Bill Text: CA AB2366 | 2023-2024 | Regular Session | Introduced

California Assembly Bill 2366

Introduced

Bill Title: Sales and use tax: administration: settlements.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-04-01 - In committee: Set, second hearing. Hearing canceled at the request of author. [AB2366 Detail]

Download: California-2023-AB2366-Introduced.html

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 2366

Introduced by Assembly Member Ta

February 12, 2024

An act to amend Section 7093.5 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL'S DIGEST

AB 2366, as introduced, Ta. Sales and use tax: administration: settlements.

Existing law establishes the California Department of Tax and Fee Administration in the Government Operations Agency under the control of an executive director appointed by the Governor. Existing law authorizes the department to enter into settlement agreements regarding protests, appeals, or refund claims for sales and use taxes if it is determined that the settlement amount is consistent with a reasonable evaluation of the costs and risks associated with litigation. Existing law requires the director to approve or disapprove recommendation for settlement within 45 days of submission of the settlement to the director and deems approved any recommendation for settlement that is not either approved or disapproved by the director within those 45 days.

This bill would decrease the number of days in which the director is required to either approve or disapprove a recommendation for settlement to 30 days.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

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

SECTION 1.

Section 7093.5 of the Revenue and Taxation Code is amended to read:

7093.5.

(a) It is the intent of the Legislature that the department, its staff, and the Attorney General pursue settlements as authorized under this section with respect to civil tax matters in dispute that are the subject of protests, appeals, or refund claims, consistent with a reasonable evaluation of the costs and risks associated with litigation of these matters.

(b) (1) Except as provided in paragraph (2), no recommendation of settlement shall be submitted to the director for approval unless and until that recommendation has been submitted by the chief counsel to the Attorney General. Within 30 days of receiving that recommendation, the Attorney General shall review the recommendation and advise the chief counsel in writing of their conclusions as to whether the recommendation is reasonable from an overall perspective. The chief counsel shall, with each recommendation of settlement submitted to the director, also submit the Attorney General’s written conclusions obtained pursuant to this paragraph.

(2) (A) A settlement of any civil tax matter in dispute involving a reduction of tax or penalties in settlement, the total of which reduction of tax and penalties in settlement does not exceed eleven thousand five hundred dollars ($11,500), may be approved by the director.

(B) Beginning on July 1, 2029, and each fifth fiscal year thereafter, the department shall adjust the amount specified in subparagraph (A) by increasing that amount by a percentage amount equal to the increase in the California Consumer Price Index, as calculated by the Department of Finance, with the resulting amount rounded to the nearest one hundred dollars ($100). The first adjustment pursuant to this subparagraph shall be a percentage amount equal to the increase in the California Consumer Price Index from January 1, 2024, to January 1, 2029. Subsequent fifth fiscal year adjustments shall cover subsequent five-year periods. The incremental change shall be added to the previously adjusted amount.

(c) Whenever a reduction of tax or penalties or total tax and penalties in settlement in excess of five hundred dollars ($500) is approved pursuant to this section, there shall be placed on file, for at least one year, in the office of the director a public record with respect to that settlement. The public record shall include all of the following information:

(1) The name or names of the taxpayers who are parties to the settlement.

(2) The total amount in dispute.

(3) The amount agreed to pursuant to the settlement.

(4) A summary of the reasons why the settlement is in the best interests of the State of California.

(5) (A) For any settlement approved by the director, except those settlements approved pursuant to paragraph (2) of subdivision (b), the Attorney General’s conclusion as to whether the recommendation of settlement was reasonable from an overall perspective.

(B) The public record shall not include any information that relates to any trade secret, patent, process, style of work, apparatus, business secret, or organizational structure that, if disclosed, would adversely affect the taxpayer or the national defense.

(d) The director shall not participate in the settlement of tax matters pursuant to this section, except as provided in subdivision (e).

(e) (1) Any recommendation for settlement shall be approved or disapproved by the director, within 45 30 days of the submission of that recommendation to the director. Any recommendation for settlement that is not either approved or disapproved by the director within 45 30 days of the submission of that recommendation shall be deemed approved.

(2) Where the director disapproves a recommendation for settlement, at the discretion of the director and chief counsel, the matter shall be remanded to staff for further negotiation, and may be resubmitted to the director, in the same manner and subject to the same requirements as the initial submission.

(f) All settlements entered into pursuant to this section shall be final and nonappealable, except upon a showing of fraud or misrepresentation with respect to a material fact.

(g) Except as provided in subdivision (c), any settlement considered or entered into pursuant to this section shall constitute confidential tax information for purposes of Section 7056.

(h) The Legislature finds that it is essential for fiscal purposes that the settlement program authorized by this section be expeditiously implemented. Accordingly, Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any determination, rule, notice, or guideline established or issued by the department in implementing and administering the settlement program authorized by this section.

(i) The amendments made to this section by the act adding this subdivision shall apply to any settlements approved on or after January 1, 2024.