BILL NUMBER: AB 2898 CHAPTERED 09/30/00 CHAPTER 1052 FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2000 APPROVED BY GOVERNOR SEPTEMBER 30, 2000 PASSED THE SENATE AUGUST 31, 2000 PASSED THE ASSEMBLY AUGUST 31, 2000 AMENDED IN SENATE AUGUST 18, 2000 AMENDED IN SENATE AUGUST 8, 2000 AMENDED IN SENATE JUNE 29, 2000 AMENDED IN SENATE JUNE 7, 2000 AMENDED IN ASSEMBLY APRIL 13, 2000 INTRODUCED BY Committee on Revenue and Taxation (Knox (Chair), Alquist, Aroner, Ducheny, Honda, and Romero) MARCH 13, 2000 An act to amend Sections 6456, 6592, 6832, 7076.7, 7091, 7657, 8269, 8877 9033, 9269, 11253, 11597, 30282, 30354, 30458.9, 32255, 32389, 32469, 38452, 38504, 40102, 40167, 40209, 41096, 41127.6, 41169, 43157, 43448, 43520, 45155, 45609, 45865, 46156, 46464, 46620, 50112.2, 50138.6, 50156.9, 55044, 55209, 55330, 60209, 60493, and 60630 of, and to add Sections 6704, 6832.6, 7056.6, 8128.1, 8257, 8958, 9033.5, 9152.1, 9255.2, 11253.5, 11453, 11553.5, 11656, 11657, 30316, 30354.5, 30362.1, 30455.5, 32387.5, 32389.5, 32402.1, 32455.5, 38503.5, 38504.5, 38602.5, 38707, 38708, 40112.1, 40156, 40167.5, 40176, 41101.1, 41123.6, 41127.7, 41132, 43444.3, 43448.5, 43452.1, 43506, 45605.5, 45609.5, 45652.1, 45855.5, 46407, 46464.5, 46502.1, 46606, 50136.5, 50138.7, 50140.1, 50155.5, 55205.5, 55209.5, 55222.1, 55305, 60408, 60493.5, 60522.1, and 60609.5 to, the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 2898, Committee on Revenue and Taxation. Taxation: State Board of Equalization. The State Board of Equalization administers various taxes. This bill would make various changes to several of those taxes, including, among other things, providing additional relief of sales or use tax liability for an innocent spouse, providing for a crime and fines for disclosure of specified information, providing for the suspension of certain periods of limitations for a person who is financially disabled, extending the managed audit program, and would make various technical and clarifying changes to administrative provisions. The bill would incorporate changes to various sections of the Revenue and Taxation Code made by AB 2894 to become operative if both bills are chaptered and this bill is chaptered last. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 6456 of the Revenue and Taxation Code is amended to read: 6456. (a) Under regulations prescribed by the board, if: (1) A tax liability under this part was understated by a failure to file a return required to be filed under this part, by the omission of an amount properly includable therein, or by erroneous deductions or credits claimed on a return, and the understatement of tax liability is attributable to one spouse; or any amount of the tax reported on a return was unpaid and the nonpayment of the reported tax liability is attributable to one spouse, (2) The other spouse establishes that he or she did not know of, and had no reason to know of, that understatement or nonpayment, and (3) Taking into account whether or not the other spouse significantly benefited directly or indirectly from the understatement or the nonpayment and taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax attributable to that understatement or nonpayment, then the other spouse shall be relieved of liability for tax (including interest, penalties, and other amounts) to the extent that the liability is attributable to that understatement or nonpayment of tax. (b) For purposes of this section, the determination of the spouse to whom items of understatement or nonpayment are attributable shall be made without regard to community property laws. (c) This section shall apply to all calendar quarters subject to the provisions of this part, but shall not apply to any calendar quarter that is more than five years from the final date on the board-issued determination, five years from the return due date for nonpayment on a return, or one year from the first contact with the spouse making a claim under this section; or that has been closed by res judicata, whichever is later. (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 or nonpayment. (e) For purposes of this section, with respect to a failure to file a return or an omission of an item from the return, "attributable to one spouse" may be determined by whether a spouse rendered substantial service as a retailer of taxable items to which the understatement is attributable. If neither spouse rendered substantial services as a retailer, 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. (f) Under procedures prescribed by the board, if, taking into account all the facts and circumstances, it is inequitable to hold the other spouse liable for any unpaid tax or any deficiency (or any portion of either) attributable to any item for which relief is not available under subdivision (a), the board may relieve the other spouse of that liability. SEC. 2. Section 6592 of the Revenue and Taxation Code is amended to read: 6592. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person shall be relieved of the penalties provided by Sections 6476, 6477, 6479.3, 6480.4, 6480.8, 6511, 6565, 6591, and 7051.2. (b) Except as provided in subdivision (c) any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provides for efficient resolution of requests for relief pursuant to this section. SEC. 3. Section 6704 is added to the Revenue and Taxation Code, to read: 6704. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a retailer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 6703 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 3.5. Section 6832 of the Revenue and Taxation Code is amended to read: 6832. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the due date of the tax, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 6565. SEC. 4. Section 6832.6 is added to the Revenue and Taxation Code, to read: 6832.6. In the case of liability for use tax arising from the board's auxiliary collection provisions pursuant to Article 3 (commencing with Section 6291) of Chapter 3.5, or use tax liability arising from purchases described in Section 6405, the board shall provide notice to purchasers in simple and nontechnical language of its authorization under Section 6832 to enter into an agreement to accept the payment of use tax in installments. The notice shall be mailed to purchasers concurrently with the mailing of the return, notice of determination, or notice of redetermination. SEC. 5. Section 7056.6 is added to the Revenue and Taxation Code, to read: 7056.6. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 5 (commencing with Section 6451), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 5.5. Section 7076.7 of the Revenue and Taxation Code is amended to read: 7076.7. This article shall remain in effect only until January 1, 2003, and as of that date is repealed; however, any managed audit commenced pursuant to Section 7076.3 before January 1, 2003, may be completed by the board thereafter and the person whose account is audited shall remain eligible for the interest rate computation specified in Section 7076.5. SEC. 6. Section 7091 of the Revenue and Taxation Code is amended to read: 7091. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those which relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to this section shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 1999. SEC. 8. Section 7657 of the Revenue and Taxation Code is amended to read: 7657. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 7655, 7659.5, 7659.6, 7660, and 7713. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 8.5. Section 7657 of the Revenue and Taxation Code is amended to read: 7657. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 7655, 7659.5, 7659.6, 7659.9, 7660, and 7713. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 9. Section 8128.1 is added to the Revenue and Taxation Code, to read: 8128.1. (a) The limitation period specified in Section 8128 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 10. Section 8257 is added to the Revenue and Taxation Code, to read: 8257. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 5 (commencing with Section 7651), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 11. Section 8269 of the Revenue and Taxation Code is amended to read: 8269. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 13. Section 8877 of the Revenue and Taxation Code is amended to read: 8877. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 8801, 8854, and 8876. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 13.5. Section 8877 of the Revenue and Taxation Code is amended to read: 8877. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 8760, 8801, 8854, and 8876. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 14. Section 8958 is added to the Revenue and Taxation Code, to read: 8958. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a user or other person liable for any amount under this part that the person's employer withheld earnings for tax as pursuant to Section 8957 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer, and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 15. Section 9033 of the Revenue and Taxation Code is amended to read: 9033. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 8854. SEC. 16. Section 9033.5 is added to the Revenue and Taxation Code, to read: 9033.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 9033 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 17. Section 9152.1 is added to the Revenue and Taxation Code, to read: 9152.1. (a) The limitation period specified in Section 9152 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 18. Section 9255.2 is added to the Revenue and Taxation Code, to read: 9255.2. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 4 (commencing with Section 8751), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 19. Section 9269 of the Revenue and Taxation Code is amended to read: 9269. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 19.5. Section 11253 of the Revenue and Taxation Code is amended to read: 11253. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) The notice requirement in subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the due date of the tax bill, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 11341. SEC. 20. Section 11253.5 is added to the Revenue and Taxation Code, to read: 11253.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 11253 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 20.5. Section 11453 is added to the Revenue and Taxation Code, to read: 11453. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 11452 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 21. Section 11553.5 is added to the Revenue and Taxation Code, to read: 11553.5. (a) The limitation period specified in Section 11553 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 21.3. Section 11597 of the Revenue and Taxation Code is amended to read: 11597. (a) Any penalty provided for in Section 11341, 11354, 11405, or 11430 may be canceled by the board upon a finding that (1) the failure to make a timely payment is due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, provided the principal payment is made within 30 days after the delinquency date, or (2) there was an inadvertent error in the amount of payment made by the taxpayer, provided the principal payment for the proper amount of tax due is made within 10 days after the notice of shortage is mailed by the board. (b) Except as provided in subdivision (c), any taxpayer seeking cancellation of the penalty shall file with the board a petition for cancellation or refund within 20 days of payment of the principal amount of the tax or within 20 days after the board mails notice of the entry of the penalty, whichever date is later. The petition shall be accompanied by a statement under penalty of perjury setting forth the facts upon which the claim for relief is based. (c) The board shall establish criteria that provides for efficient resolution of requests for relief pursuant to this section. SEC. 21.5. Section 11656 is added to the Revenue and Taxation Code, to read: 11656. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 2 (commencing with Section 11251) of this part, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 21.7. Section 11657 is added to the Revenue and Taxation Code, to read: 11657. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or denial of a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those which relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to this section shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2001. SEC. 23. Section 30282 of the Revenue and Taxation Code is amended to read: 30282. (a) If the board finds that a person's failure to make a timely report or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, the person may be relieved of the penalty provided by Sections 30171, 30221, 30264, and 30281. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 23.5. Section 30282 of the Revenue and Taxation Code is amended to read: 30282. (a) If the board finds that a person's failure to make a timely report or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, the person may be relieved of the penalty provided by Sections 30171, 30190, 30221, 30264, and 30281. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 24. Section 30316 is added to the Revenue and Taxation Code, to read: 30316. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a distributor or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 30315 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board' s determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 25. Section 30354 of the Revenue and Taxation Code is amended to read: 30354. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 30264. SEC. 26. Section 30354.5 is added to the Revenue and Taxation Code, to read: 30354.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 30354 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year and the remaining balance as of the end of the year. SEC. 27. Section 30362.1 is added to the Revenue and Taxation Code, to read: 30362.1. (a) The limitation period specified in Section 30362 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 28. Section 30455.5 is added to the Revenue and Taxation Code, to read: 30455.5. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 4 (commencing with Section 30181) of this part, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return, or (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 29. Section 30458.9 of the Revenue and Taxation Code is amended to read: 30458.9. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fees and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the state was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 30. Section 32255 of the Revenue and Taxation Code is amended to read: 32255. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 32252, 32291, 32292, and 32305. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 30.5. Section 32255 of the Revenue and Taxation Code is amended to read: 32255. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 32252, 32260, 32291, 32292, and 32305. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 32. Section 32387.5 is added to the Revenue and Taxation Code, to read: 32387.5. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a manufacturer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 32387 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board' s determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 33. Section 32389 of the Revenue and Taxation Code is amended to read: 32389. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 32305. SEC. 34. Section 32389.5 is added to the Revenue and Taxation Code, to read: 32389.5. The board, beginning no later than July 1, 2000, shall provide each taxpayer who has an installment payment agreement in effect under Section 32389 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 35. Section 32402.1 is added to the Revenue and Taxation Code, to read: 32402.1. (a) The limitation period specified in Section 32402 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existences thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 36. Section 32455.5 is added to the Revenue and Taxation Code, to read: 32455.5. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 6 of this part, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 37. Section 32469 of the Revenue and Taxation Code is amended to read: 32469. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 37.5. Section 38452 of the Revenue and Taxation Code is amended to read: 38452. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 38421 and 38451. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provides for efficient resolution of requests for relief pursuant to this section. SEC. 37.7. Section 38503.5 is added to the Revenue and Taxation Code, to read: 38503.5. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 38503 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 37.9. Section 38504 of the Revenue and Taxation Code is amended to read: 38504. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) The notice requirement in subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date in which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 38446. SEC. 38. Section 38504.5 is added to the Revenue and Taxation Code, to read: 38504.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 38504 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 39. Section 38602.5 is added to the Revenue and Taxation Code, to read: 38602.5. (a) The limitation period specified in Section 38602 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 39.3. Section 38707 is added to the Revenue and Taxation Code, to read: 38707. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 5 of this part, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 39.5. Section 38708 is added to the Revenue and Taxation Code, to read: 38708. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or denial of a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those which relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to this section shall be available as a public record for at least 10 days prior to the effective date of the award. (e) This section shall be operative for claims filed on or after January 1, 2001. SEC. 41. Section 40102 of the Revenue and Taxation Code is amended to read: 40102. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 40081, 40096, and 40101. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 41.5. Section 40102 of the Revenue and Taxation Code is amended to read: 40102. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 40067, 40081, 40096, and 40101. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 42. Section 40112.1 is added to the Revenue and Taxation Code, to read: 40112.1. (a) The limitation period specified in Section 40112 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 43. Section 40156 is added to the Revenue and Taxation Code, to read: 40156. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a user or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 40155 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 44. Section 40167 of the Revenue and Taxation Code is amended to read: 40167. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any surcharges due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the person liable for the surcharge may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the surcharge, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of surcharge, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 40096. SEC. 45. Section 40167.5 is added to the Revenue and Taxation Code, to read: 40167.5. The board shall, beginning no later than January 1, 2001, provide each taxpayer who has an installment payment agreement in effect under Section 40167 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 46. Section 40176 is added to the Revenue and Taxation Code, to read: 40176. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 4 (commencing with Section 40051), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 47. Section 40209 of the Revenue and Taxation Code is amended to read: 40209. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 49. Section 41096 of the Revenue and Taxation Code is amended to read: 41096. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 41080, 41090, and 41095. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 49.5. Section 41096 of the Revenue and Taxation Code is amended to read: 41096. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 41060, 41080, 41090, and 41095. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 50. Section 41101.1 is added to the Revenue and Taxation Code, to read: 41101.1. (a) The limitation period specified in Section 41101 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation of rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 51. Section 41123.6 is added to the Revenue and Taxation Code, to read: 41123.6. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from any person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 41123.5 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 52. Section 41127.6 of the Revenue and Taxation Code is amended to read: 41127.6. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 41090. SEC. 53. Section 41127.7 is added to the Revenue and Taxation Code, to read: 41127.7. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 41127.6 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 54. Section 41132 is added to the Revenue and Taxation Code, to read: 41132. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 4 (commencing with Section 41050), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 55. Section 41169 of the Revenue and Taxation Code is amended to read: 41169. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 56. Section 43157 of the Revenue and Taxation Code is amended to read: 43157. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 43155 and 43306. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 56.5. Section 43157 of the Revenue and Taxation Code is amended to read: 43157. (a) If the board finds that a person's failure to make a timely return, prepayment, or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 43155, 43170, and 43306. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 58. Section 43444.3 is added to the Revenue and Taxation Code, to read: 43444.3. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a feepayer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 43444.2 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 59. Section 43448 of the Revenue and Taxation Code is amended to read: 43448. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 43306. SEC. 60. Section 43448.5 is added to the Revenue and Taxation Code, to read: 43448.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 43448 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 61. Section 43452.1 is added to the Revenue and Taxation Code, to read: 43452.1. (a) The limitation period specified in Section 43452 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 62. Section 43506 is added to the Revenue and Taxation Code, to read: 43506. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 3 (commencing with Section 43151), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 63. Section 43520 of the Revenue and Taxation Code is amended to read: 43520. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fees and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 64. Section 45155 of the Revenue and Taxation Code is amended to read: 45155. (a) If the board finds that a person's failure to make a timely report or return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 45153 and 45306. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 64.5. Section 45155 of the Revenue and Taxation Code is amended to read: 45155. (a) If the board finds that a person's failure to make a timely report or return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 45153, 45160, and 45306. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 66. Section 45605.5 is added to the Revenue and Taxation Code, to read: 45605.5. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a feepayer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 45605 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first date that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 67. Section 45609 of the Revenue and Taxation Code is amended to read: 45609. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any fees due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the fee payer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the fee, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of fees, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the fee to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 45306. SEC. 68. Section 45609.5 is added to the Revenue and Taxation Code, to read: 45609.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 45609 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 69. Section 45652.1 is added to the Revenue and Taxation Code, to read: 45652.1. (a) The limitation period specified in Section 45652 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 70. Section 45855.5 is added to the Revenue and Taxation Code, to read: 45855.5. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 3 (commencing with Section 45151), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 71. Section 45865 of the Revenue and Taxation Code is amended to read: 45865. (a) Every fee payer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The fee payer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the fee payer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 72. Section 46156 of the Revenue and Taxation Code is amended to read: 46156. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 46154, 46251, and 46356. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 72.5. Section 46156 of the Revenue and Taxation Code is amended to read: 46156. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 46154, 46160, 46251, and 46356. (b) Except as provided in subdivision (c) any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 74. Section 46407 is added to the Revenue and Taxation Code, to read: 46407. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines, upon receiving information from a fee payer or other person liable for any amount under this part, that the person's employer withheld earnings for taxes pursuant to Section 46406 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board' s determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 75. Section 46464 of the Revenue and Taxation Code is amended to read: 46464. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any fees due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the fee payer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the fees, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of fees, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the fee to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination become final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 46356. SEC. 76. Section 46464.5 is added to the Revenue and Taxation Code, to read: 46464.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 46464 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 77. Section 46502.1 is added to the Revenue and Taxation Code, to read: 46502.1. (a) The limitation period specified in Section 46502 shall be suspended during any period of the person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse of any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 78. Section 46606 is added to the Revenue and Taxation Code, to read: 46606. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 3 (commencing with Section 46151), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 79. Section 46620 of the Revenue and Taxation Code is amended to read: 46620. (a) Every fee payer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The fee payer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the fee payer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to this section shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 80. Section 50112.2 of the Revenue and Taxation Code is amended to read: 50112.2. (a) If the board finds that a person's failure to make a timely report or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 50112 and 50119. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 80.5. Section 50112.2 of the Revenue and Taxation Code is amended to read: 50112.2. (a) If the board finds that a person's failure to make a timely report or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalties provided by Sections 50112, 50112.7, and 50119. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 82. Section 50136.5 is added to the Revenue and Taxation Code, to read: 50136.5. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a feepayer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 50136 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 83. Section 50138.6 of the Revenue and Taxation Code is amended to read: 50138.6. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any fees due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the fee payer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the fees, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of fees, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the fee to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 50119. SEC. 84. Section 50138.7 is added to the Revenue and Taxation Code, to read: 50138.7. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 50138.6 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 85. Section 50140.1 is added to the Revenue and Taxation Code, to read: 50140.1. (a) The limitation period specified in Section 50140 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to a period of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 86. Section 50155.5 is added to the Revenue and Taxation Code, to read: 50155.5. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 3 (commencing with Section 50109), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 87. Section 50156.9 of the Revenue and Taxation Code is amended to read: 50156.9. (a) Every fee payer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The fee payer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the fee payer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refunds. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) Any proposed award by the board pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 89. Section 55044 of the Revenue and Taxation Code is amended to read: 55044. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 55042 and 55086. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 89.5. Section 55044 of the Revenue and Taxation Code is amended to read: 55044. (a) If the board finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 55042, 55050, and 55086. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement, under penalty of perjury, setting forth the facts upon which he or she bases his or her claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 90. Section 55205.5 is added to the Revenue and Taxation Code, to read: 55205.5. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a fee payer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 55205 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 91. Section 55209 of the Revenue and Taxation Code is amended to read: 55209. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any fees due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the fee payer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the fees, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of fees, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the fee to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 55086. SEC. 92. Section 55209.5 is added to the Revenue and Taxation Code, to read: 55209.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 55209 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 93. Section 55222.1 is added to the Revenue and Taxation Code, to read: 55222.1. (a) The limitation period specified in Section 55222 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or ran be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 94. Section 55305 is added to the Revenue and Taxation Code, to read: 55305. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 3 (commencing with Section 55041), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 95. Section 55330 of the Revenue and Taxation Code is amended to read: 55330. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fees and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was found unreasonable. (d) Any proposed award by the board pursuant to this section shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 96. Section 60209 of the Revenue and Taxation Code is amended to read: 60209. (a) If the board finds that a person's failure to make a timely report, return, or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 60207, 60301, 60338, and 60355. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases the claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 96.5. Section 60209 of the Revenue and Taxation Code is amended to read: 60209. (a) If the board finds that a person's failure to make a timely report, return, or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 60207, 60250, 60301, 60338, and 60355. (b) Except as provided in subdivision (c), any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases the claim for relief. (c) The board shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section. SEC. 98. Section 60408 is added to the Revenue and Taxation Code, to read: 60408. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines receiving information from a supplier or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant Section 60407 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax. (b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted. (c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld. (d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer. (e) Collection against the person liable for the tax is stayed for both the following amount and period: (1) An amount equal to the amount determined by the board under subdivision (a). (2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof. (f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer. (g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section. SEC. 99. Section 60493 of the Revenue and Taxation Code is amended to read: 60493. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement. (b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable. (c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process. (d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy. (e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the date on which the board's notice of determination or redetermination becomes final, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 60355. SEC. 100. Section 60493.5 is added to the Revenue and Taxation Code, to read: 60493.5. The board, beginning no later than January 1, 2001, shall provide each taxpayer who has an installment payment agreement in effect under Section 60493 an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year. SEC. 101. Section 60522.1 is added to the Revenue and Taxation Code, to read: 60522.1. (a) The limitation period specified in Section 60522 shall be suspended during any period of a person's life that the person is financially disabled. (b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existence thereof is furnished in the form and manner as the board may require. (2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person in financial matters. (c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim for refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section. SEC. 102. Section 60609.5 is added to the Revenue and Taxation Code, to read: 60609.5. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 6 (commencing with Section 60201), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution: (1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return. (2) Uses that information for any purpose other than to prepare, or assist in preparing, the return. (b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process. SEC. 103. Section 60630 of the Revenue and Taxation Code is amended to read: 60630. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the board if all of the following conditions are met: (1) The taxpayer files a claim for the fee and expenses with the board within one year of the date the decision of the board becomes final. (2) The board, in its sole discretion, finds that the action taken by the board staff was unreasonable. (3) The board decides that the taxpayer shall be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the board in its sole discretion. (b) To determine whether the board staff has been unreasonable, the board shall consider whether the board staff has established that its position was substantially justified. (c) The amount of reimbursed fees and expenses shall be limited to the following: (1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund. (2) If the board finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable. (d) The board's proposed award under this section shall be available as a public record for at least 10 days prior to the effective date of the award. (e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000. SEC. 104. Sections 8.5, 13.5, 23.5, 30.5, 41.5, 49.5, 57.5, 64.5, 72.5, 80.5, 89.5, and 96.5 of this bill incorporate amendments to Sections 7657, 8877, 30282, 32255, 40102, 41096, 43157, 45155, 46156, 50112.2, 55044, and 60209 of the Revenue and Taxation Code proposed by both this bill and AB 2894. These sections shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2001, (2) each bill amends Sections 7657, 8877, 30282, 32255, 40102, 41096, 43157, 45155, 46156, 50112.2, 55044, and 60209 of the Revenue and Taxation Code, and (3) this bill is enacted after AB 2894, in which case Sections 8, 13, 23, 30, 41, 49, 57, 64, 72, 80, 89, and 96 of this bill shall not become operative. SEC. 105. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.