BILL NUMBER: SB 884 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 4, 2012
AMENDED IN SENATE MARCH 24, 2011
INTRODUCED BY Senator Calderon
FEBRUARY 18, 2011
An act to add and repeal Sections 16587, 16587.5,
16588, and 16589 to of the
Government Code, relating to state and local government.
LEGISLATIVE COUNSEL'S DIGEST
SB 884, as amended, Calderon. Tax administration: 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
specified tax liabilities under the jurisdiction of the
authorized entity , as provided . 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. This bill would
authorize the State Board of Equalization to release
inform ation that is necessary to facilitate a due
diligence review by a prospective purchaser of the tax liability, as
specified.
This bill would repeal these provisions on January 1, 2014.
Vote: majority. Appropriation: no. Fiscal committee: 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 is hereby
authorized to sell to investors those tax liabilities under the
jurisdictions of the boards, agencies, departments, and
offices jurisdiction of the board 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 , the State Board of
Equalization is authorized to discount that amount the board
will receive through the sale of these accounts receivable
tax liabilities .
(b) For the purposes of this section:
(1) "Business entity" means a corporation, partnership, joint
venture, limited liability company, business trust, or any other
group or combination acting as a unit.
(2) "Secondary tax liability" means a tax liability of a business
entity for which another person also is obligated under law to pay.
(b)
(c) In order to manage the sales, and receive the
maximum value for the State of California, the state
agencies, departments, boards, and offices board
shall retain an independent firm that has demonstrated expertise in
marketing and selling distressed assets. In selecting the firm,
they the board shall use the same
process utilized by the state pursuant to Section 10344 of the Public
Contract Code.
(d) This section shall not apply to a tax liability that is a
secondary tax liability.
(e) Prior to entering into an agreement to sell a tax liability,
the Executive Director of the State Board of Equalization shall
establish a reserve price for each sale of a tax liability. If the
reserve price is not met, the tax liability shall not be sold. Any
lien that has been filed by the board shall be released pursuant to
the order of the bankruptcy court after the tax liability is paid.
(f) This section shall be limited to business entities that have
an outstanding tax liability, including penalties and interest, of
one hundred fifty thousand dollars ($150,000) or more.
(g) This section shall become inoperative on January 1, 2014, and
as of that date is repealed.
SEC. 2. Section 16587.5 is added to the
Government Code , to read:
16587.5. (a) Notwithstanding Section 7056 of the Revenue and
Taxation Code or any other law regarding confidentiality of the
taxpayer information in laws administrated by the State Board of
Equalization, in order to facilitate the sale of tax liabilities, as
provided in Section 16587, the State Board of Equalization may
release information that is necessary to facilitate a due diligence
review by a prospective purchaser of the tax liability. This
information shall be limited to the information relating to the
business entity, tax liability, defenses, offsets, and other claims
that may be asserted by the business entity. This information shall
not include personal information of an officer, individual partner,
or any other managing individual of a business entity.
(b) For purposes of this section, "business entity" has the same
meaning as set forth in paragraph (1) of subdivision (b) of Section
16587.
(c) The purchase contract between the purchaser of the tax
liability and the State Board of Equalization shall address how
payments from other sources will be treated, and shall specify who is
responsible for paying all or part of the refund amount if all or
any part of the tax liability is refunded to the business entity.
(d) The purchaser of a tax liability shall not be entitled to the
special collection remedies and processes otherwise available to the
State Board of Equalization.
(e) This section shall become inoperative on January 1, 2014, and
as of that date is repealed.
SEC. 2. SEC. 3. Section 16588 is
added to the Government Code, to read:
16588. (a) 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.
(b) This section shall become inoperative on January 1, 2014, and
as of that date is repealed.
SEC. 3. SEC. 4. Section 16589 is
added to the Government Code, to read:
16589. (a) 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.
(b) This section shall become inoperative on January 1, 2014, and
as of that date is repealed.