BILL NUMBER: SB 884	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 24, 2011

INTRODUCED BY   Senator Calderon

                        FEBRUARY 18, 2011

    An act relating to taxation.   An act to add
Sections 16587, 16588, and 16589 to the Government Code, relating to
state and local government. 


	LEGISLATIVE COUNSEL'S DIGEST


   SB 884, as amended, Calderon. Tax administration: 
Franchise Tax Board and the State Board of Equalization 
 state and local government  : sale of tax liabilities. 

   Existing law, the Accounts Receivable Management Act, requires
participants, under specified conditions, to assign or sell, and
authorizes a city, county, or city and county to sell or transfer
part or all of its accounts receivable to a private debt collector or
private person or entity, provided that the debtor has been notified
in writing of the proposed assignment, transfer, or sale, except as
specified.  
   This bill would authorize the State Board of Equalization, the
Franchise Tax Board, and any other state agency, department, or
office, and any city, county, or city and county, to sell to
investors those accounts receivable arising from tax liabilities
under the jurisdiction of the authorized entity. The bill would
require the entity to retain an independent firm that has
demonstrated expertise in marketing and selling distressed assets
that meets specified requirements, and would require the firm to
report certain information, as specified.  
   The Personal Income Tax Law and the Corporation Tax Law impose
taxes on, or measured by, income. The Franchise Tax Board administers
the Personal Income Tax Law and the Corporation Tax Law. Existing
law requires the Franchise Tax Board to administer specified taxes
and collect those taxes from taxpayers.  
   Existing law requires the State Board of Equalization to
administer specified taxes, including sales and use taxes, fuel
taxes, and alcoholic beverage taxes, and to collect those taxes from
taxpayers.  
   This bill would declare the intent of the Legislature to enact
legislation authorizing the boards to make a sale to private
investors of specified tax liabilities that are subject to an
automatic stay on collection of taxes pursuant to a bankruptcy
proceeding, and requiring the resulting revenues to be transmitted to
the General Fund, as specified. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 16587 is added to the 
 Government Code   , to read:  
   16587.  (a) Notwithstanding any other law, the State Board of
Equalization, the Franchise Tax Board, and any other state agency,
department, or office, are hereby authorized to sell to investors
those tax liabilities under the jurisdictions of the boards,
agencies, departments, and offices that are subject to an automatic
stay on collection of taxes, pursuant to a bankruptcy proceeding
under Title 11 of the United States Code. In conducting these sales
they are empowered to compromise and settle the amount which they
will receive through the sale of these accounts receivable.
   (b) In order to manage the sales, and receive the maximum value
for the state of California, the state agencies, departments, boards,
and offices shall retain an independent firm that has demonstrated
expertise in marketing and selling distressed assets. In selecting
the firm, they shall use the same process utilized by the state
pursuant to Section 10344 of the Public Contract Code. 
   SEC. 2.    Section 16588 is added to the  
Government Code   , to read:  
   16588.  In order to be eligible to be selected to assist the state
to market the accounts receivable referenced in Section 16587, the
prospective consultant shall not engage in proprietary trading, in so
far as the company does not, and shall not, use its resources to
purchase accounts receivable, debt securities, or equity securities.
The selected firm shall also demonstrate that it has a centralized,
transparent marketplace and auction platform for the marketing and
sale of distressed assets, and shall produce regular reports to
maintain a level of transparency into the transactions conducted.
This reporting requirement allows the state to comport with its
obligation to report and track state debt levels and transactions
with third parties. The firm shall report to the state the outcome
and tax basis of each transaction taking place through the
marketplace. 
   SEC. 3.    Section 16589 is added to the  
Government Code   , to read:  
   16589.  A city, county, or city and county is authorized to sell
to investors those tax liabilities under the jurisdiction of the
city, county, or city and county that are subject to an automatic
stay on collection of taxes, pursuant to a bankruptcy proceeding
under Title 11 of the United States Code. The sales shall be
conducted in the manner and under the same conditions that the state
may sell its liabilities, as described in Sections 16587 and 16588.
 
  SECTION 1.    It is the intent of the Legislature
to enact legislation that does both of the following:
   (a) Authorizes the Franchise Tax Board and the State Board of
Equalization to sell to private investors those tax liabilities under
the jurisdiction of the boards that are subject to an automatic stay
on collection of taxes pursuant to a bankruptcy proceeding under
Title 11 of the United States Code.
   (b) Requires the revenue from the sale of the tax liabilities
described in subdivision (a) to be immediately transmitted to the
General Fund upon receipt.