AB 131 — Taxation.

Summary

(1) The California Constitution provides for the establishment of the State Board of Equalization (board) and prescribes the board's duties, powers, and responsibilities regarding the administration of certain taxes and fees, including the review, equalization, or adjustment of property tax assessments, the assessment of taxes on insurers, and the assessment and collection of excise taxes on the manufacture, importation, and sale of alcoholic beverages in this state. Existing law generally makes the board responsible for administrative appeals relating to the collection of those taxes and fees. Existing law establishes, in the Government Operations Agency, the California Department of Tax and Fee Administration (department) and transferred to the department the duty to administer various statutory taxes and fees that had previously been administered by the board. Under existing law, all laws prescribing the duties, powers, and responsibilities of the board to which the department succeeds, together with all lawful rules and regulations established under those laws, are expressly continued in force, including, but not limited to, existing processes and remedies available to a taxpayer or feepayer, such as settlement options and appeals processes. Existing law establishes the Office of Tax Appeals (office) in state government and transferred to the office the duty to conduct appeals hearings for the various taxes and fees administered by the department and for the administrative appeals of state personal income taxes and corporation franchise and income taxes, which are administered by the Franchise Tax Board. Existing law establishes tax appeals panels within the office, each consisting of 3 administrative law judges. Existing law, on and after January 1, 2018, requires that those tax appeals panels hear appeals for those various taxes and fees and, on and after January 1, 2018, prohibits the board from hearing those appeals. (2) This bill would allow the board to continue to have the legal authority to hear, determine, decide, or take any other action with respect to an appeal, regarding matters for which the duties, powers, and responsibilities are transferred to the office, only if the hearing, determination, decision, or any other action with respect to an appeal is placed on the calendar of a meeting of the board to be held before January 1, 2018 and the appeal is heard, determined, decided, or is otherwise final before January 1, 2018. On and after January 1, 2018, the bill would provide that the board has no legal authority to, and shall not, regarding those matters, conduct an appeals hearing, make a determination, issue or publish a decision, or take any other action with respect to an appeal heard at a meeting of the board before January 1, 2018, if the board's hearing, determination, decision, or any other action is, for any reason, not final before January 1, 2018. (3) With respect to the department, this bill would require appeals conferences to continue to be conducted as before the above-described transfer from the board, would provide that the regulations governing appeals conferences continue in force and apply to appeals conferences, and would authorize the department to amend, repeal, or add regulations as necessary to carry out its appeals conferences duties. The bill would also authorize a person requesting relief in an appeals conference to request a hearing before a tax appeals panel if the department denies the request for relief. Existing law prohibits the director and chief deputy director of the department or any person who has at any time obtained specified knowledge from disclosing that knowledge in a manner not authorized by law. This bill would authorize disclosure of that knowledge to designated persons for use in actions or proceedings affecting the personnel rights of employees or former employees of the department, as specified. (4) This bill would authorize the board and the department to obtain specified copies of pictures or photographs of licensees from the Department of Motor Vehicles in order to carry out its respective duties, powers, and responsibilities. (5) This bill would specify that the tax appeals panels of the office and the appeals hearings conducted by the tax appeals panels are not to be construed to be, or to be conducted by, a tax court. Existing law authorizes a person with an appeals hearing before a tax appeals panel to be represented by any authorized person, including an accountant. The Administrative Procedures Act requires a hearing to be open to public observation. This bill would instead include within that authorization both a certified public accountant and a public accountant. The bill would require the office to establish a process under which a person filing an appeal is authorized to request a closed hearing and would require the office to establish objective criteria for determining whether to grant a request, as provided. Existing law provides that the person filing the appeal may appeal the decision of the tax appeals panel to the superior court in accordance with the law imposing the tax or fee and states that the standard of judicial review is review de novo. This bill provides that if a person disagrees with the decision of the tax appeals panel, the person may bring an action in superior court in accordance with the law imposing the tax or fee for a trial de novo. Existing law requires all appeals hearings and proceedings conducted by tax appeals panels within the office to be conducted pursuant to the Administrative Procedure Act. This bill, to the extent applicable and not in conflict, would require regulations adopted under the jurisdiction of the board to continue in force and apply to all appeals hearings and proceedings. However, the bill would require the office to amend, repeal or add to the regulations to govern these hearings and proceedings as necessary or proper. The bill would require the office to adopt regulations regarding the presentation of evidence and preparation for hearings and proceedings before a tax appeals panel that do not require application of specialized knowledge, as provided. (6) This bill would also make clarifying and conforming changes with regard to the transfer of duties to the department and the establishment of the office. (7) Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, and provide various exemptions from those taxes. Existing law partially exempts from those taxes, on and after July 1, 2014, and before July 1, 2030, the gross receipts from the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased by a qualified person for purchases not exceeding $200,000,000, for use primarily in manufacturing, processing, refining, fabricating, or recycling of tangible personal property, as specified; qualified tangible personal property purchased for use by a qualified person to be used primarily in research and development, as provided; qualified tangible personal property purchased for use by a qualified person to be used primarily to maintain, repair, measure, or test any qualified tangible personal property, as provided; and qualified tangible personal property purchased by a contractor purchasing that property for use in the performance of a construction contract for the qualified person, that will use that property as an integral part of specified processes. Existing law, on and after January 1, 2018, and before July 1, 2030, additionally exempts from those taxes the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased for use by a qualified person to be used primarily in the generation or production, as defined, or storage and distribution, as defined, of electric power. Existing law, on and after January 1, 2018, and before July 1, 2030, expands the definition of a qualified person to include, among others, a person primarily engaged in the business of electric power generation or electric power distribution and further expands that definition by not excluding from the definition of a qualified person, specified persons conducting an agricultural business activity. Existing law requires the department to cancel any outstanding and unpaid deficiency determination and any related penalties and interest and prohibits the department from issuing any deficiency determination or notice of determination, with respect to unpaid sales and use tax on qualified property with a useful life, as defined, that was purchased or leased on or after July 1, 2014, and before January 1, 2018. Existing law also requires any amounts paid by a qualified person pursuant to such determination to be refunded by the department to the qualified person. Under existing law, no later than each March 1 next following a calendar year for which these provisions provide an exemption, the California Department of Tax and Fee Administration (department) is required to provide to the Joint Legislative Budget Committee and the Department of Finance a report of the total dollar amount of exemptions taken for the immediately preceding calendar year. Existing law requires an amount equal to the total dollar amount, notwithstanding the definition of "useful life," as reported by the department, with the concurrence of the Department of Finance, to be transferred from the Greenhouse Gas Reduction Fund to the General Fund. This bill would instead require the department to provide the report by May 1. The bill, no later than each May 1 next following calendar years 2018 through 2030, inclusive, would instead require the department to provide to the Joint Legislative Budget Committee and to the Department of Finance a report of the revenue value of the total dollar amount of exemptions taken for sales to, or purchases by, specified qualified persons, including a person primarily engaged in the business of electric power generation or electric power distribution and a qualified person conducting an agricultural business activity for the immediately preceding calendar year, as provided. The bill, for the purposes of these provisions, would define the revenue value of an amount of exemptions as the estimated revenue loss to the General Fund from the allowance of those exemptions. This bill, from calendar years 2018 through 2030, inclusive, would require an amount that equals the revenue value of the total dollar amount of exemptions, as reported by the department pursuant to the aforementioned report relating to specified qualified persons, with the concurrence of the Department of Finance, to be transferred from the Greenhouse Gas Reduction Fund to the General Fund, no later than each June 30 next following that calendar year, as described. The bill would require the total dollar amount to be transferred to the General Fund to exclude any amounts attributable to any cancellations the department made of any outstanding and unpaid deficiency determinations and any refunds, as specified. This bill, no later than each May 1 next following calendar years 2022 through 2030, inclusive, would require the department to provide to the Joint Legislative Budget Committee and to the Department of Finance a report of the revenue value of the total dollar amount of exemptions taken under these provisions, for all qualified persons for the immediately preceding calendar year, as provided. This bill, for calendar years 2022 through 2030, inclusive, would provide for an additional amount to be transferred from the Greenhouse Gas Reduction Fund to the General Fund, not to exceed the difference between the revenue value of the total dollar amount of exemptions reported for all qualified persons and the revenue value of the dollar amount of exemptions reported for the above-mentioned specified qualified persons, as specified. The bill would provide for the amount transferred to be determined by the Director of Finance, unless a different amount is otherwise specified in the Budget Act for that fiscal year. (8) The Personal Income Tax Law allows various credits against the taxes imposed by that law, including certain credits that are allowed in modified conformity to credits allowed by federal income tax laws. Federal income tax laws allow a refundable earned income tax credit for certain low-income individuals who have earned income from wages, salaries, tips, and other employee compensation plus net earnings from self-employment and who meet certain other requirements. The Personal Income Tax Law, for taxable years beginning on or after January 1, 2015, in modified conformity with federal income tax laws, allows an earned income tax credit against personal income tax and a payment from the Tax Relief and Refund Account for an allowable credit in excess of tax liability, to an eligible individual that is equal to that portion of the earned income tax credit allowed by federal law as determined by the earned income tax credit adjustment factor, as specified. The Personal Income Tax Law provides that the amount of the credit is calculated as a percentage of the eligible individual's earned income and is phased out above a specified amount as income increases. This bill, for taxable years on and after January 1, 2017, would revise the calculation factors to expand the credit amount. Existing law establishes the continuously appropriated Tax Relief and Refund Account and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account, including any amount to be paid as an earned income tax credit in excess of any tax liabilities. By authorizing new payments from that account for additional amounts in excess of personal income tax liabilities, this bill would make an appropriation. (9) Existing law authorizes individuals to contribute amounts in excess of their personal income tax liability for the support of specified funds. Existing law includes generally applicable administrative provisions, including a minimum contribution amount for the continuation of any voluntary tax contribution fund on the tax return form. Existing law, with respect to specified voluntary contribution funds, establishes minimum contribution amounts that are adjusted by the Franchise Tax Board each year for the continuation of that fund on the tax return form. Existing law establishes the minimum contribution amount for the 2017 calendar year, with regard to the voluntary contribution funds described above, as $0. Under existing law, the minimum contribution amount requirement for the 2018 calendar year, in order for the fund to appear on the tax return form for the 2018 taxable year, means either $250,000 or the minimum contribution amount previously determined, pursuant to the provisions establishing the fund, as of September 1, 2016, that would have been the minimum contribution requirement for the 2017 calendar year for that fund, as applicable. This bill would instead specify that, for the 2018 calendar year, the minimum contribution requirement would be the greater of either of those amounts. (10) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect. (11) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Bill Text

• Chaptered 09/16/17 - Chaptered Current pdf September 16, 2017
• Enrolled 09/15/17 - Enrolled pdf September 15, 2017
• Amended 09/11/17 - Amended Senate pdf September 11, 2017
• Amended 09/08/17 - Amended Senate pdf September 08, 2017
• Amended 09/06/17 - Amended Senate pdf September 06, 2017
• Introduced 01/10/17 - Introduced pdf January 10, 2017
• AB131 View text html

Action History

1. September 16, 2017

   Chaptered by Secretary of State - Chapter 252, Statutes of 2017.

2. September 16, 2017

   Approved by the Governor.

3. September 15, 2017

   Enrolled and presented to the Governor at 4:30 p.m.

4. September 15, 2017

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 78. Noes 1. Page 3467.).

5. September 15, 2017

   Assembly Rule 63 suspended. (Ayes 54. Noes 25. Page 3462.)

6. September 15, 2017

   In Assembly. Concurrence in Senate amendments pending.

7. September 15, 2017

   Read third time. Passed. Ordered to the Assembly. (Ayes 34. Noes 4. Page 2947.).

8. September 14, 2017

   Read second time. Ordered to third reading.

9. September 13, 2017

   From committee: Do pass. (Ayes 15. Noes 1.) (September 13).

10. September 12, 2017

    In committee: Hearing postponed by committee.

11. September 11, 2017

    From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.R.

12. September 11, 2017

    Joint Rule 62(a), file notice suspended. (Ayes 27. Noes 12. Page 2664.)

13. September 11, 2017

    Senate Rule 29.3(b) suspended. (Ayes 27. Noes 12. Page 2664.)

14. September 11, 2017

    In committee: Hearing postponed by committee.

15. September 08, 2017

    From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.R.

16. September 06, 2017

    From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.R.

17. August 31, 2017

    Joint Rule 61 suspended. (Ayes 27. Noes 11. Page 2293.)

18. May 18, 2017

    Referred to Com. on B. & F.R.

19. May 18, 2017

    In Senate. Read first time. To Com. on RLS. for assignment.

20. May 18, 2017

    Read third time. Passed. Ordered to the Senate. (Ayes 45. Noes 25. Page 1608.)

21. May 15, 2017

    Read second time. Ordered to third reading.

22. May 15, 2017

    Ordered to second reading.

23. May 15, 2017

    Withdrawn from committee.

24. May 15, 2017

    Assembly Rule 96 suspended. (Ayes 52. Noes 25. Page 1511.)

25. January 19, 2017

    Referred to Com. on BUDGET.

26. January 11, 2017

    From printer. May be heard in committee February 10.

27. January 10, 2017

    Read first time. To print.

Sponsors

• Committee on Budget · Primary

Votes

Subjects