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AB-1257 Franchise Tax Board: debtor payment priorities.(2017-2018)

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Date Published: 04/17/2017 09:00 PM
AB1257:v98#DOCUMENT

Amended  IN  Assembly  April 17, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1257


Introduced by Assembly Member Baker Members Baker and Ridley-Thomas
(Coauthors: Assembly Members Acosta, Travis Allen, Chávez, Chen, Dababneh, Lackey, Quirk, Steinorth, and Voepel)
(Coauthor: Senator Anderson)(Coauthors: Senators Anderson, Berryhill, and Vidak)

February 17, 2017


An act to amend Section 19255 of, and to amend, repeal, and add Section 19533 of the Revenue and Taxation Code, relating to taxation.


LEGISLATIVE COUNSEL'S DIGEST


AB 1257, as amended, Baker. Franchise Tax Board: debtor payment priorities.
Existing law requires, in the event that the debtor has more than one debt being collected by the Franchise Tax Board and the amount collected is insufficient to satisfy the total amount owed, the amount collected to be applied to specified priorities. Existing law also establishes, for tax liabilities that are due and payable, as defined, before, on, or after July 1, 2006, a statute of limitations on collections of those liabilities to limit the collection period to 20 years beginning from the last statutory lien date for each taxable year, and would extinguish that liability for that taxable year by abating the underlying tax.
This bill bill, beginning January 1, 2020, would make restitution payments to victims of crimes the first priority for debt collected by the Franchise Tax Board. Board and would provide for a stay on the statute of limitations for collection of tax due for the period for which an outstanding restitution amount exists.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 19255 of the Revenue and Taxation Code is amended to read:

19255.
 (a) Except as otherwise provided in subdivisions (b) and (e), after 20 years have lapsed from the date the latest tax liability for a taxable year or the date any other liability that is not associated with a taxable year becomes “due and payable” within the meaning of Section 19221, the Franchise Tax Board may not collect that amount and the taxpayer’s liability to the state for that liability is abated by reason of lapse of time. Any actions taken by the Franchise Tax Board to collect an uncollectible liability shall be released, withdrawn, or otherwise terminated by the Franchise Tax Board, and no subsequent administrative or civil action shall be taken or brought to collect all or part of that uncollectible amount. Any amounts received in contravention of this section shall be considered an overpayment that may be credited and refunded in accordance with Article 1 (commencing with Section 19301) of Chapter 6.
(b) If a timely civil action filed pursuant to Article 2 of Chapter 6 of this part is commenced, or a claim is filed in a probate action, the period for which the liability is collectable shall be extended and shall not expire until that liability, probate claim, or judgment against the taxpayer arising from that liability is satisfied or becomes unenforceable under the laws applicable to the enforcement of civil judgments.
(c) For purposes of this section, both of the following apply:
(1) “Tax liability” means a liability imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, and includes any additions to tax, interest, penalties, fees and any other amounts relating to the imposed liability.
(2) If more than one liability is “due and payable” for a particular taxable year, with the exception of a liability resulting from a penalty imposed under Section 19777.5, the “due and payable” date that is later in time shall be the date upon which the 20-year limitation of subdivision (a) commences.
(d) This section does not apply to amounts subject to collection by the Franchise Tax Board pursuant to Article 5.5 or 7 of this chapter, or any other amount that is not a tax imposed under Part 10 or Part 11, but which the Franchise Tax Board is collecting as though it were a final personal income tax delinquency.
(e) (1) The expiration of the period of limitation on collection under this section shall be suspended for the following periods:
(A) The period during which the Franchise Tax Board is prohibited by reason of a bankruptcy case from collecting, plus six months thereafter.
(B) The period described under subdivision (d) of Section 19008 relating to installment payment agreements.
(C) The period during which collection is postponed by operation of law under Section 18571, related to postponement by reason of service in a combat zone, or under Section 18572, related to postponement by reason of presidentially declared disaster or terroristic or military action.
(D) Beginning January 1, 2020, the period described under paragraph (1) of subdivision (a) of Section 19533 during which the Franchise Tax Board is collecting restitution payments to victims of crimes referred for collections pursuant to Article 5.5 (commencing with Section 19280).

(D)

(E) During any other period during which collection of a tax is suspended, postponed, or extended by operation of law.
(2) A suspension of the period of limitation under this subdivision applies with respect to both parties of any liability that is joint and several.
(f) This section shall be applied on and after July 1, 2006, to any liability “due and payable” before, on, or after that date.

SECTION 1.SEC. 2.

 Section 19533 of the Revenue and Taxation Code is amended to read:

19533.
 (a) In the event the debtor has more than one debt being collected by the Franchise Tax Board and the amount collected by the Franchise Tax Board is insufficient to satisfy the total amount owing, the amount collected shall be applied in the following priority:

(1)Restitution payments to victims of crimes referred for collection under Article 5.5 (commencing with Section 19280) of Chapter 5.

(2)

(1) Payment of any taxes, additions to tax, penalties, interest, fees, or other amounts due and payable under Part 7.5 (commencing with Section 13201), Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, and amounts authorized to be collected under Section 19722.

(3)

(2) Payment of delinquencies collected under Section 10878.

(4)

(3) Payment of any amounts due that are referred for collection under Article 5.5 (commencing with Section 19280) of Chapter 5 and that are not described in paragraph (1). 5.

(5)

(4) Payment of any delinquencies referred for collection under Article 7 (commencing with Section 19291) of Chapter 5.
(b) Notwithstanding the payment priority established by this section, voluntary payments designated by the taxpayer as payment for a personal income tax liability or as a payment on amounts authorized to be collected under Section 19722, shall not be applied pursuant to this priority, but shall instead be applied as designated.
(c) This section shall remain in effect only until January 1, 2020, and as of that date is repealed.

SEC. 3.

 Section 19533 is added to the Revenue and Taxation Code, to read:

19533.
 (a) In the event the debtor has more than one debt being collected by the Franchise Tax Board and the amount collected by the Franchise Tax Board is insufficient to satisfy the total amount owing, the amount collected shall be applied in the following priority:
(1) Restitution payments to victims of crimes referred for collection under Article 5.5 (commencing with Section 19280) of Chapter 5.
(2) Payment of any taxes, additions to tax, penalties, interest, fees, or other amounts due and payable under Part 7.5 (commencing with Section 13201), Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, and amounts authorized to be collected under Section 19722.
(3) Payment of delinquencies collected under Section 10878.
(4) Payment of any amounts due that are referred for collection under Article 5.5 (commencing with Section 19280) of Chapter 5 and that are not described in paragraph (1).
(5) Payment of any delinquencies referred for collection under Article 7 (commencing with Section 19291) of Chapter 5.
(b) Notwithstanding the payment priority established by this section, voluntary payments designated by the taxpayer as payment for a personal income tax liability or as a payment on amounts authorized to be collected under Section 19722 shall not be applied pursuant to this priority, but shall instead be applied as designated.
(c) This section shall become operative on January 1, 2020.