AB 1777, as amended, Quirk-Silva. Income taxation: timeliness penalty: abatement.
Existing law imposes penalties when a taxpayer fails to timely file an income tax return or fails to timely pay the tax due as shown on, or as required to be shown on, the tax return, unless it is shown that the failure is due to reasonable cause and not due to willful neglect.
The bill would require the Franchise Tax Board, upon taxpayer request, to abate a failure-to-file or failure-to-pay timeliness penalty when specified circumstances are met, including where the taxpayer has paid, or is in a current arrangement to pay, all tax currently due and the Franchise Tax Board has not imposed a timeliness penalty in the year of the request or prior 4 years. The bill would make a continuous appropriation from the General Fund to the Franchise Tax Board in those amounts necessary to make payments to those taxpayers who have paid the penalty that is being abated before the effective date of this bill.
The bill would make a legislative finding and declaration regarding the public purpose served by the bill.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 19132.5 of the Revenue and Taxation
2Code is repealed.
Section 19132.5 is added to the Revenue and Taxation
4Code, to read:
(a) (1) A taxpayer may elect to request abatement
6of a timeliness penalty under this section for a timeliness penalty
7that has been considered and rejected for abatement, waiver, or
8rescission pursuant to the provisions of the section under which
9the penalty is imposed.
10(2) A taxpayer may, in lieu of requesting consideration for
11abatement, waiver, or recission pursuant to the provisions of the
12section under which the timeliness penalty is imposed, instead
13request abatement of a timeliness penalty under this section.
14(b) If a taxpayer described in subdivision (a) requests, either
15orally
or in writing, the abatement of a timeliness penalty pursuant
16to this section, the timeliness penalty shall be abated if all of the
17following apply:
18(1) The taxpayer has not previously been required to file a
19California return under Part 10 (commencing with Section 17001),
20this part, or Part 11 (commencing with Section 23001), or no other
21timeliness penalty has been imposed by the Franchise Tax Board
22in the calendar year of the request for abatement or in the prior
23four tax years.
24(2) The taxpayer has filed all returns required under Part 10
25(commencing with Section 17001), this part, or Part 11
26(commencing with Section 23001), as of the date of the taxpayer’s
27request for abatement.
28(3) Excluding the timeliness
penalty that is the subject of the
29abatement request, the taxpayer has paid in full, or arranged to pay
30pursuant to an installment agreement, any tax, penalties, fees, and
31
interest due for all currently required returns and the taxpayer is
32current with all installment payments.
33(c) For purposes of this section, “timeliness penalty” means a
34penalty imposed under Section 19131, 19132, 19172, or 19172.5.
35(d) For purposes of this section:
P3 1(1) A timeliness penalty imposed and subsequently abated due
2to a determination of reasonable cause or reasonable cause and
3not willful neglect with respect to the taxpayer or the taxpayer’s
4spouse, shall be considered to have not been imposed.
5(2) A timeliness penalty is considered imposed on the original
6due date of the return for the taxable year for which the penalty is
7imposed.
8(3) If a taxpayer requests abatement for more than one taxable
9year and two or more taxable years would be eligible for abatement
10under this section, then only the penalty for the earliest taxable
11year shall be abated.
12(4) This section shall apply to requests for abatement made
13before, on, or after the effective date of the act adding this section.
14(e) The Franchise Tax Board may issue any regulations
15necessary or appropriate to implement this section.
16(f) Notwithstanding Section 13340 of the Government Code,
17and without regard to fiscal year, there is hereby continuously
18appropriated from the General Fund to the Franchise Tax Board
19those amounts necessary to
make the payments required by the
20act adding this subdivision with respect to the abatement of
21penalties paid before the effective date of the act adding this
22subdivision.
The Legislature finds and declares that the abatement
24by this act of timeliness penalties with respect to the abatement of
25penalties paid before the effective datebegin delete of the act adding this begin insert this actend insert, serves a public purpose and does not constitute
26subdivisionend delete
27a gift of public funds within the meaning of Sectionbegin insert 6end insert of Article
28XVI of the California Constitution.
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