BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1028
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 1028 (Correa) - As Amended:  August 2, 2010 

          Policy Committee:                             Revenue and  
          Taxation     Vote:                            9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill allows the Board of Equalization (BOE), under  
          specified circumstances, to charge just one day's interest-as  
          opposed to a full month's worth of interest - on tax payments  
          remitted electronically that are one day late.  Specifically,  
          the bill:

          1)Authorizes the members of BOE, after meeting publicly and  
            taking into account all facts and circumstances, to charge  
            interest on a late payment on a daily, versus monthly, basis.

          2)Specifies that in order to qualify for the daily interest  
            calculation, the taxpayer must file a request for an oral  
            hearing before BOE, the payment be no more than one day late,  
            and the taxpayer be granted relief from all penalties that  
            applied to the payment.

          3)Sunsets on January 1, 2016

           FISCAL EFFECT  

          BOE estimates this measure will result in an annual revenue loss  
          of less than $10,000.

           COMMENTS  

           1)Rationale  . This bill is sponsored by the BOE as a means to  
            "provide some limited flexibility for the members of BOE to  
            address the inequity of applying an entire month's interest to  
            a liability when the liability is paid only one day late and  
            the late payment is due to reasonable cause or circumstances  








                                                                  SB 1028
                                                                  Page  2

            beyond the taxpayer's control."  The bill provides greater  
            parity between taxpayers remitting their payments to BOE  
            electronically and those using the mail. This is because  
            taxpayers using the mail may have interest and penalties  
            waived on payments that are postmarked one day after the due  
            date. 

           2)Background  . Existing law imposes a penalty for late payments  
            of taxes, fees, and surcharges administered by the BOE. The  
            penalty is equal to 10% of the payment owed (and 6% for  
            prepayments owed). The taxpayer is also assessed interest on  
            late payments, currently 0.6% per month, or part of month, on  
            the unpaid liability. Given this method of calculation, a  
            taxpayer making a payment one day after the due date is  
            charged for the full month's worth of interest. BOE has  
            authority to waive a late payment penalty when it finds the  
            late payment was due to reasonable cause and circumstances.  
            However, BOE does not have authority to waive the interest  
            due, except in limited circumstances (such as disasters).  
           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081