BILL ANALYSIS �
AB 1307
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1307 (Skinner) - As Introduced: February 18, 2011
Policy Committee: Revenue and
Taxation Vote: 6-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows the State Board of Equalization (BOE) to refuse
to issue a seller's permit to any person with an outstanding
final liability with BOE for any amount due under the Sales and
Use Tax Law. Specifically, this bill:
1)Provides that a liability will not be deemed outstanding if
the person has entered into an installment payment agreement,
unless the person fails to comply with the installment
agreement.
2)Specifies that the BOE shall provide written notice to any
person denied a seller's permit and that notice shall be
served personally, by mail or by other means deemed
appropriate by BOE, and provides that any person denied a
seller's permit may request in writing a reconsideration of
BOE's denial within 30 days.
3)Provides that a request for reconsideration timely filed will
afford the person a hearing conducted in a manner specified by
law.
FISCAL EFFECT
The BOE estimates minor additional revenues from taxpayers
entering into installment payment agreements.
COMMENTS
1) Purpose. According to the author, AB 1307 is meant to
help collect delinquent taxes and fees owed to the State.
AB 1307
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BOE is charged with administering a variety of taxes and
fees and has many collection tools to facilitate the BOE's
responsibilities under the law. However, despite the tools
available to the BOE, some taxpayers simply refuse to remit
their tax and fee obligations due the state. The BOE's
growing accounts receivable balance is $1.5 billion-an
amount that has nearly doubled over the past three years.
AB 1307 provides the BOE with additional tools to reduce
this balance and collect the taxes and fees that support
vital services in California.
2) Background . California's sales and use tax system is
one based on the principal of voluntary compliance. Most
retailers are honest and generally comply with the tax
laws. However, the BOE's number of overdue accounts
receivable, as well as the overall balance, continues to
increase, further complicating the state's budget woes.
Within the last three-year period, the BOE's accounts
receivable balances for unpaid final liabilities
(liabilities that are due and not under appeal) have nearly
doubled. As of the end of 2010, these outstanding
liabilities totaled over $1.5 billion. Recent economic
turmoil is one factor contributing to this increase.
However, according to BOE, other reasons include the fact
that some businesses purposefully fail to remit the tax,
such as when a taxpayer diverts the sales tax reimbursement
collected from a customer for his or her own purposes
instead of remitting the tax to the state.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081