BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1307|
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THIRD READING
Bill No: AB 1307
Author: Skinner (D)
Amended: 8/15/11 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 6/29/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Huff, Fuller, La Malfa
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 5-2, 7/6/11
AYES: Price, Corbett, Hernandez, Negrete McLeod, Vargas
NOES: Emmerson, Walters
NO VOTE RECORDED: Correa, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 49-27, 5/23/11 - See last page for vote
SUBJECT : Board of Equalization: administration:
collections
SOURCE : Board of Equalization
DIGEST : This bill authorizes the Contractors State
License Board to refuse to issue, reinstate, reactivate, or
renew a license or to suspend the license of a contractor
for the failure of the licensee to resolve all outstanding
final liabilities assessed by the Board of Equalization
(BOE), if the licensee has not entered into an installment
payment agreement for that liability and is in compliance
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with that agreement. Requires the BOE to utilize the
Financial Institution Records Match system in cooperation
with the Franchise Tax Board to help locate delinquent
taxpayers and levy their accounts. Authorizes BOE to
refuse to issue a seller's permit to any person who has an
outstanding tax liability and has not entered into an
installment payment agreement, and allows BOE access to the
information filed by employers with the Employment
Development Department regarding new employees for the
purpose of tax or fee enforcement.
ANALYSIS : Existing law, the Business and Professions
Code (BPC):
1. Licenses and regulates more than 300,000 contractors
under the Contractors State License Law by the
Contractors State License Board (CSLB) within the
Department of Consumer Affairs. The CSLB is under the
direction of the Registrar of contractors (Registrar).
2. Authorizes the Registrar to refuse to issue, reinstate,
reactivate, or renew a license or to suspend the license
of a contractor for the failure of the licensee to
resolve all outstanding final liabilities, including
taxes, additions to tax, penalties, interest, and any
fees assessed by CSLB, the Department of Industrial
Relations, the Employment Development Department (EDD),
or the Franchise Tax Board (FTB). (BPC Section 7145.5)
A. Prohibits a qualifying person and any other
personnel named on the license, whose license has
been suspended due to outstanding final liabilities
with the State, as specified, from serving in any
capacity other than as a nonsupervising bona fide
employee until that debt is satisfied.
B. Provides that the license of any other renewable
licensed entity with any of the personnel of record
that have been assessed an outstanding liability, as
specified, will be suspended until the debt has been
satisfied or until the same personnel of record
disassociate themselves from the renewable licensed
entity.
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C. Allows the refusal or suspension of a license only
if the registrar of CSLB has mailed a notice at least
60 days prior to the suspension that indicates that
the license will be suspended by a certain date, as
specified.
Existing law, the Revenue and Tax Code (RTC):
1. Requires any person desiring to engage in business as a
seller in California to apply for a seller's permit with
BOE. A seller's permit is valid for as long at the
seller maintains a business and remains in good standing
with the BOE. (RTC Section 6066)
2. Provides that the BOE may revoke the seller's permit of
a person who fails to comply with any provision of the
sales and use tax law, including fulfilling the payments
of amounts due. The BOE must first provide an
opportunity for a hearing in which that person may show
why the seller's permit should not be revoked. (RTC
Section 6070)
3. Provides that a seller whose permit has been revoked or
suspended may renew their permit after paying a $100
reinstatement fee to the BOE. (RTC Section 6069)
Existing law, the Unemployment Insurance Code (UIC):
1. Provides for the payment of unemployment compensation
benefits to eligible unemployed individuals, and
requires EDD to implement and administer the
unemployment insurance system in the state.
2. Requires each employer to file with the EDD a report of
wages paid to his/her workers and to furnish to each
employee a written statement showing, among other
things, the total amount of wages, and total wages
subject to personal income tax, as specified. (UIC
Section 1088)
3. Requires each employer to file with the EDD specified
information on new employees, and authorizes the use of
that information for specified purposes including, among
other things, providing employer or employee information
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to FTB for the purpose of tax enforcement. (UIC Section
1088.5)
This bill:
1. Authorizes the CSLB to additionally refuse to issue,
reinstate, reactivate, or renew a license or to suspend
the license of a contractor for the failure of the
licensee to resolve all outstanding final liabilities
assessed by the BOE.
2. Specifies that the Registrar shall not refuse to issue,
reinstate, reactivate, renew or suspend a contractor's
license for outstanding final liabilities to the BOE, if
the licensee has entered into an installment payment
agreement for that liability with the BOE and is in
compliance with that agreement.
3. Requires the BOE to utilize the Financial Institution
Records Match system in cooperation with the FTB to
identify delinquent tax debtors. Requires BOE to
reimburse the FTB for any costs incurred.
4. Authorizes the FTB to disclose delinquent tax debtor
information provided to the FTB by the BOE to designated
financial institutions for the purpose of matching
debtor records to accountholder records at those
financial institutions, and provides that the
unauthorized use of this data is a misdemeanor.
5. Authorizes BOE to refuse to issue a seller's permit to
any person who has an outstanding liability with the BOE
and has not entered into an installment payment
agreement. This bill requires BOE to provide a notice,
as specified, to the taxpayer who was refused a permit.
Requires the board to consider offers in compromise when
determining whether to issue a seller's permit.
6. Allows the BOE access to the information filed by
employers with EDD regarding new employees for the
purpose of tax or fee enforcement.
This bill is double-jointed with AB 1424 (Perea), 2011-12
Session.
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Prior/Related Legislation
AB 2456 (Nakanishi), Chapter 122, Statutes of 2006,
prohibits the qualifying person, and any other personnel
named on the license whose license has been suspended due
to outstanding final liabilities with the State, from
serving in any capacity other than as a nonsupervising bona
fide employee.
SB 886 (Corbett), 2011-12 Session, relates to sprinkler
fitters licensing and amends Section 7145.5 to add the
State Fire Marshall to the list of agencies that the
Registrar could suspend or revoke a license if the
contractor owed money to the agency.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/16/11)
Board of Equalization (source)
OPPOSITION : (Verified 8/16/11)
Board of Equalization member, George Runner
California Taxpayers Association
ARGUMENTS IN SUPPORT : In sponsoring this bill, BOE
states:
"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
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this increase. However, 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.
Those businesses that fail to pay their tax liabilities
have in many cases an unfair competitive advantage over
taxpayers who comply with the law and pay their fair
share.
"This bill would provide additional tools that would
assist the BOE in reducing its growing outstanding
accounts receivable balances from taxpayers' failure to
remit the taxes that are owed, and would assist in
reducing the unfair competitive advantage these tax
debtors have over law-abiding taxpayers."
ASSEMBLY FLOOR : 49-27, 5/23/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes,
Gatto, Gordon, Hall, Hayashi, Roger Hern�ndez, Hill,
Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza,
Mitchell, Monning, Pan, Perea, V. Manuel P�rez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Donnelly,
Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman,
Harkey, Huber, Jeffries, Jones, Knight, Logue, Mansoor,
Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva,
Smyth, Valadao, Wagner
NO VOTE RECORDED: Cook, Furutani, Galgiani, Gorell
AGB:kc 8/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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