BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1352 (Logue)
Hearing Date: 08/25/2011 Amended: 07/14/2011
Consultant: Mark McKenzie Policy Vote: G&F 9-0
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BILL SUMMARY: AB 1352 would authorize the Board of Equalization
(BOE) to relieve interest imposed as a result of failure to make
a timely payment, if the failure was due to extraordinary
circumstances, as specified. The bill would also provide that
specified vehicle license fee (VLF) revenues that are deposited
into the Local Revenue Fund of 2011 for local law enforcement
realignment purposes would not be subject to expenditure
requirements of a local ordinance in Nevada County.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
BOE: revenue loss up to $25 up to $50 up to $50 General
also potential cost pressures (see staff
comments)
Nevada County VLF no state costs Local
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STAFF COMMENTS: SUSPENSE FILE.
Existing law requires payment of penalties and interest for
failure to pay sales and use tax obligations on time. Simple
interest is charged on a monthly basis at a rate of seven
percent annually from the date the tax is due to the date of
payment. The BOE currently has the authority to relieve a late
payment penalty when there is a finding that the failure to make
a timely payment was due to a disaster or reasonable cause and
circumstances beyond the person's control, and occurred
notwithstanding the exercise of ordinary care and the absence of
willful neglect. The BOE may only relieve interest on a late
payment in cases of a disaster or when failure to make a timely
payment was due to an unreasonable error or delay by a BOE
employee.
AB 1352 (Logue)
Page 1
AB 1352 would allow the Members of the BOE, meeting as a public
body, to relieve all or part of the interest imposed on late
payments, up to $50,000 total in a 12-month period, if the
failure to make a timely payment was due to extraordinary
circumstances. The person seeking relief must have been granted
relief from all penalties, paid the tax on which the interest is
imposed, requested an oral hearing before the Members, and filed
a statement under penalty of perjury that includes facts and
information about the claim. The failure to make a payment must
be a result of the following "extraordinary circumstances:" the
death or medical incapacity of the person's next of kin; the
occurrence of an emergency, as specified in current law (state
of war, emergency, or local emergency); or criminal misconduct
by a person other than the claimant.
It is unclear how many taxpayers would seek relief, and how many
would be granted relief, as a result of the discretionary
authority provided by this bill. The BOE cites one case in
which a taxpayer was victim of embezzlement by a bookkeeper who
had falsified the taxpayer's accounting records, resulting in an
unpaid tax liability that was subject to penalties and interest.
The accumulated interest was $15,662 when that case came before
the BOE. Since the demand for interest relief related to this
bill is unknown, the magnitude of any potential interest revenue
loss is indeterminable, but the bill limits the aggregate relief
in a 12-month period to $50,000. If demand exceeds this
limitation, the bill could create additional General Fund cost
pressures. In addition, since the limit on aggregate relief is
based on a 12-month period, the impact in any fiscal year could
be greater or less than $50,000.
Staff notes that the BOE provisions of this bill are
substantially similar to AB 2375 (Knight), which failed passage
in the Senate Revenue and Taxation Committee last year.
AB 1352 was recently amended to add a provision to address an
issue unrelated to the Sales and Use Tax law. Specifically, the
bill was amended to specify that any VLF revenues that are
deposited into the Local Law Enforcement Services Account in the
Local Revenue Fund of 2011 and distributed to counties would not
be subject to requirements of a local ordinance in Nevada County
that otherwise requires that 50% of all VLF revenues received by
that county be expended on county roads.
AB 1352 (Logue)
Page 2
In March 1996, Nevada County voters approved Measure F, an
ordinance which required that all funds received from the State
of California from motor vehicle license fee funds, as defined
in the State Constitution and in statute, must be segregated
into a separate accounting fund. The County must spend at least
half of those funds in each fiscal year only for public roads,
ways, and highways for maintenance, repair, circulation
enhancement, general road safety, and fire access. Following
the enactment of a temporary increase to the VLF as part of the
February 2009 budget agreement, SB 636 (Ashburn), Chapter 605 of
2009, was enacted to ensure that the increased VLF revenues
dedicated for local law enforcement purposes would not be
subject to the requirements of Measure F. This bill would enact
similar provisions to ensure that VLF revenues dedicated to
local law enforcement as part of the realignment package, as
specified in SB 89 (Committee on Budget and Fiscal Review),
Chapter 35 of 2011, are not subject to the requirements of
Nevada County's local ordinance. There is no state fiscal
impact associated with this provision of AB 1352.
Staff notes that the recent amendments appear to be a violation
of Joint Rule 9, which requires that a "substitute or amendment
must relate to the same subject of the original bill." It is
unclear, however, whether the bill is a violation of Article IV,
Section 9 of the California Constitution, which states in part
that "a statute shall embrace but one subject, which shall be
expressed in its title." It should be noted that the courts
have construed single subject provisions in a lenient manner so
as not to unduly restrict the Legislature's or the people's
right to package provisions in a single bill or initiative
(Californians for an Open Primary v. McPherson (2006) 38 Cal.4th
735).