BILL ANALYSIS
AB 1546
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Date of Hearing: April 27, 2009
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Charles M. Calderon, Chair
AB 1546 (Committee on Revenue and Taxation) - As Introduced:
March 5, 2009
Majority vote. Fiscal committee.
SUBJECT : Limited partnerships: revival: fees.
SUMMARY : Requires a canceled domestic limited partnership (LP),
which is seeking to revive its active status, to pay outstanding
fees, file missing tax returns, and pay a service fee for any
expedited revival requests. Specifically, this bill :
1)Requires a domestic LP to pay all outstanding fees and to file
all required tax returns to receive the written confirmation
from the Franchise Tax Board (FTB) needed for the domestic LP
to revive its status.
2)Authorizes FTB to assess, on or after January 1, 2010 and
before January 1, 2011, a $100 service fee for the expedited
processing of LP revival confirmation letter requests.
3)Authorizes FTB, after January 1, 2011, to establish, by
regulation adopted pursuant to Government Code Chapter 3.5
(commencing with Section 11340), the amount of the expedited
service fee.
4)Provides that the amount of the expedited service fee for
domestic LPs must be established in the manner and in the
amount necessary to reimburse the FTB for the costs of
administering the specialized services, including FTB's direct
and indirect costs of providing those services.
5)Applies to written confirmations made by FTB on or after
January 1, 2010.
EXISTING LAW :
1)Provides that a domestic LP formed on or after January 1,
2008, is subject to the provisions of the Uniform Limited
Partnerships Act (ULPA) of 2008. A domestic LP that was
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formed before January 1, 2008, may elect to be subject to
those provisions between January 1, 2008 and January 1, 2010.
As of January 1, 2010, all domestic LPs will be governed by
the ULPA, regardless of their date of formation.
2)Defines "limited partnership" as an entity that has one or
more general partners and one or more limited partners and
formed by two or more persons.
3)Requires a domestic LP to file a certificate of cancellation
with the Secretary of State to complete the dissolution
process. A domestic LP that filed such a certificate may
decide later to revive its active status. Once it files the
certificate of revival, the domestic LP is treated as if it
had not been canceled.
4)Provides that the certificate of revival filed by a domestic
LP must be accompanied by the FTB written confirmation stating
that the domestic LP has paid all of the annual tax,
penalties, and interest due, including those amounts for each
year between cancellation and revival.
5)Authorizes FTB to suspend a corporation's powers, rights, and
privileges for non-payment of fees due or non-filing of tax
returns. [Revenue and Taxation Code (R&TC) Section 23301 and
Section 23301.5].
6)Provides that a corporation suspended by the FTB may revive by
filing an Application for Certificate of Revivor, provided it
files all delinquent tax returns and pays any balance due,
including taxes, penalties, interest and fees. (R&TC Section
23305).
7)Requires a corporation that is looking to expedite processing
of its revivor request to pay a service fee, currently in the
amount of $100. (R&TC Section 19591). Does not contain a
similar requirement for the expedited processing requested by
domestic LPs.
FISCAL EFFECT : The FTB staff estimates that this bill will
result in a revenue gain of less than $1,000 in fiscal year (FY)
2009-10, and approximately $1,000 in each FY thereafter.
COMMENTS :
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1)According to FTB, sponsor of this bill, the purpose of this
bill is to maintain equitable treatment among taxpayers by
ensuring that the revival requirements applicable to a
domestic LP are the same as those applicable to a corporation.
2)The Committee staff notes all of the following:
a) A domestic LP, whose certificate of LP has been
canceled, may revive its status by the filing of a
"Certificate of Revival" on a prescribed form that confirms
certain items, such as payment to the FTB of all taxes,
penalties, and interest due for each year, as well as other
specified information. A Certificate of Revival is deemed
an amendment to the original Certificate of LP, and no
other amendments need be made to the Certificate of LP. In
effect, once the Certificate of Revival is filed, the
domestic LP is revived with the same force and effect as if
it were never dissolved, and the revival would validate all
contracts, acts, matters, and things done by the LP and its
partners, employees, and agents.
b) The FTB is authorized to impose specialized tax services
fees in connection with a number of listed services
enumerated in R&TC Section 19591, including expedited
services for corporation revivor requests, tax clearance
certificate requests, and tax-exempt status requests.
However, existing law does not contain a similar
requirement for the expedited processing requested by
domestic LPs. It is unclear to the Committee staff why,
currently, the same services requested by a domestic LP are
treated differently and are not subject to the service fee.
c) Even though domestic LPs must pay all of the outstanding
tax, penalties, and interest prior to revival, they are not
required to pay any fees that are due, such as the
collection cost recovery fee, nor are they obligated to
file the delinquent tax returns. In contrast, a
corporation seeking to revive its active status must file
all of the required tax returns and pay all of the tax,
additions to tax, penalties, interest, and any other
amounts due, including outstanding fees, under the R&TC.
By subjecting domestic LPs to the same requirements that
are currently applicable to corporate taxpayers, this bill
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addresses the inequity of treating similarly-situated
taxpayers differently.
3)The FTB has identified several technical errors in this bill
and suggested the following amendments:
AMENDMENT 1
On page 2, line 17, strike out "thereof" and insert "thereon"
AMENDMENT 2
On page 4, line 33, strike out "matter" and insert "manner"
4)Committee staff also recommends an amendment to replace the
word "special" on page 4, line 31, with the word
"specialized."
REGISTERED SUPPORT / OPPOSITION :
Support
Franchise Tax Board (sponsor)
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098