BILL ANALYSIS
SB 1492
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1492 (Committee on Revenue and Taxation) - As Introduced:
March 15, 2010
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes changes to the voluntary disclosure agreement
(VDA) administered by the Franchise Tax Board (FTB).
Specifically, the bill:
1)Allows qualifying taxpayers (generally non-resident entities,
particularly estates and trusts) to file the most recent tax
return as late as the extended due date.
2)Eliminates the underpayment-of-estimated-tax penalty when the
agreement is signed after the quarterly tax payment due date.
3)Allows VDA applicants requesting an installment payment
arrangement additional time to satisfy the VDA if the
installment payment request is denied after the VDA period
ends.
FISCAL EFFECT
FTB indicates that the bill will have no direct effect on its
costs or state revenues. The bill may, however, result in
compliance related revenue increases if it results in greater
participation in the VDA program and hence greater tax
compliance.
COMMENTS
1)Purpose . This bill is sponsored by the FTB to remove
impediments to participation in the VDA program. It is
intended to reduce the risks to taxpayers attempting to comply
SB 1492
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with the VDA being subjected to additional penalties due to
anomalies in existing statutes affecting the program.
2)Background . Existing law allows the FTB to enter into
voluntary disclosure agreements with non-resident taxpayers
under specified circumstances. Under the agreement, the
taxpayer files past due returns and pays taxes for the prior
six years in exchange for the waiving of penalties that would
otherwise be imposed on the unpaid taxes for the period. These
taxpayers are also relieved of all liabilities (taxes,
penalties, and interest) attributable to taxes that may have
been owed for years previous to the six-year period.
California and other states have enacted voluntary disclosure
programs to promote voluntary compliance among out-of-state
taxpayers, primarily business entities and trusts, who may have
failed to realize they have a filing requirement within a
particular state.
The FTB must approve all VDAs by majority vote. Approved
taxpayers must then submit all returns within 120 days of the
signing date of the VDA. They are also required to make full
payments of amounts owed within the 120 day period, unless
they enter into an installment agreement with FTB.
Analysis Prepared by : Brad Williams / APPR. / (916)
319-2081