the United States or any state or political subdivision thereof, or is primarily supported by contributions of the general public; (D) an organization exempt under Section 23701d, if such organization is operated, supervised, or controlled by or in connection with a religious organization described in subparagraph (A). (b) Every organization described in Section 23701d which is subject to the requirements of subdivision (a) shall furnish annually information, at such time and in such manner as the Franchise Tax Board may by rules or regulations prescribe, setting forth (1) Its gross income for the year, (2) Its expenses attributable to such income and incurred within the year, (3) Its disbursements within the year for the purposes for which it is exempt, (4) A balance sheet showing its assets, liabilities, and net worth as of the beginning of such year, (5) The total of the contributions and gifts received by it during the year, and the names and addresses of all substantial contributors, (6) The names and addresses of its foundation manager (within the meaning of Section 4946 of the Internal Revenue Code) and highly compensated employees, (7) The compensation and other payments made during the year to each individual described in paragraph (6), (8) In the case of an organization with respect to which an election under Section 23704.5 is effective for the taxable year, the following amounts for such organization for such taxable year: (A) The lobbying expenditures (as defined in Section 23740(c) (1)). (B) The lobbying nontaxable amount (as defined in Section 23740(c)(2)). (C) The grassroots expenditures (as defined in Section 23740 (c)(3)). (D) The grassroots nontaxable amount (as defined in Section 23740(c)(4)). For purposes of this paragraph, if Section 23740 (f) applies to the organization for the taxable year, the organization shall furnish the amounts with respect to the affiliated group as well as with respect to the organization. (9) Such other information with respect to direct or indirect transfers to, and other direct or indirect transactions and relationships with, other organizations described in Sections 23701a to 23701w, inclusive (other than Sections 23701d, 23701k, and 23701t), as the Franchise Tax Board may require to prevent either of the following: (A) Diversion of funds from the organization's exempt purpose. (B) Misallocation of revenue or expense, and (10) Any other relevant information as the Franchise Tax Board may prescribe. (c) In addition to the above annual return any organization which is required to file an annual report under Section 6056 of the Internal Revenue Code will furnish a copy of the report to the Franchise Tax Board at the time the annual return is due. (d) For the purposes of this part (1) In the case of a failure to file a return required under this section on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Franchise Tax Board and in the same manner as tax) by the exempt organization or trust failing so to file, five dollars ($5) for each month or part thereof during which such failure continues, but the total amount imposed hereunder on any organization for failure to file any return shall not exceed forty dollars ($40). (2) The Franchise Tax Board may make written demand upon a private foundation failing to file under paragraph (1) of this subdivision or subdivision (c) specifying therein a reasonable future date by which such filing shall be made, and if such filing is not made on or before such date, and unless it is shown that failure so to file is due to reasonable cause, there shall be paid (on notice and demand by the Franchise Tax Board and in the same manner as tax) by the person failing so to file, in addition to the penalty prescribed in paragraph (1), a penalty of five dollars ($5) each month or part thereof after the expiration of the time specified in the written demand during which such failure continues, but the total amount imposed hereunder on all persons for such failure to file shall not exceed twenty-five dollars ($25). If more than one person is liable under this paragraph for a failure to file, all such persons shall be jointly and severally liable with respect to such failure. The term "person" as used herein means any officer, director, trustee, employee, member, or other individual who is under a duty to perform the act in respect of which the violation occurs. (e) The reporting requirements and penalties shall be applicable for income years beginning after December 31, 1970, except that the provisions of subparagraph (B) of paragraph (2) of subdivision (a) shall apply to income years ending after December 31, 1970. SEC. 42. Section 23777 of the Revenue and Taxation Code is amended to read: 23777. The exemption granted to any organization under the provisions of Article 1 (commencing with Section 23701) of this chapter may be revoked by the Franchise Tax Board if the organization fails to (a) File the annual return or statement required under Section 23772 or 23774 or pay any amount required under Section 23703 or 23772 on or before the last day of the 12th month following the close of the income year; (b) Comply with Section 19504 (relating to powers of the Franchise Tax Board to examine records and subpoena witnesses); or (c) Confine its activities to those permitted by the section under which the exemption was granted. SEC. 43. Section 23802 of the Revenue and Taxation Code is amended to read: 23802. (a) Section 1363(a) of the Internal Revenue Code, relating to the taxability of an S corporation, shall not be applicable. (b) Corporations qualifying under this chapter shall continue to be subject to the taxes imposed under Chapter 2 (commencing with Section 23101) and Chapter 3 (commencing with Section 23501), except as follows: (1) The tax imposed under Section 23151 or 23501 shall be imposed at a rate of 21/2 percent rather than the rate specified in those sections. (2) In the case of an "S corporation" which is also a financial corporation, the rate of tax specified in paragraph (1) shall be increased by the excess of the rate imposed under Section 23183 over the rate imposed under Section 23151 and Section 23184 shall be applicable. (c) An "S corporation" shall be subject to the minimum franchise tax imposed under Section 23153. (d) (1) For purposes of subdivision (b), an "S corporation" shall be allowed a deduction under Section 24416 or 24416.1 (relating to net operating loss deductions), but only with respect to losses incurred during periods in which the corporation had in effect a valid election to be treated as an "S corporation" for purposes of this part. (2) Section 1371(b) of the Internal Revenue Code, relating to denial of carryovers between "C years" and "S years", shall apply for purposes of the tax imposed under subdivision (b), except as provided in paragraph (1) of this subdivision. (3) The provisions of this subdivision shall not affect the amount of any item of income or loss computed in accordance with the provisions of Section 1366 of the Internal Revenue Code, relating to pass-thru items to shareholders. (4) For purposes of subdivision (b) of Section 17276, relating to limitations on loss carryovers, losses passed through to shareholders of an "S corporation," to the extent otherwise allowable without application of that subdivision, shall be fully included in the net operating loss of that shareholder and then that subdivision shall be applied to the entire net operating loss. (e) For purposes of computing the taxes specified in subdivision (b), an "S corporation" shall be allowed a deduction from income for built-in gains and passive investment income for which a tax has been imposed under this part in accordance with the provisions of Section 1374 of the Internal Revenue Code, relating to tax imposed on certain built-in gains, or Section 1375 of the Internal Revenue Code, relating to tax imposed on passive investment income. (f) For purposes of computing taxes imposed under this part, as provided in subdivision (b) (1) An "S corporation" shall compute its deductions for amortization and depreciation in accordance with the provisions of Part 10 (commencing with Section 17001) of Division 2. (2) The provisions of Section 465 of the Internal Revenue Code, relating to limitation of deductions to the amount at risk, shall be applied in the same manner as in the case of an individual. (3) (A) The provisions of Section 469 of the Internal Revenue Code, relating to limitations on passive activity losses and credits, shall be applied in the same manner as in the case of an individual. For purposes of the tax imposed under Section 23151 or 23501, as modified by this section, material participation shall be determined in accordance with Section 469 (h) of the Internal Revenue Code, relating to certain closely held "C corporations" and personal service corporations. (B) For purposes of this paragraph, the "adjusted gross income" of the "S corporation" shall be equal to its "net income," as determined under Section 24341 with the modifications required by this subdivision, except that no deduction shall be allowed for contributions allowed by Section 24357. (g) The provisions of Section 1363(d) of the Internal Revenue Code, relating to recapture of LIFO benefits, shall be modified for purposes of this part to refer to Section 19102 in lieu of Section 6601 of the Internal Revenue Code. SEC. 44. Section 23810 of the Revenue and Taxation Code is amended to read: 23810. In the case of an "S corporation" having nonresident shareholders, the shareholders may elect to apply the provisions of Section 18535 (relating to a group return for nonresident partners of a partnership). SEC. 45. Section 23811 of the Revenue and Taxation Code is amended to read: 23811. Except as otherwise provided in this section, there is hereby imposed a tax on passive investment income attributable to California sources, determined in accordance with the provisions of Section 1375 of the Internal Revenue Code, relating to tax imposed on passive investment income, as modified by this section. (a) The tax imposed under this section shall not be imposed on an "S corporation" that has no excess net passive income for federal purposes determined in accordance with Section 1375 of the Internal Revenue Code. (b) (1) The rate of tax shall be equal to the rate of tax imposed under Section 23151 in lieu of Section 11(b) of the Internal Revenue Code. (2) In the case of an "S corporation" which is also a financial corporation, the rate of tax specified in paragraph (1) shall be increased by the excess of the rate imposed under Section 23183 over the rate imposed under Section 23151. (3) The tax imposed under subdivision (a) shall not be reduced by any financial corporation offset under Section 23184. (c) The provisions of Section 1375(c)(1) of the Internal Revenue Code, relating to credits, shall be modified to provide that the tax imposed under subdivision (a) shall not be reduced by any credits allowed under this part. (d) The term "subchapter C earnings and profits" as used in Sections 1362(d)(3) and 1375 of the Internal Revenue Code shall mean the subchapter C earnings and profits of the corporation attributable to California sources determined under this part, modified as provided in subdivision (e). (e) (1) In the case of a corporation which elects to be treated as an "S corporation" for purposes of this part for its first income year beginning in 1987, or for its first income year for which it has in effect a valid federal S election, there shall be allowed as a deduction in determining that corporation's subchapter C earnings and profits at the close of any income year the amount of any consent dividend (as provided in paragraph (2)) paid after the close of such income year. (2) In the event there is a determination that a corporation described in paragraph (1) has subchapter C earnings and profits at the close of any income year, that corporation shall be entitled to distribute a consent dividend to its shareholders. The amount of the consent dividend shall not exceed the difference between the corporation's subchapter C earnings and profits determined under subdivision (d) at the close of the income year with respect to which the determination is made and the corporation's subchapter C earnings and profits for federal income tax purposes at the same date. A consent dividend must be paid within 90 days of the date of the determination that the corporation has subchapter C earnings and profits. For this purpose, the date of a determination means the effective date of a closing agreement pursuant to Section 19441, the date an assessment of tax imposed by this section becomes final, or the date of execution by the corporation of an agreement with the Franchise Tax Board relating to liability for the tax imposed by this section. For purposes of Part 10 and this part, a corporation must make the election provided in Section 1368(e) (3) of the Internal Revenue Code for any consent dividend. (3) If a corporation distributes a consent dividend, it shall claim the deduction provided in paragraph (1) by filing a claim therefor with the Franchise Tax Board within 120 days of the date of the determination specified in paragraph (2). (4) The collection of tax imposed by this section from a corporation described in paragraph (2) shall be stayed for 120 days after the date of the determination specified in paragraph (2). If a claim is filed pursuant to paragraph (3), collection of such tax shall be further stayed until the date the claim is acted upon by the Franchise Tax Board. (5) If a claim is filed pursuant to paragraph (3), the running of the statute of limitations on the making of assessments and actions for collection of the tax imposed by this section shall be suspended for a period of two years after the date of the determination specified in paragraph (2). SEC. 46. Section 24273.5 of the Revenue and Taxation Code is amended to read: 24273.5. (a) Noncash patronage allocations from farmers' cooperative and mutual associations (whether paid in capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice or in some other manner that discloses the dollar amount of such noncash patronage allocations) may, at the election of the taxpayer, be considered as income and included in gross income for the income year in which received. (b) If a taxpayer exercises the election provided for in subdivision (a), the amount included in gross income shall be the face amount of such allocations. (c) If a taxpayer elects to exclude noncash patronage allocations from gross income for the income year in which received, such allocations shall be included in gross income in the year that they are redeemed or realized upon. (d) If a taxpayer exercises the election provided for in subdivision (c), the face amount of such noncash patronage allocations shall be disclosed in the return made for the income year in which such noncash patronage allocations were received. (e) If a taxpayer exercises the election provided for in subdivision (a) or (c) for any income year, then the method of computing income so adopted shall be adhered to with respect to all subsequent income years unless with the approval of the Franchise Tax Board a change to a different method is authorized. (f) If a taxpayer has made the election provided for in subdivision (c), then (1) the statutory period for the assessment of a deficiency for any income year in which the amount of any noncash patronage allocations are realized shall not expire prior to the expiration of four years from the date the Franchise Tax Board is notified by the taxpayer (in any manner as the Franchise Tax Board may by regulation prescribe) of the realization of gain on such allocations; and (2) that deficiency may be assessed prior to the expiration of the four-year period, notwithstanding the provisions of Section 19057 or the provisions of any other law or rule of law which would otherwise prevent such assessment. SEC. 47. Section 24447 of the Revenue and Taxation Code is amended to read: 24447. The Franchise Tax Board may disallow a deduction under this part to an individual or entity for amounts paid as remuneration for personal services if that individual or entity fails to report the payments required under Section 13050 of the Unemployment Insurance Code or Section 18637 or 18638 on the date prescribed therefor (determined with regard to any extension of time for filing). SEC. 48. Section 24448 of the Revenue and Taxation Code is amended to read: 24448. (a) Notwithstanding any other provisions in this part, in the case of a taxpayer who owns real property and has either failed to provide the information required pursuant to Section 18642 or has provided information which is either false, misleading, or incomplete in the information return required pursuant to Section 18642, no deduction for interest, taxes, depreciation, or amortization under Section 24343, 24344, 24345, 24349, or 24354.2 shall be allowed which relate to that real property, as provided in subdivision (b). (b) No deduction shall be allowed for the items provided in subdivision (a) from 60 days after the due date for filing the information return required pursuant to Section 18642 until the date the Franchise Tax Board determines that all provisions of Section 18642 have been complied with. (c) In the event the period of noncompliance does not cover an entire income year, the deductions shall be denied at the rate of one-twelfth for each full month during the period of noncompliance. SEC. 49. Section 24453 of the Revenue and Taxation Code is amended to read: 24453. Section 302(c)(2) of the Internal Revenue Code, relating to determining termination of interest, is modified to refer to the periods of limitation provided in "Chapter 4 (commencing with Section 19001) and Chapter 5 (commencing with Section 19201) of Part 10.2," in lieu of "Sections 6501 and 6502" of the Internal Revenue Code and to refer to "taxes imposed under the Personal Income Tax Law" and the "Bank and Corporation Tax Law," in lieu of "Federal income tax." SEC. 50. Section 24634 of the Revenue and Taxation Code is amended to read: 24634. (a) In addition to the short-period returns required by Section 24632, a return for a period of less than 12 months (referred to in this article as "short period") shall be made under any of the following circumstances: (1) When the taxpayer, with the approval of the Franchise Tax Board, changes its annual accounting period. In such a case, the return shall be made for the short period beginning on the day after the close of the former income year and ending at the close of the day before the day designated as the first day of the new income year. (2) When the taxpayer is in existence during only part of what would otherwise be its income year. (3) When the Franchise Tax Board terminates the taxpayer's income year under Sections 19081 and 19082 (relating to tax in jeopardy). (b) This section shall apply whether or not a federal return is required to be filed for a period of less than 12 months. SEC. 51. Section 24946 of the Revenue and Taxation Code is amended to read: 24946. If the election provided in Section 24944(a) is made by the taxpayer and such other property or such stock was purchased before the beginning of the last income year in which any part of the gain upon such conversion is realized, any deficiency, to the extent resulting from such election, for any income year ending before such last income year may be assessed (notwithstanding the provisions of Section 19057 or the provisions of any other law or rule of law which would otherwise prevent such assessment) at any time before the expiration of the period within which a deficiency for such last income year may be assessed. SEC. 52. Section 24992 of the Revenue and Taxation Code is repealed. SEC. 53. Section 25110 of the Revenue and Taxation Code is amended to read: 25110. (a) Notwithstanding Section 25101, a qualified taxpayer, as defined in paragraph (2) of subdivision (b) which is subject to the tax imposed under this part, may elect to determine its income derived from or attributable to sources within this state pursuant to a water's-edge election in accordance with the provisions of this part, as modified by this article. A taxpayer which makes a water's-edge election shall take into account the income and apportionment factors of the following affiliated entities only: (1) Affiliated banks or corporations which are eligible to be included in a federal consolidated return as described in Sections 1501 to 1505, inclusive, of the Internal Revenue Code, other than corporations making an election under Section 936 of the Internal Revenue Code. (2) Domestic international sales corporations, as described in Sections 991 to 994, inclusive, of the Internal Revenue Code and foreign sales corporations as described in Sections 921 to 927, inclusive, of the Internal Revenue Code. (3) Any corporation, regardless of the place where it is incorporated if the average of its property, payroll, and sales factors within the United States is 20 percent or more. (4) Banks and corporations which are incorporated in the United States, excluding corporations making an election pursuant to Sections 931 to 936, inclusive, of the Internal Revenue Code, of which more than 50 percent of their stock is controlled directly or indirectly by the same interests, which are not included in paragraph (1). (5) A bank or corporation which is not described in paragraphs (1) to (4), inclusive, or paragraph (6), but only to the extent of its income derived from or attributable to sources within the United States and its factors assignable to a location within the United States in accordance with paragraph (3) of subdivision (b). Income of such a bank or corporation derived from or attributable to sources within the United States as determined by federal income tax laws shall be limited to and determined from the books of account maintained by the bank or corporation with respect to its activities conducted within the United States. (6) Export trade corporations, as described in Sections 970 to 972, inclusive, of the Internal Revenue Code. (7) Any affiliated bank or corporation which is a "controlled foreign corporation," as defined in Section 957 of the Internal Revenue Code, if all or part of the income of that affiliate is defined in Section 952 of Subpart F of the Internal Revenue Code ("Subpart F income"). The income and apportionment factors of any affiliate to be included under this paragraph shall be determined by multiplying the income and apportionment factors of that affiliate without application of this paragraph by a fraction (not to exceed one), the numerator of which is the "Subpart F income" of that bank or corporation for that income year and the denominator of which is the "earnings and profits" of that bank or corporation for that income year, as defined in Section 964 of the Internal Revenue Code. (8) (A) The income and factors of the above-enumerated banks and corporations shall be taken into account only if the income and factors would have been taken into account under Section 25101 if this section had not been enacted. (B) The income and factors of a bank or corporation which is not described in paragraphs (1) to (4), inclusive, and (6) and which is an electing taxpayer under this subdivision shall be taken into account in determining its income only to the extent set forth in paragraph (5). (b) For purposes of this article and Section 24411: (1) An "affiliated bank or corporation" means a bank or corporation which is related to a bank or corporation, required to file under this part, because of any of the following: (A) It owns directly or indirectly more than 50 percent of the voting stock of the bank or corporation required to file under this part. (B) More than 50 percent of its voting stock is owned directly or indirectly by a bank or corporation required to file under this part. (C) More than 50 percent of voting stock of both it and the bank or corporation required to file under this part is owned or controlled directly or indirectly by any bank or person (as defined in Section 7701(a)(1) of the Internal Revenue Code). (2) A "qualified taxpayer" means a bank or corporation which does both of the following: (A) Files with the state tax return on which the water's-edge election is made a consent to the taking of depositions at the time and place most reasonably convenient to all parties from key domestic corporate individuals and to the acceptance of subpoenas duces tecum requiring reasonable production of documents to the Franchise Tax Board as provided in Section 19504 or by the State Board of Equalization as provided in Title 18, California Code of Regulations, Section 5005, or by the courts of this state as provided in Chapter 2 (commencing with Section 1985) of Title 3 of Part 4 of, and Section 2025 of, the Code of Civil Procedure. The consent relates to issues of jurisdiction and service and does not waive any defenses a taxpayer may otherwise have. The consent shall remain in effect so long as the water's-edge election is in effect and shall be limited to providing that information necessary to review or to adjust income or deductions in a manner authorized under Sections 482, 861, Subpart F of Part III of Subchapter N, or similar provisions of the Internal Revenue Code, together with the regulations adopted pursuant to those provisions, and for the conduct of an investigation with respect to any unitary business in which the taxpayer may be involved. (B) Agrees that for purposes of this article, dividends received by any bank or corporation whose income and apportionment factors are taken into account pursuant to subdivision (a) from either of the following are functionally related dividends and shall be presumed to be business income: (i) A bank or corporation of which more than 50 percent of the voting stock is owned, directly or indirectly, by members of the unitary group and which is engaged in the same general line of business. (ii) Any bank or corporation which is either a significant source of supply for the unitary business or a significant purchaser of the output of the unitary business, or which sells a significant part of its output or obtains a significant part of its raw materials or input from the unitary business. "Significant," as used in this subparagraph, means an amount of 15 percent or more of either input or output. All other dividends shall be classified as business or nonbusiness income without regard to this subparagraph. (3) The definitions and locations of property, payroll, and sales shall be determined under the laws and regulations which set forth the apportionment formulas used by the individual states to assign net income subject to taxes on or measured by net income in that state. If a state does not impose a tax on or measured by net income or does not have laws or regulations with respect to the assignment of property, payroll, and sales, the laws and regulations provided in Article 2 (commencing with Section 25120) shall apply. Sales shall be considered to be made to a state only if the bank or corporation making the sale may otherwise be subject to a tax on or measured by net income under the Constitution or laws of the United States, and shall not include sales made to a bank or corporation whose income and apportionment factors are taken into account pursuant to subdivision (a) in determining the amount of income of the taxpayer derived from or attributable to sources within this state. (4) "The United States" means the 50 states of the United States and the District of Columbia. (c) All references in this part to income determined pursuant to Section 25101 shall also mean income determined pursuant to this section. SEC. 54. Section 25111 of the Revenue and Taxation Code is amended to read: 25111. (a) A water's-edge election shall be made by contract with the Franchise Tax Board in the original return for a year and shall be effective only if every taxpayer which is a member of the water's-edge group and which is subject to tax under this part makes the election. A single taxpayer which is engaged in more than one business activity subject to allocation and apportionment as provided in Article 2 (commencing with Section 25120) of Chapter 17 may make a separate election for each business. The form and manner of making the water's-edge election shall be prescribed by the Franchise Tax Board. Each contract making a water's-edge election shall be for an initial term of five years, except as provided in subdivisions (b) and (c). Each contract shall provide that on the anniversary date of the contract or any other annual date specified by the contract a year shall be added automatically to the initial term unless notice of nonrenewal is given as provided in subdivision (f). Each contract shall be conditioned by an agreement to pay the amount specified in Section 25115. Except as provided in subdivisions (b) and (c), the Franchise Tax Board shall enter into a contract as provided by this section with any qualified taxpayer which wishes to make a water's-edge election. An affiliated bank or corporation which is a member of the water' s-edge group and subsequently becomes subject to tax under this part or is a nonelecting taxpayer which is subsequently proved to be a member of the water's-edge group pursuant to Franchise Tax Board audit determination, as evidenced by a notice of deficiency proposed to be assessed or a notice of tax change, shall be deemed to have elected. No water's-edge election shall be made for an income year beginning prior to January 1, 1988. (b) A water's-edge election may be terminated by a taxpayer prior to the end of the five-year period if any of the following occurs: (1) The taxpayer is acquired directly or indirectly by a nonelecting entity which alone or together with those affiliates included in its combined report is larger than the taxpayer as measured by equity capital. (2) The taxpayer ceases to be affiliated with any bank or corporation whose income and apportionment factors the taxpayer would be required to take into account in determining its income under Section 25101 but for the election and the taxpayer is not itself a bank or corporation doing business within and without the United States. (3) With the permission of the Franchise Tax Board. (4) Pursuant to a Franchise Tax Board audit determination, as evidenced by a notice of the deficiency proposed to be assessed or a notice of tax change, a substantial modification is made to the composition of the water's-edge group as filed, in which case the election may be terminated only with respect to income years beginning on or after January 1 of the year in which the audit determination is made. No refund of any amounts paid pursuant to Section 25115 shall be made for those years during which the election was in effect. (c) A water's-edge election may be disregarded by the Franchise Tax Board, only if any of the following occurs: (1) A bank or corporation willfully fails to comply substantially with Section 18634 or any federal law requiring the filing of domestic spreadsheets. (2) After a reasonable adjustment of transfer prices, royalty rates, the allocation of common expenses, and similar adjustments, the return filed pursuant to this section fails to prevent the willful evasion of taxes. (3) An otherwise qualified taxpayer willfully fails to do any of the following: (A) Retain and make available upon request the documents and information, including any questionnaires completed and submitted to the Internal Revenue Service or qualified states, which are necessary to audit issues involving attribution of income to the United States or foreign jurisdictions under Sections 482, 861, 863, 902, and 904, and Subpart F of Part III of Subchapter N, or similar sections of the Internal Revenue Code. (B) Identify, upon request, principal officers or employees who have substantial knowledge of, and access to, documents and records which discuss pricing policies, profit centers, cost centers, and the methods of allocating income and expense among these centers. The information shall include the employees' titles and addresses. (C) Retain and make available upon request all documents and correspondence ordinarily available to a bank or corporation included in the water's-edge election which are submitted to or obtained from the Internal Revenue Service, foreign countries or their territories or possessions, and competent authority pertaining to ruling requests, rulings, settlement resolutions, and competing claims involving jurisdictional assignment and sourcing of income that affect the assignment of income to the United States. The documents shall include all ruling requests and rulings on reorganizations involving foreign incorporation of branches, all ruling requests and rulings on changing a bank or corporation's jurisdictional incorporation, and all documents which are ordinarily available to a bank or corporation included in the water's-edge election which pertain to the determination of foreign tax liability, including examination reports issued by foreign taxing administrations. If the documents have been translated, the translations shall be furnished. (D) Upon request, prepare and make available for each bank or corporation included in the disclosure spreadsheet referred to in Section 18634 in which the taxpayer is included, a list of each state of the United States, including the District of Columbia, territories or possessions, and each foreign country in which it has payroll, property, or sales. The sales shall be determined by destination whether or not the taxpayer is taxable in the destination jurisdiction. (E) Retain and make available, upon request, information filed with the Internal Revenue Service to comply with Sections 6038, 6038A, 6038B, 6038C, and 6041 of the Internal Revenue Code. (F) Upon request, prepare and make available for each bank or corporation organized or created under the laws of the United States or a political subdivision thereof, of which 50 percent or more of its voting stock is directly or indirectly owned or controlled, the information which would be included in the forms described in subparagraph (E) if those forms were required for United States corporations. (G) Retain and make available, upon request, all state tax returns filed by each bank or corporation included under subdivision (a) in each state, including the District of Columbia. (H) Comply with reasonable requests for information necessary to determine or verify its net income, apportionment factors, or the geographic source of that income pursuant to the Internal Revenue Code. (I) For purposes of this subdivision, information for any year shall be retained for that period of time in which the taxpayer's income or franchise tax liability to this state may be subject to adjustment, including all periods in which additional income or franchise taxes may be assessed or during which an appeal is pending before the State Board of Equalization or a lawsuit is pending in the courts of this state or the United States with respect to California franchise or income tax. (d) The taxpayer shall be provided 90 days' prior written notice that the Franchise Tax Board intends to disregard a water' s-edge election under subdivision (c). The taxpayer shall have the right to seek review in the superior court of the Franchise Tax Board's intended decision to disregard the election. (e) In disregarding an election or in granting a change of election, the Franchise Tax Board shall impose any conditions which are necessary to prevent the avoidance of tax or clearly reflect income for the period the election was, or was purported to be, in effect. These conditions may include a requirement that income, including dividends paid from income earned while a water's-edge election was in effect, which would have been included in determining the income of the taxpayer from sources within and without this state pursuant to Section 25101 but for the water's-edge election shall be included in income in the year in which the election is changed or disregarded. (f) If the taxpayer desires in any year not to renew the contract, the taxpayer shall serve written notice of nonrenewal of the contract upon the board in advance of the annual renewal date of the contract. Unless that written notice is served by the taxpayer at least 90 days prior to the renewal date, the contract shall be considered renewed as provided in subdivision (a). (g) If the taxpayer serves notice of intent in any year not to renew the contract, the existing contract shall remain in effect for the balance of the period remaining since the original execution or the last renewal of the contract, as the case may be. SEC. 55. Section 25112 of the Revenue and Taxation Code is amended to read: 25112. (a) If a taxpayer electing under Section 25110 fails to supply any required information, in addition to being subject to disqualification by the Franchise Tax Board pursuant to Section 25111 and to any penalties otherwise provided by this part, the taxpayer shall pay a penalty of one thousand dollars ($1,000) for each income year with respect to which the failure occurs. (b) If the failure continues for more than 90 days after the date on which the Franchise Tax Board mails notice of that failure to the taxpayer, the taxpayer shall pay a penalty (in addition to the amount required under subdivision (a)) of one thousand dollars ($1,000) for each 30-day period (or fraction thereof) during which the failure continues after the expiration of the 90-day period. The increase in any penalty under this subdivision shall not exceed twenty-four thousand dollars ($24,000). (c) If the taxpayer fails to comply substantially with any formal document request arising out of the examination of the tax treatment of any item (hereinafter in this section referred to as the "examined item") before the 90th day after the date of the mailing of the request, any court having jurisdiction of a civil proceeding in which the tax treatment of the examined item is an issue may, upon motion by the Franchise Tax Board, prohibit the introduction by the taxpayer of documentation covered by that request. (d) For purposes of this section, the time in which information is to be furnished (and the beginning of the 90-day period after notice by the Franchise Tax Board) shall be treated as beginning not earlier than the last day on which reasonable cause existed for failure to furnish the information. (e) This section shall not apply with respect to any requested documentation if the taxpayer establishes that the failure to provide the documentation, as requested by the Franchise Tax Board, is due to reasonable cause. For purposes of subdivision (c), the fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the requested documentation is not reasonable cause unless, after in-camera review of the documentation, the court finds otherwise. (f) For purposes of this section, the term "formal document request" means any request (made after the normal request procedures have failed to produce the requested documentation) for the production of documentation which is mailed by registered or certified mail to the taxpayer at its last known address and which sets forth all of the following: (1) The time and place for the production of the documentation. (2) A statement of the reason the documentation previously produced (if any) is not sufficient. (3) A description of the documentation being sought. (4) The consequences to the taxpayer of the failure to produce the documentation described in this section. (g) Notwithstanding any other law or rule of law, any taxpayer to whom a formal document request is mailed may begin a proceeding to quash that request not later than the 90th day after the date the request was mailed. In any such proceeding, the Franchise Tax Board may seek to compel compliance with the request. (h) The superior courts of the State of California for the Counties of Los Angeles, Sacramento, and San Diego, and for the City and County of San Francisco shall have jurisdiction to hear any proceeding brought under subdivision (g). An order denying the petition shall be deemed a final order which may be appealed. The running of the 90-day period referred to in subdivision (b) shall be suspended during any period during which a proceeding brought under subdivision (g) is pending. (i) For purposes of this section, "documentation" means any documentation which may be relevant or material to the tax treatment of the examined item. (j) The Franchise Tax Board, and any court having jurisdiction over a proceeding under subdivision (g), may extend the 90-day period referred to in subdivision (b). (k) If any bank or corporation takes any action as provided in subdivision (g), the running of any period of limitations under Sections 19057 to 19067, inclusive (relating to the assessment and collection of tax), or under Section 19704 (relating to criminal prosecutions) with respect to that bank or corporation shall be suspended for the period during which the proceedings under subdivision (g) and appeals thereto are pending. SEC. 56. Chapter 19 (commencing with Section 25401) of Part 11 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 57. Chapter 20 (commencing with Section 25661) of Part 11 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 58. Chapter 21 (commencing with Section 25901) of Part 11 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 59. Chapter 22 (commencing with Section 26071) of Part 11 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 59.5. Section 26073.4 of the Revenue and Taxation Code is repealed. SEC. 59.6. Section 26073.4 is added to the Revenue and Taxation Code, to read: 26073.4. (a) If a change or correction is made or allowed by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or an amended return is required under Section 25432 and is filed timely, a claim for credit or refund resulting from the adjustment may be filed by the taxpayer within two years from the date of the final federal determination, or within the period provided in Section 26073.2, whichever period expires later. (b) This section shall apply to any federal determination that becomes final on or after January 1, 1993. SEC. 60. Chapter 23 (commencing with Section 26131) of Part 11 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 60.5. Section 26313 of the Revenue and Taxation Code is amended to read: 26313. (a) (1) If any person or bank fails to pay any amount of tax, penalty, addition to tax, interest, or other liability imposed and delinquent under this part, a collection cost recovery fee shall be imposed if the Franchise Tax Board has mailed a notice to the person for payment that advises that continued failure to pay the amount due may result in collection action, including the imposition of a collection cost recovery fee. The collection cost recovery fee in the amount of one hundred sixty-six dollars ($166) or an amount as adjusted under subdivision (b). (2) If any person or bank fails or refuses to make and file a tax return required by this part within 25 days after formal legal demand to file the tax return is mailed to that person or bank by the Franchise Tax Board, the Franchise Tax Board shall add a filing enforcement cost recovery fee in the amount of one hundred nineteen dollars ($119) or an amount as adjusted under subdivision (b). (b) For fees charged during the 1993-94 fiscal year and fiscal years thereafter, the amount of those fees shall be set to reflect actual costs and shall be specified in the annual Budget Act. (c) Interest shall not accrue with respect to the cost recovery fees provided by this section. (d) The amounts provided by this section are obligations imposed by this part and may be collected in any manner provided under this part for the collection of a tax. (e) Subdivision (a) is operative with respect to notices for payment or legal demands to file, either of which is mailed on or after the effective date of this section. (f) The Franchise Tax Board shall determine the total amount of the cost recovery fees collected or accrued through June 30, 1993, and shall notify the Controller of that amount. The Controller shall transfer that amount to the Franchise Tax Board, and that amount is hereby appropriated to the board for reimbursement of its collection and filing enforcement efforts. SEC. 61. Chapter 24 (commencing with Section 26422) of Part 11 of Division 2 of the Revenue and Taxation Code is repealed. SEC. 62. Section 803 of the Unemployment Insurance Code is amended to read: 803. (a) As used in this section "entity" means any employing unit that is authorized by any provision of Article 4 (commencing with Section 701) of this chapter or by Section 801 or 802 to elect a method of financing coverage permitted by this section. (b) In lieu of the contributions required of employers, an entity may elect any one of the following: (1) To pay into the Unemployment Fund the cost of benefits, including extended duration benefits and federal-state extended benefits, paid based on base period wages with respect to employment for the entity and charged to its account in the manner provided by Section 1026, pursuant to authorized regulations which shall prescribe the rate or amount, time, manner, and method of payment or advance payment or providing a good and sufficient bond to guarantee payment of contributions. (2) Two or more entities may, pursuant to authorized regulations, file an application with the director for the establishment of a joint account for the purpose of determining the rate of contributions they shall pay into the Unemployment Fund to reimburse the fund for benefits paid with respect to employment for such entities. The members of the joint account may share the cost of benefits, including extended duration benefits and federal-state extended benefits, paid based on the base period wages with respect to employment for such members and charged to the joint account in the manner provided by Section 1026. The director shall prescribe authorized regulations for the establishment, maintenance, and dissolution of joint accounts, and for the rate or amount, time, manner, and method of payment or advance payment or providing a good and sufficient bond to guarantee payment of contributions by the members of joint accounts, on the cost of benefits charged in the manner provided by Section 1026. (c) Sections 1030, 1031, 1032, and 1032.5, and any provision of this division for the noncharging of benefits to the account of an employer, shall not apply to an election under subdivision (b). The cost of benefits charged to an entity under this section shall include, but not be limited to, benefits or payments improperly paid in excess of a weekly benefit amount, or in excess of a maximum benefit amount, or otherwise in excess of the amount which should have been paid, due to any computational or other error of any type by the Employment Development Department or the Department of Benefit Payments, whether or not the error could be anticipated. (d) In making the payments prescribed by subdivision (b) there shall be paid or credited to the Unemployment Fund, either in advance or by way of reimbursement, as may be determined by the director, those sums as he or she estimates the Unemployment Fund will be entitled to receive from each entity for each calendar quarter, reduced or increased by any sum by which he or she finds that his or her estimates for any prior calendar quarter were greater or less than the amounts which should have been paid to the fund. The estimates may be made upon the basis of statistical sampling, or any other method as may be determined by the director. Upon making that determination, the director shall give notice of the determination, pursuant to Section 1206, to the entity. The director may cancel any contributions or portion thereof which he or she finds has been erroneously determined. The director shall charge to any special fund, which is responsible for the salary of any employee of an entity, the amount determined by the director for which the fund is liable pursuant to this section. The contributions due from the entity shall be paid from the liable special fund, the General Fund, or other liable fund to the Unemployment Fund by the Controller or other officer or person responsible for disbursements on behalf of the entity within 30 days of the date of mailing of the director's notice of determination to the entity. The director for good cause may extend for not to exceed 60 days the time for paying without penalty the amount determined and required to be paid. Contributions are due upon the date of mailing of the notice of determination and are delinquent if not paid on or before the 30th day following the date of mailing of the notice. Any entity which fails to pay the contributions required within the time required shall be liable for interest on the contributions at the adjusted annual rate and by the method established pursuant to Section 19521 of the Revenue and Taxation Code from and after the date of delinquency until paid, and any entity which without good cause fails to pay any contributions required within the time required shall pay a penalty of 10 percent of the amount of the contributions. If the entity fails to pay the contributions required on or before the delinquency date, the director may assess the entity for the amount required by the notice of determination. Article 8 (commencing with Section 1126) of Chapter 4 of Part 1 with respect to the assessment of contributions, and Chapter 7 (commencing with Section 1701) of Part 1 with respect to the collection of contributions, shall apply to the assessments provided by this section. Sections 1177 to 1184, inclusive, relating to refunds and overpayments, shall apply to amounts paid to the Unemployment Fund pursuant to this section. Sections 1222, 1223, 1224, 1241, and 1242 shall apply to matters arising under this section. (e) The director may terminate the election of any entity for financing under this section if the entity is delinquent in the payment of advances or reimbursements required by the director under this section. After any such termination the entity may again make an election pursuant to this section but only if it is not delinquent in the payment of contributions and not delinquent in the payment of advances or reimbursements required by the director under this section. (f) Notwithstanding any other provision of this section, no entity shall be liable for that portion of any extended duration benefits or federal-state extended benefits which is reimbursed or reimbursable by the federal government to the State of California. (g) After the termination of any election under this section, the entity shall remain liable for its proportionate share of the cost of benefits paid and charged to its account in the manner provided by Section 1026, which are based on wages paid for services during the period of the election. That liability may be charged against any remaining balance of a prior reserve account used by the entity pursuant to Section 712 or 713. Any portion of the remaining balance shall be included in the reserve account of the entity following any termination of an election under this section which occurs prior to the expiration of a period of three consecutive years commencing with the effective date of such election. For purposes of Section 982, the period of an election under Section 803 shall, to the extent permitted by federal law, be included as a period during which a reserve account has been subject to benefit charges. SEC. 63. Section 828 of the Unemployment Insurance Code is amended to read: 828. Each school employer shall be responsible for a quarterly local experience charge as set forth below, together with the charges or penalties set by the administrator for administrative indiscretions, including tardiness and error, as well as all costs for benefits and administration resulting from failure to properly cover an employee. The reimbursement for charges shall be delinquent 30 days from the date of notice and if not paid within the time required, the school employer shall pay a penalty of 10 percent of the unpaid amount, plus interest at the adjusted annual rate established pursuant to Section 19521 of the Revenue and Taxation Code from and after the date of delinquency until paid. The local experience charge to be levied against each school employer shall be computed as follows: Local Experience Charge (a) The local experience charge rate shall be 10 percent for the first three complete fiscal years of participation in the School Employees Fund. (b) The local experience charge rate for the fourth fiscal year, and each succeeding fiscal year, shall be determined by dividing the reserve balance at the end of the fiscal year which began 24 months prior to the fiscal year for which the rate is being calculated by the benefits paid for that same prior fiscal year. The factor derived is the employer's reserve ratio. If, as of the computation date, the school employer's reserve ratio equals or exceeds that which appears on any line in column 1 of the following table, but is less than that which appears in column 2 of that table, the local experience charge rate shall be the figure appearing on that same line in column 3 of that table. Line Reserve Ratio Rate 1 ................ negative to 1.00 15% 2 ................ 1.00 to 2.00 10% 3 ................ 2.00 to 3.00 5% 4 ................ 3.00 or more 0 (c) The rate determined in subdivision (a) or (b) shall be multiplied by the employer's quarterly benefit charges to compute the local experience charges. The administrator shall, not later than March 31 of each year, notify each school employer participating in the School Employees Fund of their local experience charge rate for the succeeding fiscal year. SEC. 64. Section 1111 of the Unemployment Insurance Code is amended to read: 1111. The director for good cause may extend for not to exceed 60 days the time for making a return or paying without penalty any amount required to be paid under this division. Any employer to whom an extension is granted and who pays the amount required within the period for which the extension is granted shall pay, in addition to the contributions, interest at the adjusted annual rate and by the method established pursuant to Section 19521 of the Revenue and Taxation Code from the date on which the payment would have been delinquent without the extension until the date of payment. SEC. 65. Section 1113 of the Unemployment Insurance Code is amended to read: 1113. Any employer who fails to pay any contributions required of him or of his workers, except amounts assessed under Article 8 (commencing with Section 1126), within the time required shall become liable for interest on such contributions at the adjusted annual rate and by the method established pursuant to Section 19521 of the Revenue and Taxation Code from and after the date of delinquency until paid. SEC. 66. Section 1129 of the Unemployment Insurance Code is amended to read: 1129. The amount of each assessment shall bear interest at the adjusted annual rate and by the method established pursuant to Section 19521 of the Revenue and Taxation Code from and after the last day of the month following the close of the calendar quarter, or from and after the 15th day of the month following the close of the calendar month, for which the contributions should have been returned until the date of payment. SEC. 67. Section 1181 of the Unemployment Insurance Code is amended to read: 1181. Interest shall be allowed and paid only to the extent that interest and penalties collected under this division are available therefor upon any overpayment of contributions at the adjusted rate per month, or fraction thereof, established pursuant to Section 19521 of the Revenue and Taxation Code, from the date of overpayment to the date of the allowance of the refund or credit, but no interest shall be allowed if the director determines that any overpayment was made intentionally or by reason of negligence on the part of the employing unit. SEC. 68. Section 1184 of the Unemployment Insurance Code is amended to read: 1184. If any refund or portion thereof is erroneously made, the director shall assess that amount to the employing unit or other person to whom the refund was made, together with any interest paid thereon, but no assessment shall be made with respect to any amount of worker contributions which the employer has refunded to his or her employees. The amount of the assessment shall bear interest at the adjusted annual rate and by the method established pursuant to Section 19521 of the Revenue and Taxation Code commencing 30 days after the service of notice of the assessment, if not paid within that period, until the date of repayment. The director shall give the employing unit against whom the assessment is made a written notice of the assessment pursuant to Section 1206. The notice shall be given within three years from the date the refund was made unless the employing unit waives this limitation period or consents to its extension. Sections 1135, 1136, 1222, 1223, and 1224 shall apply to assessments made under this section. The director shall collect the amount of any assessment made under this section in the same manner that other assessments are collected. SEC. 69. Section 13003 of the Unemployment Insurance Code is amended to read: 13003. (a) Except where the context otherwise requires, the definitions set forth in this chapter, and in addition the definitions and provisions of the Personal Income Tax Law referred to and hereby incorporated by reference as set forth in the following provisions of the Revenue and Taxation Code, shall apply to and govern the construction of this division: (1) "Corporation" as defined by Section 17009. (2) "Fiduciary" as defined by Section 17006. (3) "Fiscal year" as defined by Section 17011. (4) "Foreign country" as defined by Section 17019. (5) "Franchise Tax Board" as defined by Section 17003. (6) "Husband" and "wife" as defined by Section 17021. (7) "Individual" as defined by Section 17005. (8) "Military or naval forces" as defined by Section 17022. (9) "Nonresident" as defined by Section 17015. (10) "Partnership" as defined by Section 17008. (11) "Person" as defined by Section 17007. (12) "Resident" as defined by Sections 17014 and 17016. (13) "State" as defined by Section 17018. (14) "Taxable year" as defined by Section 17010. (15) "Taxpayer" as defined by Section 17004. (16) "Trade or business" as defined by Section 17020. (17) "United States" as defined by Section 17017. (b) The provisions of Part 10 (commencing with Section 17001) of Division 2 of the Revenue and Taxation Code, relating to the following items, are hereby incorporated by reference and shall apply to and govern construction of this division: (1) Trade or business expense (Article 6 (commencing with Section 17201) of Chapter 3). (2) Deductions for retirement savings (Article 6 (commencing with Section 17201) of Chapter 3). (3) Deduction for moving expense (Article 6 (commencing with Section 17201) of Chapter 3). (4) Distributions of property by a corporation to a shareholder (Chapter 4 (commencing with Section 17321)). (5) Deferred compensation (Chapter 5 (commencing with Section 17501)). (6) Partners and partnerships (Chapter 10 (commencing with Section 17851)). (7) Gross income of nonresident taxpayers Chapter 11 (commencing with Section 17951)). (c) The provisions of Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code, relating to the following items, are hereby incorporated by reference and shall apply to and govern the construction of this division: (1) Postponement of the time for certain acts by individuals in or in support of the armed forces (Section 18571). (2) Disclosure of information (Article 2 (commencing with Section 19542) of Chapter 7, except Section 19564). For this purpose "Franchise Tax Board" as used therein shall mean the Employment Development Department in respect to information obtained in the administration of this division. SEC. 70. Section 13020 of the Unemployment Insurance Code is amended to read: 13020. (a) Every employer who pays wages to a resident employee for services performed either within or without this state, or to a nonresident employee for services performed in this state, shall deduct and withhold from such wages, except as provided in Sections 13025 and 13026, for each payroll period, a tax computed in that manner as to produce, so far as practicable, with due regard to the credits for personal exemptions allowable under Section 17054 of the Revenue and Taxation Code, a sum which is substantially equivalent to the amount of tax reasonably estimated to be due under Part 10 (commencing with Section 17001) of Division 2 of the Revenue and Taxation Code resulting from the inclusion in the gross income of the employee of the wages which were subject to withholding. The method of determining the amount to be withheld shall be prescribed by the Franchise Tax Board pursuant to Section 18663 of the Revenue and Taxation Code. (b) The department upon request may permit the use of accounting machines to calculate the proper amount to be deducted and withheld from such wages, if such calculation produces an amount substantially equivalent to the amount of tax required to be withheld under subdivision (a). SEC. 71. Section 13028 of the Unemployment Insurance Code is amended to read: 13028. (a) (1) For purposes of this division (and so much of Part 10 (commencing with Section 17001) and Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code as relates to this division) pensions, annuities, and other deferred income, as described in Section 3405 of the Internal Revenue Code, are wages and subject to withholding under this division. (2) Notwithstanding paragraph (1), amounts excluded from gross income by Section 17131.5 of the Revenue and Taxation Code are not wages and are not subject to withholding under this division. (b) If an individual makes an election under Section 3405(a) (2) or Section 3405(b)(3) of the Internal Revenue Code not to have tax withheld, that election shall apply to withholding under this division, unless the individual elects, with the consent of the payer, to have those payments subject to withholding under this division. If an individual has not made an election under Section 3405(a)(2) or Section 3405(b)(3) of the Internal Revenue Code, that individual may elect to exclude those payments from withholding under this division. Elections provided in this subdivision shall be made pursuant to regulations of the director. (c) Where Section 3405 of the Internal Revenue Code provides that tables or other computational procedures shall be prescribed by the Secretary of the Treasury, for the purposes of this division, any of the following amounts may be withheld, upon election of the payer: (1) An amount determined by the method prescribed under Section 13020. (2) A designated dollar amount as requested by the payee. (3) Ten percent of the amount of federal withholding computed pursuant to Section 3405 of the Internal Revenue Code. (d) Where the amount of withholding computed pursuant to subdivision (c) is less than ten dollars ($10) per month, the payer shall not be required to withhold that amount. (e) This section shall not apply to pensions, annuities, and other deferred income of payees with addresses outside this state, as shown on the most current records of the payer. (f) The department shall, in consultation with the affected payers and payees, issue regulations to implement this section. Those regulations shall provide for delay (but not beyond July 1, 1987) of the application of this section with respect to any payer or class of payers until that time as the payers are able to comply without undue hardship with the requirements of this section. In that case, no retroactive compliance shall be required. SEC. 72. Section 13028.5 of the Unemployment Insurance Code is amended to read: 13028.5. (a) For purposes of this division (and so much of Part 10 (commencing with Section 17001) and Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code as relates to this division) any supplemental unemployment compensation benefit paid to an individual shall be treated as if it were a payment of wages by an employer to an employee for a payroll period. (b) For purposes of subdivision (a), "supplemental unemployment compensation benefits" means amounts which are paid to an employee, pursuant to a plan to which the employer is a party, because of an employee's involuntary separation from employment (whether or not that separation is temporary), resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions, but only to the extent those benefits are includable in the employee's gross income. SEC. 73. Section 13028.6 of the Unemployment Insurance Code is amended to read: 13028.6. (a) For purposes of this division (and so much of Part 10 (commencing with Section 17001) and Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code as relates to this division), any payment to an individual of sick pay which does not constitute wages (determined without regard to this subdivision), if at the time the payment is made a request that such sick pay be subject to withholding under this division is in effect, shall be treated as if it were a payment of wages by an employer to an employee for a payroll period. (b) For purposes of this subdivision, "sick pay" means any amount which satisfies both of the following: (1) Is paid to an employee pursuant to a plan to which the employer is a party. (2) Constitutes remuneration or a payment in lieu of remuneration for any period during which the employee is temporarily absent from work on account of sickness or personal injuries. (c) If a payee makes a request that any sick pay be subject to withholding under this chapter, the amount to be deducted and withheld under this chapter from any payment to which that request applies shall be an amount (not less than a minimum amount determined by the Franchise Tax Board) specified by the payee in that request. The amount deducted and withheld with respect to a payment which is greater or less than a full payment shall bear the same relation to the specified amount as that payment bears to a full payment. (1) A request that any sick pay be subject to withholding under this chapter shall satisfy all of the following: (A) Shall be made by the payee in writing to the person making the payments and shall contain the social security number of the payee. (B) Shall specify the amount to be deducted and withheld from each full payment. (C) Shall take effect with respect to payments made more than seven days after the date on which that request is furnished to the payer, or as the department shall by regulations prescribe. That request may be changed or terminated by furnishing to the person making the payments a written statement of change or termination which shall take effect in the same manner as provided in the preceding sentence. At the election of the payer, any such request (or statement of change or revocation) may take effect earlier than as provided in this subparagraph. (2) Any sick pay paid pursuant to a collective bargaining agreement between employee representatives and one or more employers which contains a provision specifying that this paragraph is to apply to sick pay paid pursuant to that agreement and contains a provision for determining the amount to be deducted and withheld from each payment of that sick pay as follows: (A) The requirement of paragraph (3) of subdivision (a) that a request for withholding be in effect shall not apply. (B) Except as provided in Section 13026, the amounts to be deducted and withheld under this chapter shall be determined in accordance with that agreement. The preceding sentence shall not apply with respect to sick pay paid pursuant to any agreement to any individual, unless the social security number of that individual is furnished to the payer and the payer is furnished with that information as is necessary to determine whether the payment is pursuant to the agreement and to determine the amount to be deducted and withheld. SEC. 74. Section 13029 of the Unemployment Insurance Code is amended to read: 13029. The department may by authorized regulations provide for withholding (a) From remuneration for services performed by an employee for his or her employer which (without regard to this section) does not constitute wages, and (b) From any other type of payment with respect to which the department finds that withholding would be appropriate under the provisions of this division, if the employer and the employee, or in the case of any other type of payment the person making and the person receiving the payment, agree to the withholding. The agreement shall be made in the form and manner as the department may by authorized regulations provide. For purposes of this division (and so much of Part 10 (commencing with Section 17001) and Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code as relates to this division) remuneration or other payments with respect to which the agreement is made shall be treated as if they were wages paid by an employer to an employee to the extent that the remuneration is paid or other payments are made during the period for which the agreement is in effect. SEC. 75. Section 13052.5 of the Unemployment Insurance Code is amended to read: 13052.5. (a) In addition to the penalty imposed by Section 19183 of the Revenue and Taxation Code (relating to failure to file information returns), if any person, or entity fails to report amounts paid as remuneration for personal services as required under Section 13050 of this code or Sections 18637 and 18638 of the Revenue and Taxation Code on the date prescribed thereof (determined with regard to any extension of time for filing), that person or entity may be liable for a penalty determined under subdivision (b). (b) For purposes of subdivision (a), the amount determined under this subdivision is the maximum rate under Section 17041 of the Revenue and Taxation Code multiplied by the unreported amounts paid as remuneration for personal services. (c) The penalty imposed by subdivision (a) shall be assessed against that person or entity required to file a return under Section 13050 of this code or Section 18637 or 18638 of the Revenue and Taxation Code. (d) Sections 1221 and 1222 of the Unemployment Insurance Code shall not apply to assessments imposed by this section. (e) The penalty imposed under this section shall be in lieu of the penalty imposed under Section 19175 of the Revenue and Taxation Code. In the event that a penalty is imposed under both this section and Section 19175 of the Revenue and Taxation Code, only the penalty imposed under this section shall apply. (f) The penalty imposed by this section may be assessed in lieu of, or in addition to, the penalty imposed by Section 13052 with respect to the failure to furnish a withholding statement to an employee. SEC. 76. Section 13054 of the Unemployment Insurance Code is amended to read: 13054. If an employer fails to file the annual report of compensation paid and taxes withheld, required under Section 13053, on or before 30 days after notice has been given to the employer of his or her failure to file, unless the failure is due to reasonable cause, the employer, in addition to any other penalties imposed by this division and Part 10 (commencing with Section 17001) and Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code, shall pay a penalty of two hundred fifty dollars ($250) or 100 percent of the tax amount required to be reported by Section 13053, whichever is less. The penalty shall be assessed and collected in the same manner as the tax. SEC. 77. Section 13101 of the Unemployment Insurance Code is amended to read: 13101. (a) In addition to any criminal penalty provided by law, if any individual makes a statement under Section 13040, 13041, or 13042 which results in a decrease in the amounts deducted and withheld under this division, and as of the time the statement was made, there was no reasonable basis for the statement, the individual shall pay a penalty of five hundred dollars ($500) for the statement. (b) The department may waive, in whole or in part, the penalty imposed under subdivision (a) if the taxes imposed with respect to the individual under Part 10 (commencing with Section 17001) of Division 2 of the Revenue and Taxation Code for the taxable year are equal to or less than the sum of both of the following: (1) The credits against those taxes allowed by Sections 17052.1 through 17053.7 and Section 19002. (2) The payments of estimated tax which are considered payments on account of those taxes. (c) Article 11 (commencing with Section 1221) of Chapter 4 of Part 1, relating to administrative appellate review, shall not apply to the assessment or collection of any penalty imposed by subdivision (a). (d) This section shall apply to acts and failures to act after December 31, 1981. SEC. 78. Section 2 of Chapter 1451 of the Statutes of 1990 is amended to read: Sec. 2. The California Commission on Aging may accept gifts and grants from any source, public or private, to the California Fund for Senior Citizens in addition to those moneys contributed to the fund by taxpayers under the Personal Income Tax Law. The commission shall allocate gifts and grants made to the California Fund for Senior Citizens pursuant to subparagraph (C) of paragraph (2) of subdivision (a) of Section 18723 of the Revenue and Taxation Code. SEC. 79. Section 43 of Chapter 1348 of the Statutes of 1990 is amended to read: Sec. 43. Sections 17, 18, 19, and 38 of this act shall be operative for any account referred for out-of-state collection via an agreement entered into pursuant to Section 19376 of the Revenue and Taxation Code. SEC. 80. The amendments made to Sections 18451, 18586.2, 18586.3, 19053.6, 23153, 25432, 25673, 25674, and 26073.4 of the Revenue and Taxation Code by Chapter 335 of the Statutes of 1992 shall apply to any federal audit determination that becomes final on or after January 1, 1993. Sections 18451, 18586.2, 18586.3, 19053.6, 23153, 25432, 25673, 25674, and 26073.4 of the Revenue and Taxation Code, as in effect immediately prior to the enactment of Chapter 335 of the Statutes of 1992, shall apply to any federal determination that became final before January 1, 1993. SEC. 81. (a) Except as provided in subdivision (b), the amendments made to Sections 18588, 19053, and 26073 of, and to subdivision (b) of Section 25633 of, the Revenue and Taxation Code by Chapter 1295 of the Statutes of 1992 shall apply to returns filed for taxable or income years, respectively, beginning on or after January 1, 1992. (b) All additional assessments under Section 18588 or subdivision (b) of Section 25663, otherwise barred solely by the provisions of Chapter 1295 of the Statutes of 1992 prior to the enactment of this act, shall remain barred. All claims for refunds under Section 19053 or Section 26073, otherwise barred solely by the provisions of Chapter 1295 of the Statutes of 1992 prior to the enactment of this act, shall be treated as timely filed if filed within the period allowed under those sections immediately prior to their amendment by Chapter 1295 of the Statutes of 1992. (c) This section is intended to clarify legislative intent and to serve the public good by providing a consistent, dependable tax administrative system. SEC. 81.5. Section 32.5 of this bill incorporates amendments to Section 23101.5 of the Revenue and Taxation Code proposed by this bill and SB 26. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1994, (2) each bill amends Section 23101.5 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 26, in which case Section 23101.5 of the Revenue and Taxation Code, as amended by SB 26, shall remain operative only until the operative date of this bill, at which time Section 32.5 of this bill shall become operative, and Section 32 of this bill shall not become operative. SEC. 82. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to avoid problems relating to the effective date of certain statutes that were enacted during the 1991-92 Regular Session, and to enable orderly administration of tax laws, it is necessary that this act go into immediate effect. SEC. 83. All of the provisions of this act shall become operative on January 1, 1994, except that Sections 20.5, 21.5, 21.6, 59.5, 59.6, 60.5 80, and 81 of this act shall become operative on the same date that this act takes effect.