BILL ANALYSIS
AB 2433
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2433 (Ruskin) - As Introduced: February 19, 2010
SUBJECT : Employment tax information
SUMMARY : Allows the Director of the Employment Development
Department (EDD) to share certain employment tax information
with the State Board of Equalization. Specifically, this bill :
1)Authorizes the Director of EDD to provide the State Board of
Equalization with employment tax information that will assist
in the administration of tax programs.
2)Specifies that the information provided shall be limited to
the exchange of employment tax information essential for tax
administration purposes to the extent permitted by federal law
and regulations.
EXISTING LAW :
1)Authorizes EDD to collect personal income taxes required to be
withheld by employers.
2)Requires employers to send unemployment insurance (UI)
contributions to EDD to finance the Unemployment Fund and pay
regular UI benefits.
3)Requires EDD to collect from employers the employee wage
deductions to the Disability Fund. This Fund pays the costs
of the state Disability Insurance (DI) Program.
4)Authorizes the Director of EDD to permit the use of
information in his or her possession for specified purposes
including sharing information with various government agencies
and local governments.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose. The purpose of this bill is to authorize the State
Board of Equalization (Board) to admit into evidence EDD
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confidential employment tax information in hearings and court
proceedings in order to resolve disputes regarding the Board's
administration of a fee or tax law, the amount owed by a
taxpayer or feepayer, or the amount to be refunded.
2)Background. Under existing law, the EDD may exchange certain
information with state agencies. The author and the Board
state that the Board is authorized to receive certain
confidential information and it has an existing reciprocal
sharing agreement for the exchange of information. As an
authorized receiver, the Board currently uses EDD's
confidential information to verify a feepayer's reported
number of employees for both the environmental fee and the
occupational lead poisoning prevention fee. The applicability
and amount of the fee for both programs is based, in part, on
the size of a feepayer's employee workforce. The Board also
uses EDD's information to discover unregistered feepayers and
underreported taxes and/or fees, and to verify refunds. In
addition, the EDD information is useful for collection
purposes and as a basis for claims in bankruptcy.
However, one section of law (Unemployment Insurance Code Section
1094) specifies that unless specifically authorized by law,
the information obtained by EDD in the administration of the
Unemployment Insurance Code is confidential, not open to the
public, and shall be for the exclusive use of the Director of
EDD in discharge of his or her duties. That section of law
also provides that the information released to authorized
entities, such as the Board, is not admissible as evidence in
any action or special proceeding, other than those actions or
special proceedings authorized by a specified section of law
(Unemployment Insurance Code Section 1095) or by another
provision of the Unemployment Insurance Code.
Currently, Section 1095 of the Unemployment Insurance Code
authorizes certain state, local, and federal agencies to use
the EDD confidential information as evidence in an action or
proceeding. Some of the currently authorized uses include
determining entitlement to general assistance, investigating
disability income, administering child support programs,
investigating workers' compensation insurance fraud, and
verifying employment history.
3)Arguments in Support. The Author and the Board state that in
the past the Board relied upon interagency agreements with EDD
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in which the Board believed the EDD information could be used
in "any action or special proceeding," as long as it was
presented in summary form. Recently, the EDD reiterated to
Board staff that provisions of Section 1094 of the
Unemployment Insurance (UI) Code specify that the confidential
information released to authorized entities cannot be admitted
as evidence in "any action or special proceeding" unless
specifically authorized by Section 1094 or 1095 of the UI
Code. It is now clear that the Board needs specific statutory
authority to admit into evidence EDD's employment tax
information in any action or special proceeding.
The Author and the Board state that EDD's information is
necessary to arriving at the correct resolution of a fee
dispute heard by the Board in an administrative hearing or
litigated in a court proceeding. Also, this bill will ease
the compliance burden on employers, as the use of EDD
information is less burdensome than providing access to their
payroll records.
REGISTERED SUPPORT / OPPOSITION :
Support
State Board of Equalization
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086