BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1036|
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THIRD READING
Bill No: SB 1036
Author: Cedillo (D), et al
Amended: 4/20/10
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 4-1, 4/14/10
AYES: Wolk, Alquist, Ashburn, Padilla
NOES: Walters
SENATE FLOOR : 20-11, 5/13/10 (FAIL)
AYES: Alquist, Ashburn, Cedillo, DeSaulnier, Ducheny,
Florez, Hancock, Kehoe, Leno, Liu, Lowenthal, Negrete
McLeod, Padilla, Pavley, Price, Romero, Simitian,
Steinberg, Wolk, Yee
NOES: Aanestad, Cogdill, Correa, Denham, Dutton, Harman,
Hollingsworth, Huff, Runner, Strickland, Walters
NO VOTE RECORDED: Calderon, Corbett, Cox, Oropeza,
Wiggins, Wright, Wyland, Vacancy, Vacancy
SUBJECT : Tax administration: disclosure information
SOURCE : Author
DIGEST : This bill allows cities to contract with third
parties to view taxpayer information received from the
Franchise Tax Board.
ANALYSIS : Existing law generally prohibits unlawful
disclosure or inspection of any income tax return
information except as specified in law. Criminal
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sanctions, including imprisonment, apply to Franchise Tax
Board (FTB) personnel convicted of unlawful disclosure or
inspection of tax records. FTB must notify a taxpayer if
criminal charges have been filed for willful unauthorized
inspection or disclosure of their tax data. However, FTB
may publish statistical data related to taxpayer
information so long as nothing specific to a single
taxpayer is disclosed.
Existing law allows an exception to the above provisions by
authorizing FTB to provide tax information - name, address,
social security number and business activity code to a city
subject to a written agreement between the city and FTB.
The city may request information only on taxpayers who file
a tax return within its boundaries and report trade or
business income. Only city employees may use this
information; they are bound by the same confidentiality
requirements as FTB employees. This statute is repealed on
January 1, 2014.
This bill allows a city with a reciprocal agreement with
FTB to adopt a resolution to enter into a contract with a
third-party vendor to process the taxpayer data received by
FTB.
This bill specifies that any agent designated by the
resolution to examine tax records must meet certain
conditions, including already having an existing contract
with the city and executing a confidentiality statement as
provided by FTB.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/28/10)
California Professional Firefighters
Cities of Gilroy, Livermore, Newport Beach, Pleasanton,
Roseville, San Rafael, and Visalia
League of California Cities
OPPOSITION : (Verified 4/28/10)
Cal-Tax
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California Chamber of Commerce
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is intended to assist FTB and cities exchange
business taxpayer information in order to identify
businesses that have not paid business license taxes and
related fees. By authorizing cities to obtain the
assistance of contractors in processing tax data, this bill
will help cities improve tax collections, increase
enforcement of city business tax laws, and thereby increase
city revenue.
The contractors authorized under this bill would be
restricted to obtaining and filling out eight fields of
data required by FTB from business tax records, cross
referencing cities' business tax records with FTB income
tax records, and validating a business's existence by
providing additional business indicators.
The author's office in a rebuttal to the concerns raised at
the policy hearing by the opposition would like to clarify
that this bill does not propose to share taxpayer
information for the purpose of collecting taxes but only
for the purposes of identifying to the FTB or partnering
city entities that have not paid their taxes and/or fees
do. It does not affect the tax collection process once
they are identified.
ARGUMENTS IN OPPOSITION : Opponents of this bill have
expressed the concern that taxpayer confidentiality could
be compromised if private individuals and consulting firms
are permitted to access taxpayer information provided by
the FTB. Cal-Tax states that "the mishandling of taxpayer
records has been well-documented in the case of private
debt collection firms assigned to handle state and local
government tax collections, and we object to extending
access to these records to other private firms hired by
local governments to enhance local revenue."
DLW:mw 5/26/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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