BILL ANALYSIS �
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Date of Hearing: January 9, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 1351 (Logue) - As Amended: January 4, 2012
Majority vote. Fiscal committee.
SUBJECT : Underground storage tanks: fees: deficiency
determinations
SUMMARY : Allows the State Board of Equalization (BOE) to
reduce, to three years, the period of deficiency determination
liability for the underground storage tank fee, under specified
circumstances. Specifically, this bill :
1)Provides that, in the case of failure to file a return, where
a feepayer has incurred more than 12 quarters' liability for
the underground storage tank fee within the eight-year period
after the date the return was due, the BOE may reduce the
period of liability for the fee to three years.
2)Provides that this relief shall only be granted if the BOE
finds that the feepayer's failure to file a return was because
the feepayer was a "qualified absentee owner" of the
underground storage tank.
3)Defines a "qualified absentee owner" as the owner of an
underground storage tank at the time the report or return was
due who meets all of the following criteria:
a) The owner was not the operator, as defined by Health and
Safety Code Section 25299.20, of the underground storage
tank system;
b) The owner had no ownership interest in the person who
was the operator of the underground storage tank system;
c) The owner establishes that he/she did not know of, and
had no reason to know of, the requirement to register with
the BOE as an owner of an underground storage tank; and,
d) The BOE did not have contact with the owner of the
underground storage tank regarding the requirement that the
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owner register with the BOE prior to the date of the
contact that prompted the BOE to issue the notice of
determination.
4)Provides that, if the BOE did have contact with the owner of
the underground storage tank prior to the three-year period of
liability described above, the owner is also liable for the
fee for the period beginning on the date of that contact and
until the date the report or return was due.
5)Provides that the BOE may reduce the period of liability to
three years only for notices of determination issued on or
after January 1, 2013.
EXISTING LAW :
1)Requires every owner of an underground storage tank, for which
a permit is required, to pay a storage fee of six mills
($0.006) for each gallon of petroleum placed in an underground
storage tank that he/she owns. The BOE is charged with
administering and collecting this fee pursuant to the
Underground Storage Tank Maintenance Fee Law (Fee Law).
2)Allows the BOE, if it is dissatisfied with the amount of fees
paid, to compute and determine the amount to be paid based
upon any information available to it. Deficiency
determinations must generally be given within three years of
the date when the amount was required to have been paid or the
report or return was due, or within three years after the
report or return was filed, whichever period expires later.
In the case of failure to make a report or return, the
deficiency determination must be mailed within eight years of
the date the report or return was due.
3)Provides for the deposit of fee payments in the Underground
Storage Tank Cleanup Fund in the State Treasury.
FISCAL EFFECT : The BOE estimates that this bill would result in
annual revenue losses of $50,000.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
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This bill is intended to provide limited fee liability
relief in those cases where the underground storage tank
owner is found to be a qualified absentee owner. If the
BOE finds that the absentee owner meets the criteria for
relief, then the BOE would be able to limit the deficiency
determination to a three year period . . . .
2)The BOE, which is sponsoring this bill, notes the following in
its staff analysis:
a) This provision would provide only limited relief for a
qualified absentee owner . "In general, in those cases
where a qualified absentee owner failed to file returns,
the BOE would be able to issue a deficiency determination
for up to a maximum of eight years. If the absentee owner
petitions the determination, then the BOE would decide if
the absentee owner meets the criteria for relief and if the
deficiency determination should be re-determined to reduce
the period of liability for the fee to three years. In
short, the BOE would only be able to provide relief for a
maximum of five years, thereby continuing to hold the
feepayer liable for a three year period."
b) The owner may not be the operator of a gas station, yet
the owner is liable for the payment of the underground
storage tank fee . "�D]espite the BOE's best efforts in
attempting to identify, locate, and communicate with the
owners of underground storage tanks that are subject to the
fee, there are still cases in which the owner fails to
register with the BOE to report and pay the �underground
storage tank] fee. These cases generally involve a person
who is the owner of the property where the underground
storage tanks are located but is not the operator of the
gas station, or does not have any ownership ties to the
operator, or does not have previous business experience or
knowledge of the operating and licensing responsibilities
associated with a gas station. In these cases, the owner
is the lessor of the property, and the gas station operator
is the lessee and responsible for the payment of the Sales
and Use tax. When the BOE ultimately identifies the owner
and has to issue determinations for failure to file
returns, the owners are unable to pay because they did not
include the cost of the UST fee in their lease charges and
they have no means of obtaining reimbursement for the fee
due for past periods."
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3)Committee Staff Comments:
a) Background : As the BOE notes in its staff analysis,
underground storage tanks are typically located at service
stations and truck stops. In such cases, the tank owner is
usually the facility operator. After the Fee Law's
enactment, the BOE attempted to reach potential tank owners
by mailing notices to sales and use tax permit holders
selling fuel products. Since that time, the BOE's Special
Taxes section has continued to locate unregistered tank
owners through both outreach efforts and investigations.
Despite the BOE's best efforts, there have been cases where
"absentee" tank owners claim they were never notified of
their duty to pay the fee. Such "absentee" owners often
lease their property to another entity that actually
operates the service station or truck stop. The BOE notes,
"This has resulted in a hardship for many absentee tank
owners who, by the time the BOE determines who owns the
underground storage tanks, suddenly owe several years of
back fees, interest and penalties." Thus, the BOE is
sponsoring this bill to provide "limited fee liability
relief in those cases where the underground storage tank
owner is found to be a qualified absentee owner."
b) Is ignorance of the law now an excuse? : To qualify for
relief under this bill, an owner must establish that he/she
did not know of, and had no reason to know of, the
requirement to register with the BOE under the Fee Law.
(Emphasis added.) Thus, this bill appears to be predicated
on the assumption that it is reasonable in certain cases to
be ignorant of existing law, which affirmatively imposes a
fee obligation on all tank owners. It seems questionable
to Committee staff to establish a precedent rewarding
ignorance of existing legal obligations.
c) Unintended consequences : This bill limits the BOE's
ability to grant relief to cases in which the feepayer has
failed to file a return. What, however, would happen if an
absentee owner voluntarily filed returns for all
outstanding years after being informed by the BOE of
his/her responsibility to do so? If such an individual
later filed a claim for refund owing to his/her status as
an absentee owner, would the BOE be precluded from limiting
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the feepayer's liability to a three-year period? If so,
Committee staff questions whether such differential
treatment unfairly penalizes those feepayers who
voluntarily and proactively comply with the law.
REGISTERED SUPPORT / OPPOSITION :
Support
State Board of Equalization (sponsor)
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098