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, uponbegin delete taxpayerend delete requestbegin insert of a qualified taxpayer, as definedend insert, to abate a failure-to-file or failure-to-pay timeliness penalty when specified circumstances are met, including where thebegin insert qualifiedend insert 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 thosebegin insert qualifiedend insert 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2Code is repealed.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) Abegin insert qualifiedend insert taxpayer may elect to request
6abatement of a timeliness penalty under this section for a timeliness
7penalty that has been considered and rejected for abatement,
8waiver, or rescission pursuant to the provisions of the section under
9which the penalty is imposed.
10(2) Abegin insert qualifiedend insert taxpayer may, in lieu of requesting consideration
11for abatement, waiver, or recission pursuant to the provisions of
12the section under which the timeliness penalty is
imposed, instead
13request abatement of a timeliness penalty under this section.
14(b) If abegin insert qualifiedend insert taxpayer described in subdivision (a) requests,
15either orally or in writing, the abatement of a timeliness penalty
16pursuant to this section, the timeliness penalty shall be abated if
17all of the following apply:
18(1) Thebegin insert qualifiedend insert taxpayer has not previously been required to
19file a California return under Part 10 (commencing with Section
2017001), this part, or Part 11 (commencing with Section 23001),
21or no other timeliness penalty has been imposed by the Franchise
22Tax Board in the calendar year of
the request for abatement or in
23the prior four tax years.
24(2) Thebegin insert qualifiedend insert taxpayer has filed all returns required under
25Part 10 (commencing with Section 17001), this part, or Part 11
26(commencing with Section 23001), as of the date of thebegin insert qualifiedend insert
27 taxpayer’s request for abatement.
28(3) Excluding the timeliness penalty that is the subject of the
29abatement request, thebegin insert qualifiedend insert taxpayer has paid in full, or
30arranged to pay pursuant to an installment agreement, any tax,
31penalties, fees, and
interest due for all currently required returns
32and thebegin insert qualifiedend insert taxpayer is current with all installment payments.
33(c) For purposes of thisbegin delete section, “timelinessend deletebegin insert section:end insert
P3 1(1) “Qualified taxpayer” means any corporation with gross
2receipts of less than one million dollars ($1,000,000) in the taxable
3year for which the timeliness penalty is imposed or an individual
4taxpayer.
5begin insert(2)end insertbegin insert end insertbegin insert“Timelinessend insert penalty” means a penalty imposed under Section
619131, 19132, 19172, or 19172.5.
7(d) For purposes of this section:
8(1) A timeliness penalty imposed and subsequently abated due
9to a determination of reasonable cause or reasonable cause and
10not willful neglect with respect to thebegin insert qualifiedend insert taxpayer or the
11begin insert qualifieend insertbegin insertdend insert
taxpayer’s spouse, shall be considered to have not been
12imposed.
13(2) A timeliness penalty is considered imposed on the original
14due date of the return for the taxable year for which the penalty is
15imposed.
16(3) If abegin insert qualifiedend insert taxpayer requests abatement for more than one
17taxable year and two or more taxable years would be eligible for
18abatement under this section, then only the penalty for the earliest
19taxable year shall be abated.
20(4) begin deleteThis end deletebegin insertSubject to Section 19306,
this end insertsection shall apply to
21requests for abatement made before, on, or after the effective date
22of the act adding this section.
23(e) The Franchise Tax Board may issue any regulations
24necessary or appropriate to implement this section.
25(f) Notwithstanding Section 13340 of the Government Code,
26and without regard to fiscal year, there is hereby continuously
27appropriated from the General Fund to the Franchise Tax Board
28those amounts necessary to make the payments required by the
29act adding this subdivision with respect to the abatement of
30penalties paid before the effective date of the act adding this
31subdivision.
The Legislature finds and declares that the abatement
33by this act of timeliness penalties with respect to the abatement of
34penalties paid before the effective datebegin insert ofend insert this act, serves a public
35purpose and does not constitute a gift of public funds within the
36meaning of Section 6 of Article XVI of the California Constitution.
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