BILL ANALYSIS
AB 1530
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1530 (Skinner)
As Amended June 30, 2010
Majority vote
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|ASSEMBLY: | |(June 1, 2009) |SENATE: |30-2 |(August 24, 2010) |
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(vote not relevant)
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|COMMITTEE VOTE: |9-0 |(August 26, 2010) |RECOMMENDATION: |concur |
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Original Committee Reference: NAT. RES.
SUMMARY : Authorizes the Franchise Tax Board (FTB) to collect
restitution orders and any other amounts imposed by a court for
criminal offenses, as provided. Allows FTB to retain specified
amounts for costs of investigation incurred by the FTB, and revises
provisions establishing a priority for application of amounts
collected by the FTB when a debtor has more than one debt and the
amount collected is insufficient to satisfy the total amount owing.
The Senate amendments delete the Assembly version of this bill and
instead:
1)Allow FTB to collect restitution orders or any other amounts
awarded to FTB by a court of competent jurisdiction in criminal
proceedings in the same way that it collects tax liabilities.
2)Specify that the provisions of the Personal Income Tax (PIT) Law,
the Administration of the Franchise and Income Tax Law, the
Taxpayers' Bill of Rights, and the Corporation Tax (CT) Law shall
apply to amounts collected under this bill, unless a conflict
exists.
3)Allow taxpayers, notwithstanding the payment priority established
under existing law, to designate voluntary restitution payments
as payments for a PIT liability or amounts authorized to be
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collected by the FTB under this bill.
4)Provide that for all amounts authorized to be collected before,
on, or after January 1, 2011, all of the following shall apply:
a) Interest shall accrue for the above collections at the
greater rate of restitution orders (10% per year) or tax
penalties, which are computed according to a statutory
formula;
b) Collection amounts shall not be bound by statutes of
limitation;
c) The FTB may file Notices of State Tax Lien at any time
until the amount is paid in full; and,
d) The FTB may retain an amount to compensate for its
investigatory costs out of the restitution amount.
EXISTING LAW :
1)Authorizes the FTB to administer the PIT Law and CT Law. The FTB
may refer cases for criminal prosecution for certain offenses,
and the court may require the restitution, for the following
crimes:
a) Failure to file returns;
b) Forging a spouse's signature;
c) False, fraudulent, or deceptive conduct;
d) Tax evasion;
e) Conversion of a taxpayer refund by a tax preparer; and,
f) Employer's failure to collect or deposit tax.
2)Authorizes the FTB to file an action in civil court for a civil
judgment under the Code of Civil Procedure.
3)Allows the FTB to collect criminal restitution fines under the
Court Ordered Debt (COD) program, in addition to fines, state or
local penalties, and forfeitures, in amounts that exceed $100 in
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the aggregate and are more than 90 days delinquent. Restitution
orders must be imposed by a governmental entity that:
a) Is authorized to collect on behalf of the state or victim;
b) Is responsible for distributing the restitution order
collections; and,
c) Ensures that it coordinates with any other related
collection activities that may occur during that debt.
4)Allows FTB to collect these amounts using wage garnishments, bank
levies, and Notices of State Tax Liens when an amount is due and
payable, and the taxpayer has not paid. Garnishments and levies
are treated like warrants issued as part of the civil process.
5)Establishes a priority for payment of debts when multiple debts
are owed by the same taxpayer and are collected by the FTB in the
following order:
a) Child support delinquencies;
b) Payment of taxes, additions to tax, penalties and interest;
c) Delinquent wages;
d) Delinquent vehicle license fees;
e) Amounts due under the COD program;
f) Amounts referred for collection under the Cal-OSHA targeted
inspection program;
g) Delinquent penalties collected for the Department of
Industrial Relations;
h) Delinquent fees collected for the Department of Industrial
Relations; and,
i) Delinquencies referred by the Student Aid Commission.
AS PASSED BY THE ASSEMBLY , this bill required the Air Resources
Board to adopt protocols for the evaluation, measurement, and
verification of any greenhouse gas reduction measure that relies on
energy efficiency, in consultation with the Public Utilities
AB 1530
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Commission, California Energy Commission, and energy efficiency
experts.
FISCAL EFFECT : The FTB staff estimates that, as a result of this
bill, the collections by FTB will increase by $50,000 in fiscal
year (FY) 2009-10, $100,000 in FY 2010-11, and $100,000 in FY
2011-12.
COMMENTS :
1)Author's Statement . The author states that, "This bill would
provide the FTB express authority to collect orders of
restitution awarded to the department for the State in criminal
proceedings in the same manner as tax debts. Authorizing the FTB
to use its efficient electronic tax collection tools would
improve the process of collecting orders of restitution awarded
to the FTB and ensure prompt follow up on debts by allowing the
tax collection system to monitor accounts for assets that could
lead to satisfaction of the debt. Orders of restitution consist
primarily of the taxes, penalties, and interest owed to the FTB
and should be collected as such."
2)The Purpose of this Bill . According to the sponsor, this bill is
intended to improve the collection process for orders of
restitution awarded to the FTB in criminal proceedings.
3)Background . Under existing law, the FTB, like any other victim,
can seek restitution for economic losses incurred as a result of
a specified crime. Generally, the economic loss suffered by FTB
in criminal proceedings is the amount of state income tax, plus
any applicable penalties, interest, and costs of investigation
and/or prosecution, that the person convicted of a crime failed
to pay. Since an order of restitution issued by a court is not a
tax or a tax penalty, it is unclear whether the FTB may use its
existing administrative tax collection tools in collecting that
order.
Currently, the FTB could collect its restitution orders either via
the COD provisions or as a civil money judgment using collection
remedies available under the Code of Civil Procedure. Restitution
orders awarded to FTB in federal cases do not meet the
requirements for referral under the COD provisions. Furthermore,
as pointed out by the FTB in its analysis of this bill, the FTB
does not use COD to collect any of its orders of restitution
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because of the following two reasons. First of all, the billing
notices that the FTB issues to taxpayers who owe both tax and
restitution would be inaccurate because the balances are
maintained on two separate systems - a billing system and a
collection system. The collection of a restitution order
requires higher level of collection expertise than the average
COD account that relies primarily on automated processes.
Secondly, the COD system does not assess interest; it is the
state agency that refers the debt to the FTB for collection that
calculates the amount of accrued interest and provides this
information to the FTB.
An existing process for enforcing a civil money judgment is
generally time consuming and cumbersome. Those statutory
procedures can delay the collection of the restitution orders and
the FTB must rely on the availability of external resources to
collect amounts owed as a civil money judgment. Depending on the
nature of the assets involved, the civil process can take
anywhere from 90 days to one year from the date of seizure to the
date of the auction to complete.
The FTB estimates that, annually, it receives approximately 40
criminal orders of restitution valued at $15 million. AB 1530
would expressly authorize the FTB to collect restitution orders,
which are awarded to the FTB by a court in criminal proceedings,
in the same manner and with the same priority as regular tax
liabilities.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916) 319-2098
FN: 0006811