BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 1015
Author: Senate Budget and Fiscal Review Committee
Amended: 6/25/12
Vote: 21
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : Not available
SUBJECT : Taxation Administration and Compliance Budget
Trailer Bill
SOURCE : Author
DIGEST : This bill makes various changes to state laws
regarding tax administration and compliance necessary for
the implementation of the Budget Act of 2012.
Assembly Amendments delete the Senate version of the bill
and insert the above language.
ANALYSIS : Under existing law, the state is authorized to
issue a withholding order for taxes to collect an
outstanding state tax liability, including any penalties,
accrued interest, and costs in accordance with state law
and regulation. Currently, "state tax liability" is
defined to mean an amount for which the state has a state
tax lien created pursuant to specified provisions.
Existing law requires multistate corporations to apportion
income among the states based on specified criteria. From
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1993 through 2010, corporations were required to apportion
income using a four-factor formula based on the relative
proportion in California of property value, payroll cost
and sales revenue (weighted twice). Existing law allows
the Franchise Tax Board to use automatic data exchanges to
identify accounts of delinquent tax debtors held at
financial institutions doing business in California.
This bill includes the following provisions:
1. Changes the Ability of Franchise Tax Board to Impose
Earnings Withholding . Expedites and reduces the costs
associated with the earnings withhold process by
expanding the term "state tax liability" to include any
liability under the Personal Income Tax Law, Corporation
Tax Law, or specified franchise and income tax
provisions that is due and payable and that remains
unpaid. The proposal would save the administrative
costs associated with recording a lien. It would also
allow the tax agency to collect tax liabilities that are
over 10 years old. (Tax debts over 10 years old expire
unless renewed by recording a lien.) The change is
expected to result in additional General Fund revenues
of $11 million in the current year and $27 million in
2012-13.
2. Confirms Existing Law with Respect to the Apportionment
of Income . Confirms that current law with respect to
apportionment of corporation income is pursuant to an
original return, repeals all provisions related to the
Multistate Tax Compact, and adopts non-inference
language regarding this action.
3. Expands the Use of a Financial Institution Records
Match . Authorizes the expansion of the Financial
Institutions Records Match (FIRM) program to the
Employment Development Department and Board of
Equalization. The 2011 Budget Act authorized the
Franchise Tax Board to operate and administer FIRM and
utilize automated data exchanges to identify accounts of
delinquent tax debtors held at financial institutions
doing business in California. The Franchise Tax Board
estimated that the use of FIRM would generate $30
million in additional General Fund revenues in 2011-12.
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Expanding the FIRM program to tax programs administered
by the Employment Development Department and Board of
Equalization is expected to result in additional General
Fund revenues of $4 million in 2011-12 and $11 million
in 2012-13.
Comments
This bill facilitates the collection of tax liabilities
that remain unpaid by changing the existing earnings
withholding procedures; confirming the income apportionment
method for multistate corporations; and expanding the
existing Financial Institutions Records Match program from
Franchise Tax Board to include taxes programs administered
by the Employment Development Department and the Board of
Equalization.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Budget and Fiscal Review Committee,
this bill will result in additional General Fund revenues
of $15 million in 2011-12 and $38 million in 2012-13.
AGB:m 6/27/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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