Bill Text: CA AB2692 | 2015-2016 | Regular Session | Amended
Bill Title: Sales and use taxes: deficiency determinations: qualifying retailers: income and corporation taxes: disclosure agreements.
Spectrum: Bipartisan Bill
Status: (Failed) 2016-11-30 - From committee without further action. [AB2692 Detail]
Download: California-2015-AB2692-Amended.html
BILL NUMBER: AB 2692 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 26, 2016
INTRODUCED BY Assembly Member Brough
( Coauthor: Assembly Member
Ridley-Thomas )
FEBRUARY 19, 2016
An act to amend Section 19777.5 of, to add Article 4
(commencing with Section 7100) to Chapter 8 of Part 1 of Division 2
of, and to add Chapter 9.3 (commencing with Section 19740) to Part
10.2 of Division 2 of, Sections 6487.05, 19191, and
19192 of the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 2692, as amended, Brough. Personal income tax:
corporation tax: sales Sales and use taxes:
tax penalty and fee waiver programs.
deficiency determinations: qualifying retailers: income and
corporation taxes: disclosure agreements.
The State Board of Equalization, if not satisfied with a return or
the amount of sales tax, may compute and determine the amount
required to be paid, as specified. Existing law provides that if the
board finds that a qualifying retailer's failure to make a timely
return or payment is due to reasonable cause and circumstances beyond
its control, as provided, the qualifying retailer shall be relieved
of specified penalties. Existing law additionally provides that
requests for the relief of those penalties shall be filed under
penalty of perjury.
This bill would revise the definition of a "qualifying retailer"
to include a retailer that had gross receipts of less than $1,000,000
in the previous 4 calendar quarters.
By requiring the qualifying retailer to file certain information
under penalty of perjury, thereby expanding the crime of perjury,
this bill 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.
The Personal Income Tax Law and the Corporation Tax Law impose
various penalties for failure to file specified returns.
Existing law authorizes the Franchise Tax Board to enter into
voluntary disclosure agreements, as specified, with any qualified
entity, qualified shareholder, qualified member, or a qualified
beneficiary of a qualified trust, as defined, that permits, under the
authority of the voluntary disclosure agreement, the Franchise Tax
Board to waive its authority to assess taxes, additions to taxes,
fees, or penalties, as described.
This bill would expand the above authorization to allow the
Franchise Tax Board to enter into voluntary disclosure agreements
with out-of-state limited partnerships and qualified small
businesses, as defined, and would revise the definition of qualified
trust to allow the trust to have resident beneficiaries, as provided.
Under existing law, the Franchise Tax Board collects and
administers taxes imposed under the Personal Income Tax Law and the
Corporation Tax Law. The State Board of Equalization collects and
administers, among others, taxes imposed under the Sales and Use Tax
Law, the Bradley-Burns Uniform Sales and Use Tax Law, and local laws
imposed pursuant to the Transactions and Use Tax Law. Existing law
sets forth various penalties, including penalties for the nonpayment
or late payment of those taxes, and the failure to file or
intentional filing of incorrect returns. Existing law established a
tax amnesty program, conducted in 2005, for sales, use, personal
income, and corporation tax liabilities due and payable for tax
reporting periods or taxable years beginning before January 1, 2003.
This bill would require the State Board of Equalization and the
Franchise Tax Board to administer tax penalty and fee waiver
programs, as applicable, during the period beginning on February 1,
2017, to April 30, 2017, inclusive, or a period ending no later than
June 30, 2017, for specified taxpayers with respect to penalties and
fees for tax reporting periods beginning before January 1, 2015. This
bill would require the applicant to the waiver program to file the
application under the penalty of perjury. By expanding the crime of
perjury, this bill would impose 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 6487.05 of the
Revenue and Taxation Code is amended to read:
6487.05. (a) Notwithstanding Section 6487, the period during
which a deficiency determination may be mailed to a qualifying
retailer is limited to three years after the last day of the calendar
month following the quarterly period for which the amount is
proposed to be determined. For purposes of this section, a
"qualifying retailer" is a retailer that meets all of the following
conditions:
(b) For purposes of this section, a "qualifying retailer" is a
retailer that either:
(1) The retailer is Is located
outside this state, and has not previously
registered with the board. board, is engaged
in business in this state, as defined in Section 6203, voluntarily
registers with the board, and has not been previously contacted by
the board or its agents regarding the provisions of Section 6203.
(2) The retailer is engaged in business in this state, as defined
in Section 6203.
(3) The retailer voluntarily registers with the board.
(4) The retailer has not been previously contacted by the board or
its agents regarding the provisions of Section 6203.
(2) Has gross receipts of less than one million dollars
($1,000,000) in the previous four calendar quarters.
(5) As determined by the board, the
(c) In addition to the criteria of
subdivision (a), in order to qualify as a "qualifying retailer," the
retailer's failure to file a return or failure to report or pay
the tax or amount due required by law was due to reasonable cause
and was not a result of negligence or intentional disregard of the
law, or because of fraud or an intent to evade the provisions of this
part. part, as determined by the board.
(b)
(d) If the board or its designee finds that the
retailer's failure to make a timely return or payment is due to
reasonable cause and circumstances beyond the retailer's control, and
occurred notwithstanding the exercise of ordinary care and the
absence of willful neglect, the retailer shall be relieved of the
penalties imposed pursuant to this part. Any retailer seeking relief
of penalty shall file a statement under penalty of perjury setting
forth the facts upon which he or she bases his or her claim for
relief.
SEC. 2. Section 19191 of the Revenue
and Taxation Code is amended to read:
19191. (a) The Franchise Tax Board may enter into a voluntary
disclosure agreement with any qualified small business,
qualified entity, qualified shareholder, qualified member, or
qualified beneficiary as defined in Section 19192, that is binding on
both the Franchise Tax Board and the qualified small business,
qualified entity, qualified shareholder, qualified member, or
qualified beneficiary.
(b) The Franchise Tax Board shall do all of the following:
(1) Provide guidelines and establish procedures for qualified
small businesses, qualified entities and their qualified
shareholders, qualified members, or qualified beneficiaries to apply
for voluntary disclosure agreements.
(2) Accept applications on an anonymous basis from qualified
small businesses, qualified entities and their qualified
shareholders, qualified members, or qualified beneficiaries for
voluntary disclosure agreements.
(3) Implement procedures for accepting applications for voluntary
disclosure agreements through the National Nexus Program administered
by the Multistate Tax Commission.
(4) For purposes of considering offers from qualified small
businesses, qualified entities and their qualified
shareholders, qualified members, or qualified beneficiaries to enter
into voluntary disclosure agreements, take into account the following
criteria:
(A) The nature and magnitude of the qualified entity's previous
presence and activity in this state and the facts and circumstances
by which the nexus of the qualified entity or qualified shareholder,
qualified member, or qualified beneficiary was established.
(B) The extent to which the weight of the factual circumstances
demonstrates that a prudent business person exercising reasonable
care would conclude that the previous activities and presence in this
state were or were not immune from taxation by this state by reason
of Public Law 86-272 or otherwise.
(C) Reasonable reliance on the advice of a person in a fiduciary
position or other competent advice that the qualified entity or
qualified shareholder, qualified member, or qualified beneficiary
activities were immune from taxation by this state.
(D) Lack of evidence of willful disregard or neglect of the tax
laws of this state on the part of the qualified small business,
qualified entity or qualified shareholder, qualified member, or
qualified beneficiary.
(E) Demonstrations of good faith on the part of the qualified
small business, qualified entity, qualified shareholder,
qualified member, or qualified beneficiary.
(F) Benefits that will accrue to the state by entering into a
voluntary disclosure agreement.
(5) Act on any application of a voluntary disclosure agreement
within 120 days of receipt.
(6) Enter into voluntary disclosure agreements with qualified
small businesses, qualified entities, qualified shareholders,
qualified members, or qualified beneficiaries, as authorized in
subdivision (a) and based on the criteria set forth in paragraph (4).
(c) Before any voluntary disclosure agreement becomes binding, the
Franchise Tax Board, itself, shall approve the agreement in the
following manner:
(1) The Executive Officer and Chief Counsel of the Franchise Tax
Board shall recommend and submit the voluntary disclosure agreement
to the Franchise Tax Board for approval.
(2) Each voluntary disclosure agreement recommendation shall be
submitted in a manner as to maintain the anonymity of the taxpayer
applying for the voluntary disclosure agreement.
(3) A recommendation for approval of a voluntary disclosure
agreement shall be approved or disapproved by the Franchise Tax
Board, itself, within 45 days of the submission of that
recommendation to the board.
(4) A recommendation of a voluntary disclosure agreement that is
not either approved or disapproved by the board within 45 days of the
submission of that recommendation shall be deemed approved.
(5) Disapproval of a recommendation of a voluntary disclosure
agreement shall be made only by a majority vote of the Franchise Tax
Board.
(6) The members of the Franchise Tax Board shall not participate
in any voluntary disclosure agreement except as provided in this
subdivision.
(d) The voluntary disclosure agreement entered into by the
Franchise Tax Board and the qualified small business,
qualified entity, qualified shareholder, qualified member, or
qualified beneficiary as provided for in subdivision (a) shall to the
extent applicable specify that:
(1) The Franchise Tax Board shall with respect to a qualified
small business, qualified entity, qualified shareholder,
qualified member, or qualified beneficiary, except as provided in
paragraph (4), (6), or (9) of subdivision (a) of Section 19192:
(A) Waive its authority under this part, Part 10 (commencing with
Section 17001), or Part 11 (commencing with Section 23001) to assess
or propose to assess taxes, additions to tax, fees, or penalties with
respect to each taxable year ending prior to six years from the
signing date of the voluntary disclosure agreement.
(B) With respect to each of the six taxable years ending
immediately preceding the signing date of the voluntary disclosure
agreement, based on its discretion, agree to waive any or all of the
following:
(i) A penalty related to a failure to make and file a return, as
provided in Section 19131.
(ii) A penalty related to a failure to pay any amount due by the
date prescribed for payment, as provided in Section 19132.
(iii) An addition to tax related to an underpayment of estimated
tax, as provided in Section 19136.
(iv) A penalty related to Section 6810 or subdivision (a) of
Section 8810 of the Corporations Code, as provided in Section 19141
of this code.
(v) A penalty related to a failure to furnish information or
maintain records, as provided in Section 19141.5.
(vi) An addition to tax related to an underpayment of tax imposed
under Part 11 (commencing with Section 23001), as provided in Section
19142.
(vii) A penalty related to a partnership required to file a return
under Section 18633, as provided in Section 19172.
(viii) A penalty related to a failure to file information returns,
as provided in Section 19183.
(ix) A penalty related to relief from contract voidability, as
provided in Section 23305.1.
(2) The qualified entity, qualified shareholder, qualified member,
or qualified beneficiary shall:
(A) With respect to each of the six taxable years ending
immediately preceding the signing date of the written agreement:
(i) Voluntarily and fully disclose on the qualified small
business ' or qualified entity's application all
material facts pertinent to the qualified small business
', qualified entity's, shareholder's, member's, or
beneficiary's liability for any taxes imposed under Part 10
(commencing with Section 17001) or Part 11 (commencing with Section
23001).
(ii) Except as provided in paragraph (3), within 30 days from the
signing date of the voluntary disclosure agreement:
(I) File all returns required under this part, Part 10 (commencing
with Section 17001), or Part 11 (commencing with Section 23001).
(II) Pay in full any tax, interest, fee, and penalties, other than
those penalties specifically waived by the Franchise Tax Board under
the terms of the voluntary disclosure agreement, imposed under this
part, Part 10 (commencing with Section 17001), or Part 11 (commencing
with Section 23001) in a manner as may be prescribed by the
Franchise Tax Board. Paragraph (1) of subdivision (f) of Section
23153 shall not apply to qualified entities admitted into the
voluntary disclosure program.
(B) Agree to comply with all franchise and income tax laws of this
state in subsequent taxable years by filing all returns required and
paying all amounts due under this part, Part 10 (commencing with
Section 17001), or Part 11 (commencing with Section 23001).
(3) The Franchise Tax Board may extend the time for filing returns
and paying amounts due to 120 days from the signing date of the
voluntary disclosure agreement or to the latest extended due date of
the return for a taxable year for which relief is granted, whichever
is later.
(e) An addition to tax under Section 19136 or 19142 shall not be
made for any underpayment of estimated tax attributable to the
underpayment of an installment of estimated tax due before the
signing date of the voluntary disclosure agreement.
(f) The amendments to this section made by Chapter 954 of the
Statutes of 1996 shall apply to taxable years beginning on or after
January 1, 1997.
(g) The amendments to this section made by Chapter 543 of the
Statutes of 2001 shall apply to voluntary disclosure agreements
entered into on or after January 1, 2002.
(h) The amendments to this section made by Chapter 543 of the
Statutes of 2001 shall apply to voluntary disclosure agreements
entered into on or after January 1, 2005.
(i) The amendments to this section made by Chapter 296 of the
Statutes of 2011 shall apply to voluntary disclosure agreements
entered into on or after January 1, 2011.
SEC. 3. Section 19192 of the Revenue
and Taxation Code is amended to read:
19192. For purposes of this article, the following terms have the
following meanings:
(a) (1) "Qualified entity" means an entity that is all of the
following:
(A) A corporation, as defined in Section 23038, a limited
liability company, as defined in subdivision (d) of Section 17941,
limited partnership, as defined in Section 17935, or a
qualified trust, as defined in paragraph (7).
(B) An entity, including any predecessors to the entity, that
previously has never filed a return with the Franchise Tax Board
pursuant to this part, Part 10 (commencing with Section 17001), or
Part 11 (commencing with Section 23011).
(C) An entity, including any predecessors to the entity, that
previously has not been the subject of an inquiry by the Franchise
Tax Board with respect to liability for any of the taxes imposed
under Part 10 (commencing with Section 17001) or Part 11 (commencing
with Section 23001).
(D) An entity that voluntarily comes forward prior to any
unilateral contact from the Franchise Tax Board, makes application
for a voluntary disclosure agreement in a form and manner prescribed
by the Franchise Tax Board, and makes a full and accurate statement
of its activities in this state for the six immediately preceding
taxable years.
(2) (A) Notwithstanding paragraph (1), a qualified entity does not
include any of the following:
(i) An entity that is organized and existing under the laws of
this state.
(ii) An entity that is qualified or registered with the office of
the Secretary of State.
(iii) An entity that maintains and staffs a permanent facility in
this state.
(B) For purposes of this paragraph, the storing of materials,
goods, or products in a public warehouse pursuant to a public
warehouse contract does not constitute maintaining a permanent
facility in this state.
(3) "Qualified shareholder" means an individual that is all of the
following:
(A) A nonresident on the signing date of the voluntary disclosure
agreement.
(B) A shareholder of an "S" corporation (defined in Section 23800)
that has applied for a voluntary disclosure agreement under this
article under which all material facts pertinent to the shareholder's
liability would be disclosed on that "S" corporation's voluntary
disclosure agreement as required under clause (i) of subparagraph (A)
of paragraph (2) of subdivision (d) of Section 19191.
(4) Notwithstanding paragraph (3), subparagraph (B) of paragraph
(1) of subdivision (d) of Section 19191 shall not apply to any of the
six taxable years immediately preceding the signing date that the
qualified shareholder was a California resident required to file a
California tax return, nor to any penalties or additions to tax
attributable to income other than the California source income from
the "S" corporation that filed an application under this article.
(5) "Qualified member" means an individual, corporation, or
limited liability company that is all of the following:
(A) (i) In the case of an individual, is a nonresident on the
signing date of the voluntary disclosure agreement.
(ii) In the case of a corporation or limited liability company, is
not either of the following:
(I) Organized under the laws of this state.
(II) Qualified or registered with the office of the Secretary of
State.
(B) A member of a limited liability company that has applied for a
voluntary disclosure agreement under this article under which all
material facts pertinent to the member's liability would be disclosed
on that limited liability company's voluntary disclosure agreement
as required under clause (i) of subparagraph (A) of paragraph (2) of
subdivision (d) of Section 19191.
(6) Notwithstanding paragraph (5), in the case of a qualified
member who is an individual, subparagraph (B) of paragraph (1) of
subdivision (d) of Section 19191 shall not apply to any of the six
taxable years immediately preceding the signing date that the
qualified member was a California resident required to file a
California tax return, nor to any penalties or additions to tax
attributable to income other than the California source income from
the limited liability company that filed an application under this
article.
(7) "Qualified trust" means a trust that meets both of
the following: in which the administration of the
trust has never been performed in California. For purposes of this
paragraph, administrative activities performed in California would be
deemed to be performed outside of California if those activities we
re inconsequential to the overall administration of the
trust.
(A) (i) The administration of the trust has never been performed
in California.
(ii) For purposes of this subparagraph, administrative activities
performed in California would be deemed to be performed outside of
California if those activities were inconsequential to the overall
administration of the trust.
(B) For six taxable years ending immediately preceding the signing
date of the voluntary disclosure agreement, the trust has had no
resident beneficiaries (other than a beneficiary whose interest in
that trust is contingent; a beneficiary's trust interest is not
contingent if the trust has made any distribution to the resident
beneficiary at any time during the six taxable years ending
immediately preceding the signing date of the voluntary disclosure
agreement).
(8) "Qualified beneficiary" means an individual who is all of the
following:
(A) A nonresident on the signing date of the voluntary disclosure
agreement and a nonresident during each of the six taxable years
ending immediately preceding the signing date of the voluntary
disclosure agreement.
(B) A beneficiary of a qualified trust that has applied for a
voluntary disclosure agreement under this article under which all
material facts pertinent to the beneficiary's liability would be
disclosed on that trust's voluntary disclosure agreement as required
under clause (i) of subparagraph (A) of paragraph (2) of subdivision
(d) of Section 19191.
(9) Notwithstanding paragraph (8), subparagraph (B) of paragraph
(1) of subdivision (d) of Section 19191 shall not apply to any
penalties or additions to tax attributable to income other than
income from the trust that filed an application under this article.
(10) "Qualified small business" means an entity with a total
income of less than one million dollars ($1,000,000) in the previous
taxable year.
(b) "Signing date" of the voluntary disclosure agreement means the
date on which a person duly authorized by the Franchise Tax Board
signs the agreement.
(c) The amendments to this section made by Chapter 954 of the
Statutes of 1996 shall apply to taxable years beginning on or after
January 1, 1997.
(d) The amendments to this section made by Chapter 543 of the
Statutes of 2001 shall apply to voluntary disclosure agreements
entered into on or after January 1, 2002.
(e) The amendments to this section made by the act adding this
subdivision shall apply to voluntary disclosure agreements entered
into on or after January 1, 2005.
SEC. 4. 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.
SECTION 1. Article 4 (commencing with Section
7100) is added to Chapter 8 of Part 1 of Division 2 of the Revenue
and Taxation Code, to read:
Article 4. Tax Penalty Waiver Program
7100. The board shall develop and administer a tax penalty waiver
program for taxpayers subject to Part 1 (commencing with Section
6001), as provided in this article.
7100.2. The tax penalty waiver program shall be conducted for a
three-month period beginning February 1, 2017 to April 30, 2017,
inclusive, or during a timeframe ending no later than June 30, 2017.
The program shall apply to tax liabilities due and payable for tax
reporting periods beginning before January 1, 2015.
7100.4. (a) For any taxpayer who meets the requirements of
Section 7100.6:
(1) The board shall waive all penalties imposed by this part, for
the tax reporting periods for which a waiver is allowed for the
nonreporting or underreporting of tax liabilities or the nonpayment
of any taxes previously determined or proposed to be determined.
(2) Except as provided in subdivision (b), no criminal action
shall be brought against the taxpayer, for the tax reporting periods
for which a waiver is requested, for the nonreporting or
underreporting of tax liabilities.
(b) This section does not apply to violations of this part for
which, as of the first day of the waiver period specified in Section
7100.2, (1) the taxpayer is on notice of a criminal investigation by
a complaint having been filed against him or her or by written notice
having been mailed to him or her that he or she is under criminal
investigation, or (2) a court proceeding has already been initiated.
(c) No refund or credit shall be granted of any penalty paid
prior to the time the taxpayer makes a request for a waiver pursuant
to Section 7100.6.
7100.6. (a) This article shall apply to any taxpayer who, during
the waiver period specified in Section 7100.2, meets all of the
following:
(1) Is eligible to participate in the tax penalty waiver program.
(2) Files a completed waiver application with the board, signed
under penalty of perjury, to participate in the tax penalty waiver
program.
(3) Within 60 days after the conclusion of the waiver period, does
all of the following:
(A) Files completed tax returns for all tax reporting periods for
which he or she has not previously filed a tax return and files
completed amended returns for all tax reporting periods for which he
or she underreported his or her tax liability.
(B) Pays in full the taxes and interest due for all periods for
which a waiver is requested, or applies for an installment agreement
under subdivision (b).
(C) For taxpayers who have not paid in full any tax liabilities
due and payable for tax reporting periods beginning before January 1,
2015, pays in full the taxes and interest due for each period for
that portion of the proposed determination for each period for which
a waiver is requested or applies for an installment payment agreement
under subdivision (b).
(4) In the case of any taxpayer that has filed for bankruptcy
protection under Title 11 of the United States Code, submits an order
from a Federal Bankruptcy Court allowing the taxpayer to participate
in the waiver program.
(b) The board may enter into an installment payment agreement in
lieu of the complete payment required under subparagraph (B) of
paragraph (3) of subdivision (a), but only if final payment under the
terms of that installment payment agreement is due and is paid no
later than June 30, 2018. The installment payment agreement shall
include interest on the outstanding amount due at the rate prescribed
by law. Failure by the taxpayer to fully comply with the terms of
the installment payment agreement shall render the waiver of
penalties null and void, unless the board determines that the failure
was due to reasonable causes, and the total amount of tax, interest,
and all penalties shall be immediately due and payable.
(c) The application required under paragraph (2) of subdivision
(a) shall be in the form and manner specified by the board, but in no
case shall a mere payment of any taxes and interest due, in whole or
in part, for any period otherwise eligible for a waiver under this
part, be deemed to constitute an acceptable waiver application under
this part. For purposes of the preceding sentence, the application of
a refund from one period to offset a tax liability for another
period otherwise eligible for a waiver shall not be allowed without
the filing of a waiver application under this part.
7100.8. The board shall issue forms and instructions and take
other actions needed to implement this article. The provisions
contained in subdivision (c) of Section 19745, to the extent feasible
and practical, shall also apply to the board.
7100.10. The board shall adequately publicize the tax penalty
waiver program so as to maximize public awareness of the
participation in the program. The board shall coordinate to the
highest degree possible its publicity efforts and other actions taken
in implementing this article with similar programs administered by
the Franchise Tax Board.
7100.12. Subdivision (b) of Section 19746, to the extent feasible
and practical, shall also apply to the board.
SEC. 2. Chapter 9.3 (commencing with Section
19740) is added to Part 10.2 of Division 2 of the Revenue and
Taxation Code, to read:
CHAPTER 9.3. TAX PENALTY AND FEE WAIVER PROGRAM
19740. The Franchise Tax Board shall administer a tax penalty and
fee waiver program for taxpayers subject to Part 10 (commencing with
Section 17001) and Part 11 (commencing with Section 23001), as
provided in this chapter.
19741. The tax penalty and fee waiver program shall be conducted
during a three-month period beginning February 1, 2017, to April 31,
2017, inclusive, or during a timeframe ending no later than June 30,
2017, pursuant to Section 19743. The program shall apply to tax
liabilities for taxable years beginning before January 1, 2015.
19742. (a) For any taxpayer who meets each of the requirements
of Section 19743 both of the following apply:
(1) The Franchise Tax Board shall waive all unpaid penalties and
fees imposed by this part for each taxable year for which a waiver is
allowed, but only to the extent of the amount of any penalty or fee
that is owed as a result of previous nonreporting or underreporting
of tax liabilities or prior nonpayment of any taxes previously
assessed or proposed to be assessed for that taxable year.
(2) Except as provided in subdivision (b), no criminal action
shall be brought against the taxpayer for the taxable years for which
a waiver is allowed for the nonreporting or underreporting of tax
liabilities or the nonpayment of any taxes previously assessed or
proposed to be assessed.
(b) This chapter shall not apply to violations of this part, for
which, as of February 1, 2017, any of the following applies:
(1) The taxpayer is on notice of a criminal investigation by a
complaint having been filed against the taxpayer.
(2) The taxpayer is under criminal investigation.
(3) A court proceeding has already been initiated.
(c) This section shall not apply to any nonreported or
underreported tax liability amounts attributable to tax shelter items
that could have been reported under either the voluntary compliance
initiative under Chapter 9.5 (commencing with Section 19751), the
Internal Revenue Service's Offshore Voluntary Compliance Initiative
described in Revenue Procedure 2003-11, or the Internal Revenue
Service's Voluntary Disclosure Program.
(d) No refund or credit shall be granted with respect to any
penalty or fee paid with respect to a taxable year prior to the time
the taxpayer makes a request for a waiver for that taxable year
pursuant to Section 19743.
(e) Notwithstanding Chapter 6 (commencing with Section 19301), a
taxpayer may not file a claim for refund or credit for any amounts
paid in connection with the tax penalty and fee waiver program under
this chapter.
19743. (a) This chapter shall apply to any taxpayer who satisfies
all of the following requirements:
(1) During the tax penalty and fee waiver program period specified
in Section 19741, is eligible to participate in the waiver program.
(2) During the tax penalty and fee waiver program period specified
in Section 19741, files a completed waiver application with the
Franchise Tax Board, signed under penalty of perjury, electing to
participate in the tax penalty and fee waiver program.
(3) Within 60 days after the conclusion of the waiver period, does
the following:
(A) (i) For any taxable year eligible for the tax penalty and fee
waiver program where the taxpayer has not filed any required return,
files a completed original tax return for that year.
(ii) For any taxable year eligible for the tax penalty and fee
waiver program where the taxpayer filed a return but underreported
tax liability on that return, files an amended return for that year.
(B) Pays in full any taxes and interest due for each taxable year
described in clauses (i) and (ii) of subparagraph (A), as applicable,
for which a waiver is requested, or applies for an installment
payment agreement under subdivision (b). For taxpayers who have not
paid in full any taxes previously proposed to be assessed, pays in
full the taxes and interest due for that portion of the proposed
assessment for each taxable year for which a waiver is requested or
applies for an installment payment agreement under subdivision (b).
(4) For purposes of complying with the full payment provisions of
paragraph (3) of subdivision (a), if the full amount due is paid
within the period set forth in paragraph (3) of subdivision (c) of
Section 19101 after the date the Franchise Tax Board mails a notice
resulting from the filing of a waiver application or the full amount
is paid within 60 days after the conclusion of the tax penalty and
fee waiver program period, the full amount due shall be treated as
paid during the waiver period.
(5) In the case of any taxpayer that has filed for bankruptcy
protection under Title 11 of the United States Code, submits an order
from a Federal Bankruptcy Court allowing the taxpayer to participate
in the waiver program.
(b) (1) For purposes of complying with the full payment provisions
of subparagraph (B) of paragraph (3) of subdivision (a), the
Franchise Tax Board may enter into an installment payment agreement,
but only if final payment under the terms of that installment payment
agreement is due and is paid no later than June 30, 2018.
(2) Any installment payment agreement authorized by this
subdivision shall include interest on the outstanding amount due at
the rate prescribed in Section 19521.
(3) Failure by the taxpayer to fully comply with the terms of an
installment payment agreement under this subdivision shall render the
waiver of penalties and fees under Section 19732 null and void,
unless the Franchise Tax Board determines that the failure was due to
reasonable cause and not due to willful neglect.
(4) In the case of any failure described under paragraph (3), the
total amount of tax, interest, fees, and all penalties shall become
immediately due and payable.
(c) (1) The application required under paragraph (2) of
subdivision (a) shall be in the form and manner specified by the
Franchise Tax Board, but in no case shall a mere payment of any taxes
and interest due, in whole or in part, for any taxable year
otherwise eligible for a waiver under this part, be deemed to
constitute an acceptable waiver application under this part. For
purposes of the prior sentence, the application of a refund from one
taxable year to offset a tax liability from another taxable year
otherwise eligible for a waiver shall not, without the filing of a
waiver application, be deemed to constitute an acceptable waiver
application under this part.
(2) The Legislature specifically intends that the Franchise Tax
Board, in administering the waiver application requirement under this
part, make the waiver application process as streamlined as possible
to ensure participation in the waiver program will be available to
as many taxpayers as possible without otherwise compromising the
Franchise Tax Board's ability to enforce and collect the taxes
imposed under Part 10 (commencing with Section 17001) and Part 11
(commencing with Section 23001).
(d) Upon the conclusion of the tax penalty and fee waiver program
period, the Franchise Tax Board may propose a deficiency upon any
return filed pursuant to subparagraph (A) of paragraph (3) of
subdivision (a), impose penalties and fees, or initiate criminal
action under this part with respect to the difference between the
amount shown on that return and the correct amount of tax. This
action shall not invalidate any waivers previously granted under
Section 19732.
(e) All revenues derived pursuant to subdivision (c) shall be
subject to Sections 19602 and 19604.
19744. Notwithstanding any other provision of this chapter, if
any overpayment of tax shown on an original or amended return filed
under this article is refunded or credited within 180 days after the
return is filed, no interest shall be allowed under Section 19340 on
that overpayment.
19745. (a) The Franchise Tax Board may issue forms, instructions,
notices, rules, or guidelines, and take any other necessary actions,
needed to implement this chapter, specifically including any forms,
instructions, notices, rules, or guidelines that specify the form and
manner of any acceptable form of waiver application described in
Section 19743.
(b) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to this chapter.
19746. (a) The Franchise Tax Board shall conduct a public
outreach program and adequately publicize the tax penalty and fee
waiver program so as to maximize public awareness and to make
taxpayers aware of the program. In addition, the Franchise Tax Board
shall make taxpayers aware of the new and increased penalties
associated with taxpayer failure to participate in the tax penalty
and fee waiver program.
(b) The Franchise Tax Board shall make reasonable efforts to
identify taxpayer liabilities and, to the extent practicable, will
send written notice to taxpayers of their eligibility for the tax
penalty and fee waiver program. However, failure of the Franchise Tax
Board to notify a taxpayer of the existence or correct amount of a
tax liability eligible for waiver shall not preclude the taxpayer
from participating in the tax penalty and fee waiver program.
SEC. 3. Section 19777.5 of the Revenue and
Taxation Code is amended to read:
19777.5. (a) There shall be added to the tax for each taxable
year for which amnesty could have been requested:
(1) For amounts that are due and payable on the last day of the
amnesty period, an amount equal to 50 percent of the accrued interest
payable under Section 19101 for the period beginning on the last
date prescribed by law for the payment of that tax (determined
without regard to extensions) and ending on the last day of the
amnesty period specified in Section 19731.
(2) For amounts that become due and payable after the last date of
the amnesty period, an amount equal to 50 percent of the interest
computed under Section 19101 on any final amount, including final
deficiencies and self-assessed amounts, for the period beginning on
the last date prescribed by law for the payment of the tax for the
year of the deficiency (determined without regard to extensions) and
ending on the last day of the amnesty period specified in Section
19731.
(3) For purposes of paragraph (2), Sections 19107, 19108, 19110,
and 19113 shall apply in determining the amount computed under
Section 19101.
(b) The penalty imposed by this section is in addition to any
other penalty imposed under Part 10 (commencing with Section 17001),
Part 11 (commencing with Section 23001), or this part.
(c) This section does not apply to any amounts that are treated as
paid during the amnesty program period under paragraph (4) of
subdivision (a) of Section 19733 or paragraph (1) of subdivision (b)
of Section 19733.
(d) Article 3 (commencing with Section 19031), (relating to
deficiency assessments) shall not apply with respect to the
assessment or collection of any penalty imposed by subdivision (a).
(e) (1) Notwithstanding Chapter 6 (commencing with Section 19301),
a taxpayer may not file a claim for refund or credit for any amounts
paid in connection with the penalty imposed in subdivision (a),
except as provided in paragraph (2).
(2) A taxpayer may file a claim for refund for any amounts paid to
satisfy a penalty imposed under subdivision (a) on the grounds that
the amount of the penalty was not properly computed by the Franchise
Tax Board.
(f) Notwithstanding Section 18415, the amendments made to this
section by the act adding this subdivision shall apply to penalties
imposed under paragraph (2) of subdivision (a) after March 31, 2005.
(g) This section shall not apply to the waiver period provided for
in Part 9.4 (commencing with Section 19740).
SEC. 4. 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.
