Bill Text: CA SB211 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Tax administration: disclosure of information: Franchise

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-10-03 - Chaptered by Secretary of State. Chapter 513, Statutes of 2013. [SB211 Detail]

Download: California-2013-SB211-Amended.html

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BILL NUMBER: SB 211	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  SEPTEMBER 3, 2013
	AMENDED IN ASSEMBLY  AUGUST 13, 2013
	AMENDED IN SENATE  MAY 8, 2013

INTRODUCED BY   Senator Hernandez

                        FEBRUARY 11, 2013

   An act to amend Sections 19551, 19551.1, and 19551.5 of, the
Revenue and Taxation Code, relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 211, as amended, Hernandez. Tax administration: disclosure of
information: Franchise Tax Board and cities.
   Existing law authorizes, until December 31, 2013, a city that has
entered into a reciprocal agreement, as defined, with the Franchise
Tax Board, to exchange tax information, as provided. Existing law
limits the use of the tax data received from the Franchise Tax Board
 for   to  business tax administration
purposes and provides that any other use or disclosure of the
information is punishable as a misdemeanor.
   This bill would extend the authorization until January 1, 2019,
and extend the repeal date of the provisions relating to the
reciprocal agreements between the Franchise Tax Board and cities.
This bill would add an additional limitation on the use of the tax
data to require the data to be utilized in a form and manner to
safeguard the tax information, as prescribed.
   Because this bill would continue the operation of the reciprocal
agreement exchange, and the unauthorized use of such information
would be a crime, it would impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 19551 of the Revenue and Taxation Code, as
amended by Section 1 of Chapter 345 of the Statutes of 2008, is
amended to read:
   19551.  (a) The Franchise Tax Board may permit the Commissioner of
Internal Revenue of the United States, other tax officials of this
state, the Multistate Tax Commission, the proper officer of any state
imposing an income tax or a tax measured by income or the authorized
representative of that officer, or the tax officials of Mexico, if a
reciprocal agreement exists, to inspect the income tax returns of
any taxpayer, or may furnish to the commission, or the officer or the
authorized representative thereof an abstract of the return or
supply thereto information concerning any item of income contained in
any return or disclosed by the report of any investigation of the
income or return. The information shall be furnished to the
Multistate Tax Commission, the federal or state officer or his or her
representative, or the officials of Mexico for tax purposes only. If
furnished pursuant to a written agreement, information furnished
pursuant to this section shall be furnished only if the request is in
the form of an affidavit under penalty of perjury stating that the
purpose for the request relates to an investigation of the tax
specified in the request and that the information will be used in the
ordinary performance of the applicant's official duties.
   (b) Notwithstanding subdivision (a) and except as otherwise
provided in Section 19551.1, tax officials of political subdivisions
of this state shall request information from the Franchise Tax Board
by affidavit only. At the time a tax official makes the request, he
or she shall provide the affected person with a copy of the affidavit
and, upon request, make the information obtained available to that
person.
   (c) For purposes of this section, "reciprocal agreement" means a
formal agreement to exchange information between national taxing
officials of Mexico and taxing authorities of the State Board of
Equalization, the Franchise Tax Board, and the Employment Development
Department. Furthermore, the reciprocal agreement shall be limited
to the exchange of information that is essential for tax
administration purposes only. Taxing authorities of the State of
California shall be granted tax information only on California
residents. Taxing authorities of Mexico shall be granted tax
information only on Mexican nationals.
   (d) This section shall remain in effect only until January 1,
2019, and as of that date, is repealed.
  SEC. 2.  Section 19551 of the Revenue and Taxation Code, as added
by Section 2 of Chapter 345 of the Statutes of 2008, is amended to
read:
   19551.  (a) The Franchise Tax Board may permit the Commissioner of
Internal Revenue of the United States, other tax officials of this
state, the Multistate Tax Commission, the proper officer of any state
imposing an income tax or a tax measured by income or the authorized
representative of that officer, or the tax officials of Mexico, if a
reciprocal agreement exists, to inspect the income tax returns of
any taxpayer, or may furnish to the commission, or the officer or the
authorized representative thereof an abstract of the return or
supply thereto information concerning any item of income contained in
any return or disclosed by the report of any investigation of the
income or return. The information shall be furnished to the
Multistate Tax Commission, the federal or state officer or his or her
representative, or the officials of Mexico for tax purposes only.
Except when furnished pursuant to a written agreement, information
furnished pursuant to this section shall be furnished only if the
request is in the form of an affidavit under penalty of perjury
stating that the purpose for the request relates to an investigation
of the tax specified in the request and that the information will be
used in the ordinary performance of the applicant's official duties.
   (b) Notwithstanding subdivision (a), tax officials of political
subdivisions of this state shall request information from the
Franchise Tax Board by affidavit only. At the time a tax official
makes the request, he or she shall provide the affected person with a
copy of the affidavit and, upon request, make the information
obtained available to that person.
   (c) For purposes of this section, "reciprocal agreement" means a
formal agreement to exchange information between national taxing
officials of Mexico and taxing authorities of the State Board of
Equalization, the Franchise Tax Board, and the Employment Development
Department. Furthermore, the reciprocal agreement shall be limited
to the exchange of information that is essential for tax
administration purposes only. Taxing authorities of the State of
California shall be granted tax information only on California
residents. Taxing authorities of Mexico shall be granted tax
information only on Mexican nationals.
   (d) This section shall become operative on January 1, 2019.
  SEC. 3.  Section 19551.1 of the Revenue and Taxation Code is
amended to read:
   19551.1.  (a) (1) The Franchise Tax Board may permit the tax
officials of any city to enter into a reciprocal agreement with the
Franchise Tax Board to obtain tax information from the Franchise Tax
Board, as specified in subdivision (b).
   (2) For purposes of this section, "reciprocal agreement" means a
formal agreement to exchange information for tax administration
purposes between tax officials of a city and the Franchise Tax Board.

   (b) The information furnished to tax officials of a city under
this section shall be limited as follows:
   (1) The tax officials of a city are authorized to receive
information only with respect to taxpayers with an address as
reflected on the Franchise Tax Board's records within the
jurisdictional boundaries of the city who report income from a trade
or business to the Franchise Tax Board.
   (2) The tax information that may be provided by the Franchise Tax
Board to a city is limited to a taxpayer's name, address, social
security or taxpayer identification number, and business activity
code.
   (3) Tax information provided to the taxing authority of a city may
not be furnished to, or used by, any person other than an employee
 or agent  of that taxing authority and shall be
utilized in a form and manner to safeguard the tax information as
required by the Franchise Tax Board, including, but not limited to:
   (A) The completion of a data exchange security questionnaire
provided by the Franchise Tax Board prior to approval of a data
exchange by the Franchise Tax Board.
   (B) The tax official  or agent  of a city shall
allow for an onsite safeguard review conducted by the Franchise Tax
Board.
   (C) The completion of disclosure training provided by the
Franchise Tax Board and a confidentiality statement signed by all
employees  or agents  with access to information
provided by the Franchise Tax Board confirming the requirement of
data security with respect to that information and acknowledging
awareness of penalties for unauthorized access or disclosure under
Sections 19542 and 19552  of this code  and Section 502 of
the Penal Code.
   (D) The tax official  or agent  of a city shall
notify the Franchise Tax Board within 24 hours upon discovery of any
incident of unauthorized or suspected unauthorized access or
disclosure of the tax information and provide a detailed report of
the incident and the parties involved.
   (E) All records received by the tax officials of a city 
or its agents  shall be destroyed in a manner to make them
unusable or unreadable so an individual record may no longer be
ascertained in a timeframe specified by the Franchise Tax Board.
   (4) The information provided to the tax officials of the city by
the Franchise Tax Board under this section is subject to Section
19542, and may not be used for any purpose other than the city's tax
enforcement, or as otherwise authorized by state or federal law.
   (5) Section 19542.1 applies to this section.
   (c) The Franchise Tax Board may not provide any information
pursuant to this section until all of the following have occurred:
   (1) An agreement has been executed between a city and the
Franchise Tax Board, that provides that an amount equal to all first
year costs necessary to furnish the city information pursuant to this
section shall be received by the Franchise Tax Board before the
Franchise Tax Board incurs any costs associated with the activity
permitted by this section. For purposes of this section, first year
costs include costs associated with, but not limited to, the
purchasing of equipment, the development of processes, and labor.
   (2) An agreement has been executed between a city and the
Franchise Tax Board, that provides that the annual costs incurred by
the Franchise Tax Board, as a result of the activity permitted by
this section, shall be reimbursed by the city to the Franchise Tax
Board.
   (3) Pursuant to the agreement described in paragraph (1), the
Franchise Tax Board has received an amount equal to the first year
costs.
   (d) Any information, other than the type of tax information
specified in subdivision (b), may be requested by the tax officials
of a city from the Franchise Tax Board by affidavit. At the time a
tax official makes the request, he or she shall provide the person
whose information is the subject of the request, with a copy of the
affidavit and, upon request, make the information obtained available
to that person.
   (e) This section does not invalidate any other law. This section
does not preclude any city or county from obtaining information about
individual taxpayers, including those taxpayers not subject to this
section, by any other means permitted by state or federal law.
   (f) Nothing in this section shall be construed to affect any
obligations, rights, or remedies regarding personal information
provided under state or federal law.
   (g) Notwithstanding subdivision (c), the Franchise Tax Board shall
waive a city's reimbursement of the Franchise Tax Board's cost if a
city enters into a reciprocal agreement as defined in paragraph (2)
of subdivision (a). The reciprocal agreement shall specify that each
party shall bear its own costs to furnish the data involved in the
exchange authorized by this section and Section 19551.5, and a city
shall be precluded from obtaining reimbursement as specified under
Section 5 of the act adding this subdivision.
   (h) This section shall remain in effect only until January 1,
2019, and as of that date, is repealed.
  SEC. 4.  Section 19551.5 of the Revenue and Taxation Code is
amended to read:
   19551.5.  (a) Notwithstanding any other law, each city that
assesses a city business tax or requires a city business license
shall, upon the request of the Franchise Tax Board, annually submit
to the Franchise Tax Board the information that is collected in the
course of administration of the city's business tax program, as
described in subdivision (b).
   (b) Information, collected in the course of administration of the
city's business tax program, shall be limited to the following:
   (1) Name of the business, if the business is a corporation,
partnership, or limited liability company, or the owner's name if the
business is a sole proprietorship.
   (2) Business mailing address.
   (3) Federal employer identification number, if applicable, or the
business owner's social security number.
   (4) Standard Industrial Classification (SIC) Code or North
American Industry Classification System (NAICS) Code.
   (5) Business start date.
   (6) Business cease date.
   (7) City number.
   (8) Ownership type.
   (c) The reports required under this section shall be filed on
magnetic media such as tapes or compact discs, through a secure
electronic process, or in other machine-readable form, according to
standards prescribed by regulations promulgated by the Franchise Tax
Board.
   (d) Cities that receive a request from the Franchise Tax Board
shall begin providing to the Franchise Tax Board the information
required by this section as soon as economically feasible, but no
later than December 31, 2009. The information shall be furnished
annually at a time and in the form that the Franchise Tax Board may
prescribe by regulation.
   (e) The city data provided to the Franchise Tax Board under this
section is subject to Section 19542, and may not be used for any
purpose other than state tax enforcement or as otherwise authorized
by law.
   (f) If a city enters into a reciprocal agreement with the
Franchise Tax Board pursuant to subdivision (a) of Section 19551.1,
the city shall also waive reimbursement for costs incurred to provide
information required under this section and shall be precluded from
obtaining reimbursement as specified under Section 5 of Chapter 345
of the Statutes of 2008. The reciprocal agreement shall specify that
each party shall bear its own costs to furnish the data involved in
the exchange authorized by Section 19551.1 and this section, and the
Franchise Tax Board shall be precluded from obtaining reimbursement
as specified under subdivision (c) of Section 19551.1.
   (g) A city shall not be required to provide information to the
Franchise Tax Board pursuant to this section if the Franchise Tax
Board fails to provide tax information to the city pursuant to a
reciprocal agreement entered into pursuant to subdivision (a) of
Section 19551.1 for reasons other than concerns related to
confidentiality of tax information provided to the city.
   (h) This section shall remain in effect only until January 1,
2019, and as of that date, is repealed.
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.