BILL ANALYSIS �
SB 1548
Page 1
Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1548 (Wyland) - As Amended: May 8, 2012
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill extends, from January 1, 2013, to January 1, 2018, the
sunset date for those program provisions that allow the State
Board of Equalization (BOE) to accept an offer in compromise
(OIC) for businesses that are open and active.
FISCAL EFFECT
1)The BOE estimates that this bill will result in additional
revenues, taxes and fees, of approximately $400,000. There
will be negligible administrative costs.
2)Although keyed a mandate, no reimbursement is required because
the mandate is the creation of a new crime, which is exempt
from reimbursement.
COMMENTS
1)Purpose . The author states the OIC programs are mechanisms
that government agencies use to help taxpayers settle
outstanding tax liabilities that they could not pay in full
without having to declare bankruptcy. The author argues the
goal of establishing an OIC program is to allow taxpayers to
negotiate with the government agency to pay a reduced amount
to settle their tax liability, allowing the taxpayer to keep
their business open, which creates further economic
development. The author notes both the Internal Revenue
Service and the California Franchise Tax Board operate OIC
programs for both taxpayers and businesses.
2)Support . BOE, the sponsor, argues this bill would allow it to
SB 1548
Page 2
continue for an additional five years to compromise final tax
liabilities of (a) businesses that are not discontinued or
transferred if the final tax liability arises from
transactions in which the taxpayer did not fail to remit
received sales tax reimbursement or use tax, (b) persons
liable as successors, and (c) consumers who incurred a use tax
liability.
The BOE notes that in fiscal year 2009-10 and FY 2010-11, the
BOE accepted offers from eight open and active businesses; the
offer amounts totaled $532,668. Of the eight, seven of the
businesses have remained open.
3)Background . AB 1458 (Kelley), Chapter 152, Statutes of 2002,
first authorized the BOE to accept an OIC on certain final tax
and fee liabilities. The original program applied exclusively
to liabilities generated from discontinued or transferred
businesses. In 2008, AB 2047 (Horton), Chapter 222, Statutes
of 2008, modified the BOE's OIC program by extending it to
open and active businesses, provided there is no evidence the
taxpayer collected tax reimbursement (e.g., sales tax
reimbursement from customers). Essentially, AB 2047
authorized the BOE to accept an OIC from a taxpayer who may
otherwise have to sell or discontinue their business because
of an inability to pay in full a final tax liability that
arose from transactions in which the taxpayer did not collect
tax reimbursement. This bill also contained a sunset of
January 1, 2013 to allow review of the then new provisions.
4)This bill has no registered opposition.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081