BILL ANALYSIS
SB 402
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Date of Hearing: July 15, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 402 (Wolk) - As Amended: April 28, 2009
Policy Committee: Revenue and
Taxation Vote: 6-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Franchise Tax Board (FTB), in
coordination with financial institutions, to operate a Financial
Institution Record Match (FIRM) system, which would allow FTB to
match its list of delinquent tax debtors against the financial
institutions' customer records. Key provisions of this bill:
1)Require banks, credit unions, and other financial institutions
to provide to the FTB, on a quarterly basis, the name, record
address, social security number or taxpayer identification
number for each delinquent tax debtor identified in their
customer records.
2)Limit the first data file created by the FTB under the FIRM
program to 600,000 data records and specifies that the number
of tax debtor records included in a subsequent data file may
not be increased by more than 600,000 records.
3)Defines the phrase "delinquent tax debtor" as any person
liable for any income or franchise tax or other debt referred
to the FTB for collection (which includes registration fees,
transfer fees, license fees, and court ordered debt.)
4)Authorizes the FTB to impose penalties and institute civil
proceedings to enforce this bill.
5)Requires FTB reimburse financial institutions for costs
incurred in implementing FIRM, up to $2,500 for start up costs
and to $250 per calendar quarter for data matching costs.
6)States that the implementation of the FIRM program is
SB 402
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contingent upon an appropriation of funds and is not operative
until 120 days after the date the funds are appropriated.
FISCAL EFFECT
GF revenue increases of $19 million in 2009-10, $60 million in
2010-11, $99 million in 2011-12, and about $100 million annually
thereafter. Additional revenues to special funds (related to
other debts referred to FTB for collection) of about $3 million
in 2010-11, rising to between $5 million and $10 million
annually in future years. FTB staff estimates that the
implementation of this measure would cost $3.2 million in
2009-10, $7.9 million in 2010-11, $4.7 million in 2011-12, and
similar amounts in future years.
COMMENTS
1)Background . The FIRM program is modeled after an existing
program for child support collections, referred to as the
Financial Information Data Match (FIDM) program. This program
requires financial institutions to match their customer
records against a list of child support debtors. Once
deposits are identified, FTB would be able to recover
delinquent taxes through the issuance of an order to withhold,
which is authorized under existing law.
2)Rationale . The purpose of this bill is to build on FIDM
program, by requiring financial institutions to match customer
records against the FTB's database of individuals with
tax-related delinquencies. The program only applies to
taxpayers that have delinquent liabilities referred to FTB for
collection, and have received a demand for payment from FTB
that is unpaid for more than 30 days. Taxes become delinquent
after an assessment is made, all appeals and other due process
procedures have been exhausted, and the assessment is final.
3)Related legislation . SBx3 17 (Ducheny), introduced in the
current Third Extraordinary Session, creates an identical FIRM
program. SBx3 17 was vetoed by the governor on July 9.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081