Bill Text: CA SB516 | 2023-2024 | Regular Session | Amended

---

Bill Title: Health care coverage: prior authorization.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Engrossed) 2023-09-14 - Re-referred to Com. on APPR. pursuant to Assembly Rule 96. [SB516 Detail]

Download: California-2023-SB516-Amended.html

---

Amended  IN  Assembly  September 13, 2023

Amended  IN  Assembly  September 01, 2023

Amended  IN  Assembly  June 30, 2023

Amended  IN  Senate  May 18, 2023

Amended  IN  Senate  April 27, 2023

Amended  IN  Senate  April 10, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 516

---

Introduced by Senator Skinner
(Coauthor: Senator Wiener)
(Coauthors: Assembly Members Bains, Jackson, and Weber)

February 14, 2023

---

An act to amend Sections 12419.5 and 12419.8 of the Government Code, and to amend Sections 19008, 19280, and 21015.5 of, and to add Section 21015.8 to, the Revenue and Taxation Code, relating to taxation. An act to add Article 4.7 (commencing with Section 1366.70) to Chapter 2.2 of Division 2 of, and to repeal Section 1366.81 of, the Health and Safety Code, and to add Article 1.3 (commencing with Section 10127.40) to Chapter 1 of Part 2 of Division 2 of, and to repeal Section 10127.51 of, the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL'S DIGEST

SB 516, as amended, Skinner. Franchise Tax Board Debtor Bill of Rights. Health care coverage: prior authorization.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law generally authorizes a health care service plan or health insurer to use prior authorization and other utilization review or utilization management functions, under which a licensed physician or a licensed health care professional who is competent to evaluate specific clinical issues may approve, modify, delay, or deny requests for health care services based on medical necessity. Existing law requires a health care service plan or health insurer, including those plans or insurers that delegate utilization review or utilization management functions to medical groups, independent practice associations, or to other contracting providers, to comply with specified requirements and limitations on their utilization review or utilization management functions. Existing law requires the criteria or guidelines used to determine whether or not to authorize, modify, or deny health care services to be developed with involvement from actively practicing health care providers.

On or after January 1, 2026, this bill would prohibit a health care service plan or health insurer from requiring a contracted health professional to complete or obtain a prior authorization for any covered health care services if the plan or insurer approved or would have approved not less than 90% of the prior authorization requests they submitted in the most recent completed one-year contracted period. The bill would set standards for this exemption and its denial, rescission, and appeal. The bill would authorize a plan or insurer to evaluate the continuation of an exemption not more than once every 12 months, and would authorize a plan or insurer to rescind an exemption only at the end of the 12-month period and only if specified criteria are met. The bill would require a plan or insurer to provide an electronic prior authorization process. The bill would also require a plan or insurer to have a process for annually monitoring prior authorization approval, modification, appeal, and denial rates to identify services, items, and supplies that are regularly approved, and to discontinue prior authorization on those services, items, and supplies that are approved 95% of the time. Because a willful violation of the bill’s requirements relative to health care service plans would be a crime, the 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.

(1)Existing law authorizes the Controller to offset any amount due to a state agency from a person or entity against any amount owing to that person or entity by a state agency, including any tax refund, except as specified.

This bill would require the Controller to provide information to any person or entity that requests the information on how to file a claim for a refund of any amount erroneously offset pursuant to above-described provisions with the state agency that requested the offset, as specified. The bill would require the state agency to notify the Controller if a claim is filed. The bill would require the Controller to suspend the offset until the state agency notifies the Controller that the claim has been resolved. The bill would require the state agency to refund any amount erroneously offset as expeditiously as possible, but within one year of the filing of a claim and cancel the request for any future offset for the remaining amount. The bill would require the Controller to work in collaboration with applicable state agencies to implement these claim provisions.

(2)Existing law authorizes the Controller to offset any amount due to a city, county, or special district from a person or entity against any amount owing to that person or entity by a state agency at the request of the city, county, or special district, as specified.

This bill would require a city, county, or special district that has submitted an offset request to withdraw that request upon discovering that the amount owed has been received by the city, county, or special district, as specified. The bill would also require a city, county, or special district that overcollects, as prescribed, to refund the overcollection, as provided. The bill would require the Controller to give the person or entity from whom the offset was collected a receipt with specified information, including the offset amount, and the remaining amount due to the city, county, or special district, when the Controller satisfies an offset request.

The bill would require the Controller to provide the public address, phone number, and internet website of the city, county, or special district that requested the offset to any person or entity that requests information on how to file a claim for a refund of any amount erroneously offset under the above-described provisions, as specified. The bill would require the city, county, or special district to notify the Controller if a claim is filed. The bill would require the city, county, or special district that requested an offset to withdraw any request that is subject to a claim for a refund until the claim has been resolved. The bill would require the city, county, or special district to refund any amount erroneously offset and cancel any future offset request for the remaining amount. The bill would require the Controller to work in collaboration with specified state agencies to implement these claim provisions.

(3)Existing law authorizes the Franchise Tax Board to allow a taxpayer to enter into an installment payment agreement to make full or partial payment of taxes due, as specified. Under existing law, except in specified circumstances, an installment agreement under these provisions is not considered null and void, or otherwise terminated, unless a specified notice of termination is provided to the taxpayer.

This bill would additionally require the Franchise Tax Board to authorize a taxpayer to submit an application for an installment agreement online or by mail or telephone. The bill would prohibit the terms of the installment agreement to be less favorable because of the method the taxpayer chose to submit the application. The bill would also require the Franchise Tax Board, before terminating an installment payment agreement with a taxpayer for failure to comply fully with the terms of the installment agreement, to give the taxpayer at least 60 days to cure the failure.

(4)Existing law authorizes a juvenile or superior court, county, state, or the State Bar to refer any fine, monetary sanction, state or local penalty, bail, forfeiture, restitution fine, restitution order, or any other amount to the Franchise Tax Board for collection under guidelines prescribed by the Franchise Tax Board, as specified.

Under existing law, upon expiration of 10 years after the date of entry of a money judgment or a judgment for possession or sale of property, the judgment may not be enforced, any enforcement procedures must cease, and any lien created by an enforcement procedure pursuant to the judgment is extinguished.

This bill would require the above-described entities to give a specified notice before referring the above-described amounts to the Franchise Tax Board. The bill would prohibit the entities from referring any amount to the Franchise Tax Board that has not been imposed within the previous 15 years or is unenforceable pursuant to the above-described provisions relating to the enforcement of a judgment, unless renewed. The bill would prohibit the entities from referring any renewed judgment to the Franchise Tax Board after 5 years from the date of the filing of the application for renewal. The bill would require the entities to relinquish all rights to collect the referred amounts unless the entities withdraw the referral.

(5)Existing law authorizes the state to collect state tax liability through various means, including issuing a withholding order in accordance with certain procedures. Existing law requires the Franchise Tax Board to provide notice before levying any property or property right for unpaid taxes, as specified. Existing law requires that the notice include, among other information, the amount of unpaid tax and the proposed action or actions that may be taken by the Franchise Tax Board and the rights of the person with respect to the action or actions. Existing law authorizes taxpayers to request a review of the Franchise Tax Board’s actions, as specified.

This bill would expand the above-described provisions to unpaid non-tax debts. The bill would require the Franchise Tax Board, when providing the above-described notice, to additionally specify the source of the unpaid tax or non-tax debt, the type of money or property exempt from any levy, as specified, requirements and procedures to enter into installment agreements, and legal requirements and procedures to release a levy on money or property that is exempt from any levy.

The bill would additionally require the board to provide the public address, phone number, and internet website of the city, county, or special district that requested the offset to any person or entity that requests information on how to file a claim with a city, county, or special district for a refund of any amount erroneously levied or collected by the board because of a request by the city, county, or special district. The bill would require the city, county, or special district to notify the board if a claim is filed. The bill would require the city, county, or special district that requested an offset to withdraw any request that is subject to a claim for a refund until the claim has been resolved. The bill would require the city, county, or special district to refund any amount or property erroneously levied or collected.

(6)This bill would state its provisions become operative on September 1, 2025, except as provided.

(7)This bill would incorporate additional changes to Section 19008 of the Revenue and Taxation Code proposed by AB 1765 to be operative only if this bill and AB 1765 are enacted and this bill is enacted last.

Digest Key

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

---

Bill Text

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

SECTION 1.

 Article 4.7 (commencing with Section 1366.70) is added to Chapter 2.2 of Division 2 of the Health and Safety Code, to read:

Article  4.7. Prior Authorization Exemptions

1366.70.

 For purposes of this article:

(a) “Health professional” means a physician and surgeon or other professional who is licensed in California to deliver or furnish health care services.

(b) (1) “Health care service” means a health care procedure, treatment, or service that is either of the following:

(A) Provided at a health facility licensed in California.

(B) Provided or ordered by a physician and surgeon or within the scope of practice for which a health care professional is licensed in California.

(2) “Health care service” also includes the provision of pharmaceutical products or services, or durable medical equipment.

(3) “Health care service” includes brand name prescription drugs until January 1, 2029.

(4) “Health care service” does not include any of the following:

(A) Tier four prescription drugs, as defined in Section 1342.73, under the applicable enrollee’s coverage.

(B) Experimental, investigational, or unproven drugs or products under the applicable enrollee’s coverage.

(C) Prescription drugs not approved by the federal Food and Drug Administration.

(c) (1) “Prior authorization” means the process by which utilization review determines the medical necessity or medical appropriateness of otherwise covered health care services before or concurrent with the rendering of those health care services.

(2) “Prior authorization” also includes a health care service plan requirement that an enrollee or health professional notify the health care service plan before providing a health care service, including preauthorization, precertification, and prior approval.

(3) “Prior authorization” does not include utilization review used and submitted by health facilities, such as hospitals, skilled nursing facilities, long-term care facilities, and acute rehabilitation facilities, to track the ongoing appropriateness of care and confirm payment to the facilities from health care service plans.

1366.71.

 (a) (1) On or after January 1, 2026, a health care service plan shall not require a contracted health professional to complete or obtain a prior authorization for any covered health care services if, in the most recent completed one-year contracted period, the health care service plan approved or would have approved not less than 90 percent of the prior authorization requests submitted by the health professional for the class of health care services or treatments subject to prior authorization for enrollees of the health care service plan.

(2) A health professional shall have a total contracting history of at least 36 months with the health care service plan to be considered eligible for an exemption pursuant to paragraph (1). The 36 months do not need to be continuous.

(3) For purposes of this section, a modification by a plan of a prior authorization request that is ultimately approved shall count as an approval.

(4) A health professional’s exemption pursuant to paragraph (1) shall apply to all health care services, items, and supplies, including drugs, that are covered by the plan contract and are within the contracted health professional’s medical licensure, board certification, specialty, or scope of practice.

(5) This article applies to any and all product types offered by the health care service plan that are regulated by the department, but includes Medi-Cal managed care plans only to the extent permissible under federal law.

(6) (A) A health care service plan shall provide an electronic prior authorization process.

(B) A health professional shall agree to use the plan’s electronic prior authorization process to be considered eligible for an exemption pursuant to paragraph (1). A health care service plan may waive this requirement based on the health professional’s access to requisite technologies and infrastructure, including broadband internet.

(b) A health care service plan shall evaluate if a contracted health professional without an exemption qualifies for an exemption from prior authorization requirements under subdivision (a) once every 12 months. A health care service plan may evaluate if a contracted health care professional continues to qualify for an exemption from prior authorization requirements under subdivision (a) not more than once every 12 months. This section does not require a health care service plan to evaluate an existing exemption or prevent the establishment of a longer exemption period.

(c) A health care service plan shall provide a health professional who receives an exemption with a notice that includes a statement that the health professional qualifies for an exemption from preauthorization requirements and a statement of the duration of the exemption.

1366.72.

 A health professional’s exemption from prior authorization shall remain in effect until the 30th calendar day after the date the health care service plan notifies the health professional of the health care service plan’s determination to rescind the exemption.

1366.73.

 (a) A health care service plan shall only rescind a prior authorization exemption at the end of the 12-month period and if the health care service plan meets all of the following requirements:

(1) For exemptions pursuant to paragraph (1) of subdivision (a) of Section 1366.71, makes a determination that the health professional would not have met the 90-percent approval criteria based on a retrospective review of a sample of a minimum of 15, but no more than 25, claims for covered services for which the exemption applies for the previous 12 months.

(2) Complies with other applicable requirements specified in this section, including both of the following:

(A) Notifies the health professional at least 30 calendar days before the proposed rescission is to take effect.

(B) Provides the notice required under subparagraph (A)with the information and data relied on to make the determination.

(b) A determination to rescind or deny a prior authorization exemption shall be made by a health professional licensed in California, of the same or similar specialty as the health professional being considered for an exemption, and who has experience in providing the type of services for which the exemption applies.

(c) If a health care service plan does not finalize a rescission determination as specified in subdivision (a), then the individual health professional is considered to have met the criteria under Section 1366.71 to continue to qualify for the exemption.

1366.74.

 A health care service plan shall not retroactively deny or modify a covered health care service on the basis of a rescission of an exemption.

1366.75.

 Following a final determination to rescind or deny an exemption, a health professional is eligible for consideration of an exemption after a 12-month period.

1366.76.

 A health care service plan shall not deny or reduce payment for a covered health care service exempted from a prior authorization requirement pursuant to paragraph (1) of subdivision (a) of Section 1366.71, including a covered health care service performed or supervised by another health care professional when the performing or supervising health care professional or other health care professional who ordered the service received a prior authorization exemption, unless the performing or supervising health care professional or other health care professional did either of the following:

(a) Knowingly and materially misrepresented the health care service in a request for payment submitted to a health care service plan with the specific intent to deceive and obtain an unlawful payment from the health care service plan.

(b) Failed to substantially perform the health care service.

1366.77.

 This article does not prevent a health care service plan from taking action, including rescinding a prior authorization exemption granted under subdivision (a) of Section 1366.71 at any time, against a contracted health professional that has been found, through an investigation by the plan, to have committed fraud or to have a pattern of waste or abuse in violation of the plan’s contract.

1366.78.

 A grievance or appeal submitted by or on behalf of an enrollee regarding a delay, denial, or modification of health care services shall be reviewed by a physician and surgeon of the same or similar specialty as the physician and surgeon requesting authorization for those health care services.

1366.79.

 (a) A health care service plan’s policies and procedures pursuant to Section 1367.01 shall include a process for annually monitoring prior authorization approval, modification, appeal, and denial rates to identify services, items, and supplies, including drugs, that are regularly approved.

(b) A health care service plan shall discontinue requiring prior authorization on services, items, and supplies, including drugs, that are approved 95 percent of the time.

1366.80.

 (a) The exemption from prior authorization described in paragraph (1) of subdivision (a) of Section 1366.71 shall not be applicable to any health professional for health care services delivered or furnished pursuant to a contract with a risk-bearing organization, as defined in subdivision (g) of Section 1375.4, that is delegated in a contract with a health care service plan to perform prior authorization.

(b) This article does not apply to prior authorization that is delegated by a health care service plan to a risk-bearing organization, as defined in subdivision (g) of Section 1375.4. A health care service plan shall not delegate the requirements in this article to a delegated provider unless the parties have negotiated and agreed upon a new provision to the parties’ contract pursuant to Section 1375.7. That change to the parties’ contract shall be considered a material change.

(c) This article does not apply to fully integrated delivery systems, as defined in subdivision (h) of Section 127500.2.

(d) This article does not apply to vision-only and dental-only health care service plans and coverage.

(e) This article applies to a pharmacy benefit manager under contract with a health care service plan to administer prior authorization for prescription drugs.

1366.81.

 (a) The department shall conduct an analysis of the inclusion of brand name prescription drugs as a health care service for purposes of this article, including an analysis of the costs and savings, prospects for continuing or expanding the gold card program for brand name prescription drugs, feedback received from the provider community, and an assessment of the administrative costs to the plan of administering or implementing the gold card program for brand name prescription drugs.

(b) The department shall submit a report on its findings to the Legislature on or before July 1, 2029. The report shall be submitted in compliance with Section 9795 of the Government Code.

(c) This section shall remain in effect only until January 1, 2030, and as of that date is repealed.

SEC. 2.

 Article 1.3 (commencing with Section 10127.40) is added to Chapter 1 of Part 2 of Division 2 of the Insurance Code, to read:

Article  1.3. Prior Authorization Exemptions

10127.40.

 For purposes of this article:

(a) “Health professional” means a physician and surgeon or other professional who is licensed in California to deliver or furnish health care services.

(b) (1) “Health care service” means a health care procedure, treatment, or service that is either of the following:

(A) Provided at a health facility licensed in California.

(B) Provided or ordered by a physician and surgeon or within the scope of practice for which a health care professional is licensed in California.

(2) “Health care service” also includes the provision of pharmaceutical products or services, or durable medical equipment.

(3) “Health care service” includes brand name prescription drugs until January 1, 2029.

(4) “Health care service” does not include any of the following:

(A) Tier four prescription drugs, as defined in Section 10123.1932, under the applicable insured’s coverage.

(B) Experimental, investigational, or unproven drugs or products under the applicable insured’s coverage.

(C) Prescription drugs not approved by the federal Food and Drug Administration.

(c) (1) “Prior authorization” means the process by which utilization review determines the medical necessity or medical appropriateness of otherwise covered health care services before or concurrent with the rendering of those health care services.

(2) “Prior authorization” also includes a health insurer requirement that an insured or health professional notify the health insurer before providing a health care service, including preauthorization, precertification, and prior approval.

(3) “Prior authorization” does not include utilization review used and submitted by health facilities, such as hospitals, skilled nursing facilities, long-term care facilities, and acute rehabilitation facilities, used to track the ongoing appropriateness of care and confirm payment to the facilities from health insurers.

10127.41.

 (a) (1) On or after January 1, 2026, a health insurer shall not require a contracted health professional to complete or obtain a prior authorization for any covered health care services if, in the most recent completed one-year contracted period, the health insurer approved or would have approved not less than 90 percent of the prior authorization requests submitted by the health professional for the class of health care services or treatments subject to prior authorization for insureds of the health insurer.

(2) A health professional shall have a total contracting history of at least 36 months with the health insurer to be considered eligible for an exemption pursuant to paragraph (1). The 36 months do not need to be continuous.

(3) For purposes of this section, a modification by an insurer of a prior authorization request that is ultimately approved shall count as an approval.

(4) A health professional’s exemption pursuant to paragraph (1) shall apply to all health care services, items, and supplies, including drugs, that are covered by the insurance policy and are within the contracted health professional’s medical licensure, board certification, specialty, or scope of practice.

(5) This article applies to any and all product types offered by the health insurer that are regulated by the department.

(6) (A) A health insurer shall provide an electronic prior authorization process.

(B) A health professional shall agree to use the insurer’s electronic prior authorization process to be considered eligible for an exemption pursuant to paragraph (1). A health insurer may waive this requirement based on the health professional’s access to requisite technologies and infrastructure, including broadband internet.

(b) A health insurer shall evaluate if a contracted health professional without an exemption qualifies for an exemption from prior authorization requirements under subdivision (a) once every 12 months. A health insurer may evaluate if a contracted health care professional continues to qualify for an exemption from prior authorization requirements under subdivision (a) not more than once every 12 months. This section does not require a health insurer to evaluate an existing exemption or prevent the establishment of a longer exemption period.

(c) A health insurer shall provide a health professional who receives an exemption with a notice that includes a statement that the health professional qualifies for an exemption from preauthorization requirements and a statement of the duration of the exemption.

10127.42.

 A health professional’s exemption from prior authorization shall remain in effect until the 30th calendar day after the date the health insurer notifies the health professional of the health insurer’s determination to rescind the exemption.

10127.43.

 (a) A health insurer shall only rescind a prior authorization exemption at the end of the 12-month period and if the health insurer meets all of the following requirements:

(1) For exemptions pursuant to paragraph (1) of subdivision (a) of Section 10127.41, makes a determination that the health professional would not have met the 90-percent approval criteria based on a retrospective review of a sample of a minimum of 15, but no more than 25, claims for covered services for which the exemption applies for the previous 12 months.

(2) Complies with other applicable requirements specified in this section, including both of the following:

(A) Notifies the health professional at least 30 calendar days before the proposed rescission is to take effect.

(B) Provides the notice required under subparagraph (A) with the information and data relied on to make the determination.

(b) A determination to rescind or deny a prior authorization exemption shall be made by a health professional licensed in California of the same or similar specialty as the health professional being considered for an exemption and who has experience in providing the type of services for which the exemption applies.

(c) If a health insurer does not finalize a rescission determination as specified in subdivision (a), then the individual health professional is considered to have met the criteria under Section 10127.41 to continue to qualify for the exemption.

10127.44.

 A health insurer shall not retroactively deny or modify a covered health care service on the basis of a rescission of an exemption.

10127.45.

 Following a final determination to rescind or deny an exemption, a health professional is eligible for consideration of an exemption after a 12-month period.

10127.46.

 A health insurer shall not deny or reduce payment for a covered health care service exempted from a prior authorization requirement pursuant to paragraph (1) of subdivision (a) of Section 10127.41, including a covered health care service performed or supervised by another health care professional when the performing or supervising health care professional or other health care professional who ordered the service received a prior authorization exemption, unless the performing or supervising health care professional or other health care professional did either of the following:

(a) Knowingly and materially misrepresented the health care service in a request for payment submitted to a health insurer with the specific intent to deceive and obtain an unlawful payment from the health insurer.

(b) Failed to substantially perform the health care service.

10127.47.

 This article does not prevent a health insurer from taking action, including rescinding a prior authorization exemption granted under subdivision (a) of Section 10127.41 at any time, against a contracted health professional that has been found, through an investigation by the insurer, to have committed fraud or to have a pattern of waste or abuse in violation of the insurer’s contract.

10127.48.

 A grievance or appeal submitted by or on behalf of an insured regarding a delay, denial, or modification of health care services shall be reviewed by a physician and surgeon of the same or similar specialty as the physician and surgeon requesting authorization for those health care services.

10127.49.

 (a) A health insurer’s policies and procedures pursuant to Section 10123.135 shall include a process for annually monitoring prior authorization approval, modification, appeal, and denial rates to identify services, items, and supplies, including drugs, that are regularly approved.

(b) A health insurer shall discontinue requiring prior authorization on services, items, and supplies, including drugs, that are approved 95 percent of the time.

10127.50.

 (a) An insurer shall not delegate the requirements in this article to a delegated provider unless the parties have negotiated and agreed upon a new provision to the parties’ contract pursuant to Section 10133.65. That change to the parties’ contract shall be considered a material change.

(b) This article does not apply to fully integrated delivery systems, as defined in subdivision (h) of Section 127500.2 of the Health and Safety Code.

(c) This article does not apply to vision-only and dental-only health insurance policies and coverage.

(d) This article applies to a pharmacy benefit manager under contract with a health insurer to administer prior authorization for prescription drugs.

10127.51.

 (a) The department shall conduct an analysis of the inclusion of brand name prescription drugs as a health care service for purposes of this article, including an analysis of the costs and savings, prospects for continuing or expanding the gold card program for brand name prescription drugs, feedback received from the provider community, and an assessment of the administrative costs to the insurer of administering or implementing the gold card program for brand name prescription drugs.

(b) The department shall submit a report on its findings to the Legislature on or before July 1, 2029. The report shall be submitted in compliance with Section 9795 of the Government Code.

(c) This section shall remain in effect only until January 1, 2030, and as of that date is repealed.

SEC. 3.

 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.This act shall be known and may be cited as the Franchise Tax Board Debtor Bill of Rights.

SEC. 2.Section 12419.5 of the Government Code is amended to read:

12419.5.

(a)The Controller may, in the Controller’s discretion, offset any amount due a state agency from a person or entity, against any amount owing that person or entity by any state agency. The Controller may deduct from the claim, and draw the Controller’s warrants for the amounts offset in favor of the respective state agencies to which due, and, for any balance, in favor of the claimant. Whenever insufficient to offset all amounts due state agencies, the amount available shall be applied in the manner as the Controller, in the Controller’s discretion, shall determine. If, in the discretion of the Controller, the person or entity refuses or neglects to file a claim within a reasonable time, the head of the state agency owing the amount shall file the claim on behalf of that person or entity. If approved by the Controller, the claim shall have the same force and effect as though filed by that person or entity. The amount due any person or entity from the state or any agency thereof is the net amount otherwise owing that person or entity after any offset as provided in this section.

(b)For purposes of this section, an amount owing to a person or entity by any state agency shall include any tax refund.

(c)This section shall not apply to payment of online game prizes of ninety-nine dollars ($99) or lower by California State Lottery Retailers pursuant to subdivision (a) of former Section 8880.32.

(d)(1)The Controller shall provide information to any person or entity that requests the information on how to file a claim for a refund of any amount erroneously offset pursuant to this section with the state agency that requested the offset, including the public address and phone number of the state agency.

(2)The state agency that requested the offset shall notify the Controller if a claim is filed as described in paragraph (1).

(3)In order to comply with paragraph (1), the Controller shall maintain the public address and phone number of the state agency that requested an offset.

(4)Upon notification by a state agency, described in paragraph (2), the Controller shall suspend any future offset that is the subject of a claim, described in paragraph (1), until the state agency that requested the offset notifies the Controller that the claim has been resolved.

(5)The state agency that requested the offset shall refund any amount erroneously offset pursuant to this section as expeditiously as possible, but within one year of the filing of the claim and shall cancel the request for any future offset for the remaining amount.

(6)The Controller shall work in collaboration with the applicable state agencies to implement this subdivision.

(e)The amendments made to this section by the act adding this subdivision shall become operative on September 1, 2025.

SEC. 3.Section 12419.8 of the Government Code is amended to read:

12419.8.

(a)The Controller may, in the Controller’s discretion, offset any amount due a city, county, or special district from a person or entity pursuant to paragraph (1), (2), or (4) of subdivision (f), and shall, at the request of the city, county, or special district, offset any amount due a city, county, or special district from a person or entity pursuant to paragraph (3) of subdivision (f), against any amount owing the person or entity by a state agency on a claim for a refund from the Franchise Tax Board under the Personal Income Tax Law or the Bank and Corporation Tax Law, a claim for refund from the California Department of Tax and Fee Administration under the Sales and Use Tax Law, from winnings in the California State Lottery, or a claim filed by the owner, as described in subdivision (d) of Section 1540 of the Code of Civil Procedure, for payment of money from unclaimed property held by the state. Standards and procedures for submission of requests for offsets shall be as prescribed by the Controller. Whenever insufficient funds are available to satisfy an offset request, the Controller, after first applying the amounts available to any amount due a state agency, may allocate the balance among any other requests for offset.

(b)The Controller shall deduct and retain from any amount offset in favor of a city, county, or special district an amount sufficient to reimburse the Controller, the Franchise Tax Board, the California Department of Tax and Fee Administration, or the California State Lottery for their administrative costs of processing the offset payment.

(c)(1)A city, county, or special district that has submitted an offset request to the Franchise Tax Board’s Interagency Intercept Collection program, as established pursuant to Section 12419.2, pursuant to subdivision (a) shall withdraw the offset request upon discovering that the amount owed has been received by the city, county, or special district. That withdrawal shall occur as soon as possible and no later than the 45^th day following the discovery.

(2)(A)If a city, county, or special district overcollects debt under the program described in Section 12419.2 and other concurrent collection methods, the city, county, or special district shall refund the overcollection to the person or entity from whom the offset was collected. Any refund required under this paragraph shall be provided to the person or entity for whom the offset was collected as soon as possible and no later than the 45^th day following the city, county, or special district’s discovery of the overcollection.

(B)If the overcollection is not refunded by the 45^th day following discovery of the overcollection, the city, county, or special district shall pay interest to the person or entity from whom the offset was collected at a rate of 3 percent per annum on any amount refunded if that interest is ten dollars ($10) or more.

(d)(1)When the Controller satisfies an offset request pursuant to subdivision (a), the Controller shall, by the United States Postal Service, issue to the person or entity from whom the offset was collected a receipt specifying all of the following:

(A)The offset amount.

(B)The name, phone number, and internet website of the city, county, or special district that requested the offset.

(C)An explanation of the legal rights and protections afforded to the person or entity from whom the offset was collected, which shall include, but is not limited to, both of the following:

(i)A description of the protections against collection for people that receive the Young Child Tax Credit, the California Earned Income Tax Credit, and the Foster Youth Tax Credit.

(ii)Language that informs a person of their right to request a fair hearing and free legal representation with the agency that has requested the collection, if the collection is for public benefits.

(D)A statement, in bold font, indicating that the funds owed may be more than the amount requested and referring the person from whom an offset was collected to the agency that requested the collection for more information on any outstanding collections.

(2)The receipt shall be written using language that is not more than a sixth grade reading level.

(3)The Controller shall work in collaboration with the Franchise Tax Board to implement this subdivision.

(e)(1)The Controller shall provide the public address, phone number, and internet website of the city, county, or special district that requested the offset to any person or entity that requests information on how to file a claim for a refund of any amount erroneously offset pursuant to this section.

(2)The city, county, or special district that requested the offset shall notify the Controller if a claim is filed as described in paragraph (1).

(3)In order to comply with paragraph (1), the Controller shall maintain the public address and phone number of the city, county, or special district that requested an offset.

(4)The city, county, or special district that requested the offset shall withdraw any request for offset that is the subject of a claim, described in paragraph (1), until the claim has been resolved.

(5)The city, county, or special district that requested the offset shall refund any amount erroneously offset and shall cancel the request for any future offset for the remaining amount.

(6)The Controller shall work in collaboration with the state agencies described in subdivision (a) to implement this subdivision.

(f)This section shall apply only to any of the following situations:

(1)Where the amount has been reduced to a judgment.

(2)Where the amount is contained in an order of a court.

(3)Where the amount is from a bench warrant for payment of any fine, penalty, or assessment.

(4)Where the amount is delinquent unsecured property taxes on which a certificate lien has been filed for record in the office of the county recorder pursuant to Section 2191.3 of the Revenue and Taxation Code.

(g)For purposes of paragraph (4) of subdivision (f):

(1)Upon the tax collector’s request for taxpayer identification numbers required by the Controller’s procedures, the tax collector shall immediately notify the appropriate assessee, by registered or certified mail, that the request has been made for the purpose of intercepting refunds from the state government due the taxpayer, in order to offset the delinquent property tax obligation. The letter shall state that if the assessee does not pay the outstanding tax amount to the tax collector within 20 days, the required taxpayer identification number will be so provided.

(2)The tax collector shall not be named in any action that may be brought as a result of compliance with this subdivision.

(h)(1)The amendments made to subdivisions (c) and (e) by the act adding this subdivision shall become operative on September 1, 2025.

(2)The amendments made to subdivision (d) by the act adding this subdivision shall become operative upon the Controller updating the notice it sends to the person or entity from whom an offset is collected.

SEC. 4.Section 19008 of the Revenue and Taxation Code is amended to read:

19008.

(a)(1)The Franchise Tax Board may, in cases of financial hardship, as determined by the Franchise Tax Board, allow a taxpayer to enter into installment payment agreements with the Franchise Tax Board to make full or partial payment of taxes due, plus applicable interest and penalties over the life of the installment period. Failure by a taxpayer to comply fully with the terms of the installment payment agreement shall render the agreement null and void, unless the Franchise Tax Board determines that the failure was due to a reasonable cause, and the total amount of tax, interest, and all penalties shall be immediately due and payable.

(2)(A)The Franchise Tax Board shall allow a taxpayer to submit an application for an installment agreement online or by mail or telephone.

(B)The terms of the installment agreement shall not be less favorable because of the method chosen by the taxpayer to submit an application pursuant to subparagraph (A).

(b)In the case of a liability for tax of an individual under Part 10 (commencing with Section 17001) or this part, the Franchise Tax Board shall enter into an agreement to accept the full payment of the tax in installments if, as of the date the individual offers to enter into the agreement, all of the following apply:

(1)The aggregate amount of the liability (determined without regard to interest, penalties, additions to the tax and additional amounts) does not exceed ten thousand dollars ($10,000).

(2)The taxpayer (and, if the liability relates to a joint return, the taxpayer’s spouse) has not during any of the preceding five taxable years done any of the following:

(A)Failed to file any return of tax imposed under Part 10 (commencing with Section 17001) or this part.

(B)Failed to pay any tax required to be shown on the return.

(C)Entered into an installment agreement under this section for payment of any tax imposed by Part 10 (commencing with Section 17001) or this part.

(3)The Franchise Tax Board determines that the taxpayer is financially unable to pay the liability in full when due, and the taxpayer submits any information as the Franchise Tax Board may require to make this determination.

(4)The agreement requires full payment of the liability within three years.

(5)The taxpayer agrees to comply with the provisions of this part and Part 10 (commencing with Section 17001) for the period the agreement is in effect.

(c)Except in any case where the Franchise Tax Board finds collection of the tax to which an installment payment agreement relates to be in jeopardy, or there is a mutual consent to terminate, alter, or modify the agreement, the agreement shall not be considered null and void, or otherwise terminated, unless all of the following occur:

(1)A notice of termination is provided to the taxpayer not later than 30 days before the date of termination.

(2)The notice includes an explanation of why the Franchise Tax Board intends to terminate the agreement.

(3)If the taxpayer has failed to comply fully with the terms of the installment payment agreement, the taxpayer has been given at least 60 calendar days to cure the failure.

(d)No levy may be issued on the property or rights to property of any person with respect to any unpaid tax, including, but not limited to, an offset as described in Section 12419.5 or 12419.8 of the Government Code, or the amount referred to the Franchise Tax Board pursuant to Section 19280:

(1)During the period that an offer by the taxpayer for an installment agreement under this section for payment of the unpaid tax is pending with the Franchise Tax Board.

(2)If the offer is rejected by the Franchise Tax Board, during the 30 days thereafter and, if a request for review of the rejection is filed within the 30 days, during the period that the review is pending.

(3)During the period that the installment agreement for payment of the unpaid tax is in effect.

(4)If the agreement is terminated by the Franchise Tax Board, during the 30 days thereafter (and, if a request for review of the termination is filed within the 30 days, during the period that the review is pending).

(5)This subdivision shall not apply with respect to any of the following:

(A)Any unpaid tax if either of the following occurs:

(i)The taxpayer files a written notice with the Franchise Tax Board that waives the restriction imposed by this subdivision on levy with respect to the tax.

(ii)The Franchise Tax Board finds that the collection of that tax is in jeopardy.

(B)Any levy that was first issued before the date that the applicable proceeding under this subdivision commenced.

(C)At the discretion of the Franchise Tax Board, any unpaid tax for which the taxpayer makes an offer of an installment agreement subsequent to a rejection of an offer of an installment agreement with respect to that unpaid tax (or to any review thereof).

(D)The period of limitation under Section 19371 shall be suspended for the period during which the Franchise Tax Board is prohibited under this subdivision from making a levy.

(e)The Taxpayers’ Rights Advocate shall establish procedures for an independent departmental administrative review for the rejection of the offer of an installment payment and for installment payment agreements that are rendered null and void, or otherwise terminated under this section, for taxpayers that request that review. This administrative review shall not be subject to Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code. Unless review is requested by the taxpayer within 30 days of the date of rejection of the offer of an installment agreement or termination of the installment agreement, this administrative review shall not stay collection of the tax to which the installment payment agreement relates.

(f)In the case of an agreement entered into by the Franchise Tax Board under paragraph (1) of subdivision (a) for partial payment of a tax liability, the Franchise Tax Board shall review the agreement at least once every two years.

(g)(1)In the case of any taxpayer that is making payments to the Franchise Tax Board under an informal payment arrangement that was in existence prior to the effective date of the act adding this subdivision, that informal payment arrangement, for purposes of this section, shall be treated as an installment payment agreement that was entered into on the later of the following:

(A)January 1, 2005.

(B)The date on which the arrangement was established by the Franchise Tax Board.

(2)In any case where the date determined under the rules of paragraph (1) is a date prior to February 1, 2005, the amount due under the informal payment arrangement as of February 1, 2005, shall be treated as an installment payment agreement amount as of the start of the amnesty program within the meaning of Section 19738.

(3)Section 19591 does not apply to either of the following:

(A)Informal payment arrangements treated as installment payment agreements under paragraph (1).

(B)Installment payment agreements authorized by the amendments made by the act adding this subdivision that were entered into prior to July 1, 2005, or the effective date of the act adding this subdivision, whichever occurs later.

SEC. 4.5.Section 19008 of the Revenue and Taxation Code is amended to read:

19008.

(a)(1)The Franchise Tax Board may, in cases of financial hardship, enter into installment payment agreements with any taxpayer under which that taxpayer is allowed to make payment of any liability imposed or collected under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, including any additions to tax, interest, penalties, fees, and any other amounts relating to the imposed liability, in installment payments, pursuant to the agreement, if the Franchise Tax Board determines that the agreement will facilitate full or partial collection of the liability.

(2)(A)The Franchise Tax Board shall allow a taxpayer to submit an offer for an installment agreement online or by mail or telephone.

(B)The terms of the installment agreement shall not be less favorable because of the method chosen by the taxpayer to submit an offer pursuant to subparagraph (A).

(b)In the case of a liability of an individual under Part 10 (commencing with Section 17001) or this part, the Franchise Tax Board shall enter into an agreement to accept the full payment of the tax in installments if, as of the date the individual offers to enter into the agreement, all of the following apply:

(1)The aggregate amount of the liability (determined without regard to interest, penalties, additions to the tax, and additional amounts) does not exceed twenty-five thousand dollars ($25,000).

(2)The taxpayer (and, if the liability relates to a joint return, the taxpayer’s spouse) has not during any of the preceding five taxable years done any of the following:

(A)Failed to file any return of liability imposed under Part 10 (commencing with Section 17001) or this part.

(B)Failed to satisfy any term of an installment agreement under this section for payment of any liability imposed by Part 10 (commencing with Section 17001) or this part.

(3)The Franchise Tax Board determines that the taxpayer is financially unable to pay the liability in full when due, and the taxpayer submits any information as the Franchise Tax Board may require to make this determination.

(4)The agreement requires full payment of the liability within five years.

(5)The taxpayer agrees to comply with the provisions of this part and Part 10 (commencing with Section 17001) for the period the agreement is in effect.

(c)(1)(A)Failure by a taxpayer to comply fully with the terms of the installment payment agreement shall render the agreement null and void, unless the Franchise Tax Board determines that the failure was due to a reasonable cause, and the total amount of tax, interest, and all penalties shall be immediately due and payable. Except in any case where the Franchise Tax Board finds collection of the tax to which an installment payment agreement relates to be in jeopardy, or there is a mutual consent to terminate, alter, or modify the agreement, the agreement shall not be considered null and void, or otherwise terminated, unless all of the following occur:

(i)A notice of termination is provided to the taxpayer not later than 30 days before the date of termination.

(ii)The notice includes an explanation of why the Franchise Tax Board intends to terminate the agreement.

(iii)If the taxpayer has failed to comply fully with the terms of the installment payment agreement, the taxpayer has been given at least 60 calendar days to cure the failure.

(B)This paragraph shall apply only to agreements entered into before January 1, 2024.

(2)(A)(i)The Franchise Tax Board may alter, modify, or terminate an agreement entered into under this section if any of the following apply:

(I)Information that the taxpayer provided to the Franchise Tax Board before the date the agreement was entered into was inaccurate or incomplete.

(II)The Franchise Tax Board determines that the collection of any liability to which an agreement under this section relates is in jeopardy.

(III)The Franchise Tax Board determines that the financial condition of a taxpayer with whom the Franchise Tax Board has entered into an agreement has significantly changed.

(IV)The taxpayer fails to make an installment payment at the time the installment payment is due under the agreement.

(V)The taxpayer fails to file a required tax return under this part or pay any other liability at the time that the liability is due.

(VI)The taxpayer fails to provide a financial condition update upon the Franchise Tax Board’s request.

(ii)The Franchise Tax Board may modify or alter an agreement under this section to add a liability that the taxpayer fails to pay at the time that the liability is due.

(iii)If a taxpayer is currently in an installment agreement under subdivision (a) or (b), the Franchise Tax Board may require financial hardship to alter or modify the installment agreement.

(iv)(I)Except as provided in subclause (II), the Franchise Tax Board shall not alter, modify, or terminate any agreement under this paragraph unless both of the following occur:

(ia)A notice of the alteration, modification, or termination is provided to the taxpayer not later than 30 days before the date of that action.

(ib)The notice includes an explanation of the rationale of the Franchise Tax Board for altering, modifying, or terminating the agreement.

(II)In any case where the Franchise Tax Board finds collection of the liability to which an installment payment agreement relates to be in jeopardy, the Franchise Tax Board may terminate the installment agreement and issue demand for immediate payment of the liability or the deficiency declared to be in jeopardy.

(B)This paragraph shall apply only to agreements entered into on or after January 1, 2024.

(d)No levy may be issued on the property or rights to property of any person with respect to any unpaid liability, including, but not limited to, an offset as described in Section 12419.5 or 12419.8 of the Government Code, or the amount referred to the Franchise Tax Board pursuant to Section 19280:

(1)During the period that an offer by the taxpayer for an installment agreement under this section for payment of the unpaid liability is pending with the Franchise Tax Board.

(2)If the offer is rejected by the Franchise Tax Board, during the 30 days thereafter and, if a request for review of the rejection is filed within the 30 days, during the period that the review is pending.

(3)During the period that the installment agreement for payment of the unpaid liability is in effect.

(4)If the agreement is terminated by the Franchise Tax Board, during the 30 days thereafter (and, if a request for review of the termination is filed within the 30 days, during the period that the review is pending).

(5)This subdivision shall not apply with respect to any of the following:

(A)Any unpaid liability if either of the following occurs:

(i)The taxpayer files a written notice with the Franchise Tax Board that waives the restriction imposed by this subdivision on levy with respect to the liability.

(ii)The Franchise Tax Board finds that the collection of that liability is in jeopardy.

(B)Any levy that was first issued before the date that the applicable proceeding under this subdivision commenced.

(C)At the discretion of the Franchise Tax Board, any unpaid liability for which the taxpayer makes an offer of an installment agreement subsequent to a rejection of an offer of an installment agreement with respect to that unpaid liability (or to any review thereof).

(D)The period of limitation under Section 19371 shall be suspended for the period during which the Franchise Tax Board is prohibited under this subdivision from making a levy.

(e)The Taxpayers’ Rights Advocate shall establish procedures for an independent departmental administrative review for the rejection of the offer of an installment payment and for installment payment agreements that are rendered null and void, or otherwise terminated under this section, for taxpayers that request that review. This administrative review shall not be subject to Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code. Unless review is requested by the taxpayer within 30 days of the date of rejection of the offer of an installment agreement or termination of the installment agreement, this administrative review shall not stay collection of the liability to which the installment payment agreement relates.

(f)The Franchise Tax Board shall review a representative sample of existing installment agreements entered into under this section at least once every two years to ensure taxpayers are in compliance with the terms of the agreement.

(g)(1)The Franchise Tax Board may prescribe regulations as necessary or appropriate to carry out the purposes of this section.

(2)The Administrative Procedure Act (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 standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this section.

SEC. 5.Section 19280 of the Revenue and Taxation Code is amended to read:

19280.

(a)(1)(A)Fines, monetary sanctions, state or local penalties, bail, forfeitures, restitution fines, restitution orders, or any other amounts imposed by a juvenile or superior court of the State of California or the Supreme Court of the State of California upon a person or any other entity, or any payment from the State Bar of California’s Client Security Fund that is part of a final determination from the Client Security Fund, that are due and payable in an amount totaling no less than one hundred dollars ($100), in the aggregate, for criminal offenses, including all offenses involving a violation of the Vehicle Code, any amounts due pursuant to Section 903.1 of the Welfare and Institutions Code, and any amounts due pursuant to Section 6086.10, 6086.13, or 6140.5 of the Business and Professions Code may, no sooner than 90 days after payment of that amount becomes delinquent, be referred by the juvenile or superior court, the county, the state, or the State Bar to the Franchise Tax Board for collection under guidelines prescribed by the Franchise Tax Board. Except as specified in subparagraph (C), the Department of Corrections and Rehabilitation or county may refer a restitution order to the Franchise Tax Board, in accordance with subparagraph (B) of paragraph (2), for any person subject to the restitution order who is or has been under the jurisdiction of the Department of Corrections and Rehabilitation or the county.

(B)A juvenile or superior court, county, state, or the State Bar shall not refer an amount pursuant to subparagraph (A) unless written notice is provided to the debtor specifying all of the following:

(i)The amount will be referred to the Franchise Tax Board for collection that may include bank levy, wage garnishment, tax refund offsets, and unclaimed property or lottery offsets.

(ii)The full accounting of the amount referred, including, but not limited to, the case number, and date the amount was imposed.

(iii)Information about resolving the amount before referral, including, but not limited to, a payment plan or the procedure to pay the amount.

(C)The Department of Corrections and Rehabilitation or the county shall not refer a restitution order to the Franchise Tax Board if a county agency has been designated by the county board of supervisors to collect restitution from individuals who are either of the following:

(i)Serving a sentence in a county jail pursuant to subdivision (h) of Section 1170 of the Penal Code.

(ii)On mandatory supervision pursuant to paragraph (5) of subdivision (h) of Section 1170 of the Penal Code.

(iii)On postrelease community supervision pursuant to Title 2.05 (commencing with Section 3450) of Part 3 of the Penal Code, the designated county agency has an existing collection system and objects to collection by the Franchise Tax Board, and the designated county agency informs the Department of Corrections and Rehabilitation or the county that it will collect the restitution order.

(D)If the crime victim entitled to restitution in the order notifies either the Department of Corrections and Rehabilitation or the designated county agency with regard to their preference of a collecting agency, that preference shall be honored and the collection shall be performed in accordance with the preference of the victim.

(E)A juvenile or superior court, county, state, or the State Bar shall not refer an amount pursuant to subparagraph (A) to the Franchise Tax Board that has not been imposed within the previous 15 years.

(F)A juvenile or superior court, county, state, or the State Bar shall not refer an amount to the Franchise Tax Board pursuant to subparagraph (A) that is unenforceable pursuant to Section 683.020 of the Code of Civil Procedure, unless renewed. A juvenile or superior court, county, state, or the State Bar shall not refer any renewed judgment to the Franchise Tax Board after five years from the date of the filing of the application for renewal.

(2)For purposes of this subdivision:

(A)The amounts referred by the juvenile or superior court, the county, the state, or the State Bar under this section may include an administrative fee and any amounts that a government entity may add to the court-imposed obligation as a result of the underlying offense, trial, or conviction. For purposes of this article, those amounts shall be deemed to be imposed by the court.

(B)Restitution orders may be referred to the Franchise Tax Board only by a government entity, as agreed upon by the Franchise Tax Board, provided that all of the following apply:

(i)The government entity has the authority to collect on behalf of the state or the victim.

(ii)The government entity shall be responsible for distributing the restitution order collections, as appropriate.

(iii)The government entity shall ensure, in making the referrals and distributions, that it coordinates with any other related collection activities that may occur by superior courts, counties, or other state agencies.

(iv)The government entity shall ensure compliance with laws relating to the reimbursement of the Restitution Fund.

(C)The Franchise Tax Board shall establish criteria for referral that shall include setting forth a minimum dollar amount subject to referral and collection.

(b)The Franchise Tax Board, in conjunction with the Judicial Council, shall seek whatever additional resources are needed to accept referrals from all 58 counties or superior courts.

(c)Upon written notice to the debtor from the Franchise Tax Board, any amount referred to the Franchise Tax Board under subdivision (a) and any interest thereon, including any interest on the amount referred under subdivision (a) that accrued prior to the date of referral, shall be treated as final and due and payable to the State of California, and shall be collected from the debtor by the Franchise Tax Board in any manner authorized under the law for collection of a delinquent personal income tax liability, including, but not limited to, issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes.

(d)(1)Part 10 (commencing with Section 17001), this part, Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001) shall apply to amounts referred under this article in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this article, except to the extent that any provision is either inconsistent with this article or is not relevant to this article.

(2)Any information, information sources, or enforcement remedies and capabilities available to the court or the state referring to the amount due described in subdivision (a) shall be available to the Franchise Tax Board to be used in conjunction with, or independent of, the information, information sources, or remedies and capabilities available to the Franchise Tax Board for purposes of administering Part 10 (commencing with Section 17001), this part, Part 10.7 (commencing with Section 21001), or Part 11 (commencing with Section 23001).

(e)The activities required to implement and administer this part shall not interfere with the primary mission of the Franchise Tax Board to administer Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001).

(f)For amounts referred for collection under subdivision (a), interest shall accrue at the greater of the rate applicable to the amount due being collected or the rate provided under Section 19521. When notice of the amount due includes interest and is mailed to the debtor and the amount is paid within 15 days after the date of notice, interest shall not be imposed for the period after the date of notice.

(g)A collection under this article is not a payment of income taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).

(h)(1)Both of the following shall apply to any levy or order issued on or after January 1, 2022, under subdivision (c):

(A)The maximum amount of disposable earnings of a debtor for any workweek that is subject to collection shall not exceed the amount specified in Section 706.050 of the Code of Civil Procedure.

(B)The minimum basic standard of care amount specified in subdivision (a) of Section 704.220 of the Code of Civil Procedure shall not be subject to collection.

(2)This subdivision shall not apply to restitution orders or restitution fines.

(i)The juvenile or superior court, the county, the state, or the State Bar shall relinquish all rights to collect the amount referred to the Franchise Tax Board pursuant to subdivision (a), unless or until the juvenile or superior court, the county, the state, or the State Bar has withdrawn the referral.

(j)The amendments made to this section by the act adding this subdivision shall become operative on September 1, 2025.

SEC. 6.Section 21015.5 of the Revenue and Taxation Code is amended to read:

21015.5.

(a)(1)No levy may be made on any property or property right of any person unless the board has notified the person in writing of the person’s rights as described in subparagraph (D) of paragraph (3) before the levy is made. Except as provided in subdivision (f), the notice shall be required only once for the taxable period to which the unpaid tax or non-tax debt specified in subparagraph (A) of paragraph (3) relates. The notice shall not be required if the unpaid tax or non-tax debt for which notice would otherwise be required under this paragraph is consolidated for collection purposes with a preexisting unpaid tax or non-tax debt for which notice has been given under this paragraph.

(2)The notice required by paragraph (1) shall be made by first-class mail to the address of record not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax or non-tax debt for the applicable period. Notice under paragraph (1) is not required if previous mail to the same address was returned undelivered with no forwarding address.

(3)The notice required under paragraph (1) shall specify, in simple and nontechnical terms, all of the following:

(A)The amount of unpaid tax or non-tax debt.

(B)The agency that referred the unpaid tax or non-tax debt to the board for collection.

(C)A telephone number to call in the event of any questions.

(D)The right of the person to request a review during the 30-day period described in paragraph (2).

(E)(i)A disclosure of the type of money or property exempt from any levy, including, but not limited to, the exemptions provided in Article 3 (commencing with Section 704.010) of Chapter 4 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure.

(ii)The requirement of clause (i) may be satisfied by a link to a list of exempt money or property on the board’s internet website.

(F)The proposed action or actions that may be taken by the board and the rights of the person with respect to the action or actions, including a brief statement that sets forth all of the following:

(i)The provisions of California law relating to levy and sale of property.

(ii)The procedures applicable to the levy and sale of property under California law.

(iii)The independent departmental administrative review available to the taxpayers with respect to the levy and sale and the procedures to obtain that review.

(iv)The alternatives available to taxpayers or debtors that could prevent levy on property, including installment agreements under Section 19008.

(v)Requirements and procedures to enter into installment agreements under Section 19008.

(vi)California legal requirements and procedures with respect to the release of levy, including legal requirements and procedures to release a levy on money or property that is exempt from any levy.

(b)(1)The Taxpayers’ Rights Advocate shall establish procedures for an independent departmental administrative review for taxpayers who request review under subparagraph (D) of paragraph (3) of subdivision (a).

(2)A person shall be entitled to only one review under this section with respect to the applicable period to which the unpaid tax or non-tax debt specified in subparagraph (A) of paragraph (3) of subdivision (a) relates.

(3)An independent departmental administrative review under this subdivision shall be conducted by an officer or employee, or officers or employees, who have had no prior involvement with respect to the unpaid tax or non-tax debt specified in subparagraph (A) of paragraph (3) of subdivision (a) before the first review under this section or Section 19225. A taxpayer or debtor may waive the requirement of this paragraph. Administrative review under this subdivision is not subject to Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code.

(c)(1)The person or persons conducting the independent departmental administrative review shall obtain verification that the requirements of any applicable law or administrative procedures have been met by the board.

(2)The taxpayer or debtor may raise during the review any relevant issue relating to the unpaid tax, non-tax debt, or the lien, including any of the following:

(A)Appropriate spousal defenses.

(B)Challenges to the appropriateness of collection actions.

(C)Offers of collection alternatives, that may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer in compromise.

(3)The determination of the person or persons conducting the review under this subdivision shall take into consideration all of the following:

(A)The verification presented under paragraph (1).

(B)The issues raised under paragraph (2).

(C)Whether any proposed collection action balances the need for the efficient collection of taxes or non-tax debts with the legitimate concern of the person that any collection action not be more intrusive than necessary.

(4)An issue may not be raised during the review if:

(A)The issue was raised and considered at a previous review under this section or in any other administrative or judicial proceeding.

(B)The person seeking to raise the issue participated meaningfully in the review or proceeding.

(C)The issue meets the requirements of clause (i) or (ii) of Section 6702(b)(2)(A) of the Internal Revenue Code, as modified by Section 19179.

This paragraph does not apply to any issue with respect to a change in circumstances of that person that affects the determination.

(d)If review is requested under subparagraph (D) of paragraph (3) of subdivision (a), the levy actions that are the subject of the requested review shall be suspended for the period during which the review is pending. In no event shall any period expire before the 15th day after the day upon which there is a final determination in the review.

(e)This section does not apply if the board has made a finding under Section 19081 or 19082 that the collection of tax is in jeopardy except that the taxpayer shall be given the opportunity for the review described in this section within a reasonable period of time after the levy.

(f)If the board holds in abeyance the collection of a liability imposed under Part 10 (commencing with Section 17001) or Part 10.2 (commencing with Section 18401), that is final and otherwise due and payable, for a period in excess of six months from the date the hold is first placed on the account, the board shall thereafter mail to the taxpayer a notice prior to issuing a levy or filing or recording a notice of state tax lien.

(g)This section is operative for collection actions initiated after the date which is 180 days after the effective date of the act adding this section.

(h)Notwithstanding any other provision of this section, if the board determines that any portion of a request for review under this section meets the requirements of clause (i) or (ii) of Section 6702(b)(2)(A) of the Internal Revenue Code, as modified by Section 19179, then the board may treat that portion as if it were never submitted and that portion shall not be subject to any further administrative or judicial review.

(i)The amendments made to this section by the act adding this subdivision shall become operative on September 1, 2025.

SEC. 7.Section 21015.8 is added to the Revenue and Taxation Code, to read:

21015.8.

(a)The board shall provide the public address, phone number, and internet website of the city, county, or special district that requested the offset to any person or entity that requests information on how to file a claim for a refund of any amount, or for property that has been erroneously levied or collected by the board because of a request by the city, county, or special district.

(b)A city, county, or special district shall notify the board if a claim is filed as described in subdivision (a).

(c)In order to comply with subdivision (a), the board shall maintain the contact information of the city, county, or special district that requested a levy or collection.

(d)The city, county, or special district that requested the offset shall withdraw any request for offset that is the subject of a claim, described in subdivision (a), until the claim has been resolved.

(e)The city, county, or special district that requested the levy or collection shall refund any amount or property erroneously levied or collected.

(f)This section shall become operative on September 1, 2025.

SEC. 8.

Section 4.5 of this bill incorporates amendments to Section 19008 of the Revenue and Taxation Code proposed by both this bill and Assembly Bill 1765. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2024, (2) each bill amends Section 19008 of the Revenue and Taxation Code, and (3) this bill is enacted after Assembly Bill 1765, in which case Section 4 of this bill shall not become operative.