Bill Text: CA AB879 | 2021-2022 | Regular Session | Amended
Bill Title: Personal income tax: corporation tax: sales and use taxes: California Tax Amnesty and Revenue Recovery Act.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2022-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB879 Detail]
Download: California-2021-AB879-Amended.html
Amended
IN
Assembly
May 03, 2021 |
Introduced by Assembly Member Blanca Rubio |
February 17, 2021 |
LEGISLATIVE COUNSEL'S DIGEST
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
The Legislature finds and declares all of the following:SEC. 2.
Article 1.7 (commencing with Section 7067) is added to Chapter 8 of Part 1 of Division 2 of the Revenue and Taxation Code, to read:Article 1.7. California Tax Amnesty and Revenue Recovery Act
7067.
The department shall develop and administer a tax amnesty program for taxpayers subject to Part 1 (commencing with Section 6001), as provided in this article.7067.1.
The tax amnesty program shall be conducted for a two-month period beginning7067.2.
(a) For any taxpayer who meets the requirements of Section 7067.3:7067.3.
(a) This article shall apply to any taxpayer that, during the amnesty period specified in Section 7067.1, meets all of the following:7067.4.
(a) Except for taxpayers that have entered into an installment payment agreement pursuant to subdivision (b) of Section 7067.3, there shall be added to the tax for each period for which amnesty could have been requested:7067.5.
Any taxpayer that has an existing installment payment agreement under Section 6832 as of the start of the amnesty program, and that does not participate in the amnesty program, may not be subject to the penalty imposed under Section 7067.4.7067.6.
The department shall issue forms and instructions and take other actions needed to implement this article. The provisions contained in Section 19740.5, to the extent feasible and practical, shall also apply to the department.7067.7.
The Taxpayers’ Rights Advocate Office, in coordination with the department and the department’s external affairs division, shall adequately publicize the tax amnesty program so as to maximize public awareness of the participation in the program. The department 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.7067.8.
Subdivision (b) of Section 19740.6, to the extent feasible and practical, shall also apply to the department.7067.9.
(a) A penalty may not be imposed under this article upon a showing by the taxpayer that there was reasonable cause for, and the taxpayer acted in good faith with respect to, that portion.(b)(1)The determination of whether a taxpayer acted with reasonable cause and in good faith under this section is made on a case-by-case basis, taking into account all pertinent facts and circumstances. The most important factor is the extent of the taxpayer’s effort to assess the taxpayer’s proper tax liability.
(2)Circumstances that may indicate reasonable cause and good faith include an honest
misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances, including the experience, knowledge, and education of the taxpayer. An isolated computational or transcriptional error generally is not inconsistent with reasonable cause and good faith. Reliance on the advice of a professional tax advisor does not necessarily demonstrate reasonable cause and good faith. Reasonable cause and good faith is not necessarily indicated by reliance on facts that, unknown to the taxpayer, are incorrect. Reliance on professional tax advice, or other facts, however, constitutes reasonable cause and good faith if, under all the circumstances, the reliance was reasonable and the taxpayer acted in good faith.
(3)A taxpayer’s reliance on erroneous information reported on a return indicates reasonable cause and good faith,
provided the taxpayer did not know or have reason to know that the information was incorrect. A taxpayer knows, or has reason to know, that the information on a return is incorrect if the information is inconsistent with other information reported or otherwise furnished to the taxpayer, or with the taxpayer’s knowledge of the transaction.
(4)All facts and circumstances shall be taken into account in determining whether a taxpayer has reasonably relied in good faith on advice, including the opinion of a professional tax advisor, as to the treatment of the taxpayer, or any entity, plan, or arrangement, under state tax law. For example, the taxpayer’s education, sophistication, and business experience will be relevant in determining whether the taxpayer’s reliance on written tax advice was reasonable and made in good faith.
(5)Advice is any written communication, including, but not limited to, letters, electronic communications, such as emails and text messages, tax returns prepared by a professional tax advisor, or other written communications, setting forth the analysis or conclusion of a person, other than the taxpayer, provided to or for the benefit of the taxpayer and on which the taxpayer relies, directly or indirectly, with respect to the imposition of the Section 7067.4 amnesty penalty.
(c)
SEC. 3.
Chapter 9.2 (commencing with Section 19740) is added to Part 10.2 of Division 2 of the Revenue and Taxation Code, to read:CHAPTER 9.2. California Tax Amnesty and Revenue Recovery Act
19740.
The Franchise Tax Board shall administer a tax amnesty program for taxpayers subject to Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001), as provided in this chapter.19740.1.
The tax amnesty program shall be conducted during a two-month period beginning19740.2.
(a) For any taxpayer that meets each of the requirements of Section 19740.3, both of the following apply:19740.3.
(a) This chapter shall apply to any taxpayer who satisfies all of the following requirements:(d)
19740.4.
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.19740.5.
(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 amnesty application described in Section 19733.19740.6.
(a) The Taxpayers’ Rights19740.7.
Any taxpayer who has an existing installment payment agreement under Section 19008 as of the start of the amnesty program, and who does not participate in the amnesty program,19740.8.
(a) A penalty(b)(1)The determination of whether a taxpayer acted with reasonable cause and in good faith under this section is made on a case-by-case basis, taking into account all pertinent facts and circumstances. The most important factor is the extent of the taxpayer’s effort to assess the taxpayer’s proper tax liability.
(2)Circumstances that may indicate reasonable cause and good faith include an
honest misunderstanding of fact or law that is reasonable in light of all of the facts and circumstances, including the experience, knowledge, and education of the taxpayer. An isolated computational or transcriptional error generally is not inconsistent with reasonable cause and good faith. Reliance on an information return or on the advice of a professional tax advisor does not necessarily demonstrate reasonable cause and good faith. Reasonable cause and good faith is not necessarily indicated by reliance on facts that, unknown to the taxpayer, are incorrect. Reliance on an information return, professional advice, or other facts, however, constitutes reasonable cause and good faith if, under all the circumstances, that reliance was reasonable and the taxpayer acted in good faith. For example, reliance on erroneous information, such as an error relating to the cost or adjusted basis of
property, the date property was placed in service, or the amount of opening or closing inventory, inadvertently included in data compiled by the various divisions of a multidivisional corporation or in financial books and records prepared by those divisions generally indicates reasonable cause and good faith, provided the corporation employed internal controls and procedures, reasonable under the circumstances, that were designed to identify such factual errors.
(3)Reasonable cause and good faith ordinarily is not indicated by the mere fact that there is an appraisal of the value of property. Other factors to consider include the methodology and assumptions underlying the appraisal, the appraised value, the relationship between appraised value and purchase price, the circumstances under which the appraisal was obtained, and the appraiser’s relationship
to the taxpayer or to the activity in which the property is used.
(4)A taxpayer’s reliance on erroneous information reported on a Form W-2, Form 1099, or other information return indicates reasonable cause and good faith, provided the taxpayer did not know or have reason to know that the information was incorrect. A taxpayer knows, or has reason to know, that the information on an information return is incorrect if that information is inconsistent with other information reported or otherwise furnished to the taxpayer, or with the taxpayer’s knowledge of the transaction. This knowledge includes, for example, the taxpayer’s knowledge of the terms of the taxpayer’s employment relationship or of the rate of return on a payor’s obligation.
(c)(1)All facts and
circumstances shall be taken into account in determining whether a taxpayer has reasonably relied in good faith on advice, including the opinion of a professional tax advisor, as to the treatment of the taxpayer, or any entity, plan, or arrangement, under state or federal tax law. For example, the taxpayer’s education, sophistication, and business experience will be relevant in determining whether the taxpayer’s reliance on tax advice was reasonable and made in good faith. In no event will a taxpayer be considered to have reasonably relied in good faith on advice, including an opinion, unless the requirements of this paragraph are satisfied. The fact that these requirements are satisfied, however, will not necessarily establish that the taxpayer reasonably relied on the advice, including the opinion of a tax advisor, in good faith. For example, reliance may not be reasonable or in good faith if
the taxpayer knew, or reasonably should have known, that the advisor lacked knowledge in the relevant aspects of state or federal tax law.
(2)The advice must be based upon all pertinent facts and circumstances and the law as it relates to those facts and circumstances. For example, the advice must take into account the taxpayer’s purposes, and the relative weight of those purposes, for entering into a transaction and for structuring a transaction in a particular manner. In addition, the requirements of this paragraph are not satisfied if the taxpayer fails to disclose a fact that it knows, or reasonably should know, to be relevant to the proper tax treatment of an item.
(3)The advice must not be based on unreasonable factual or legal assumptions, including assumptions as to
future events, and must not unreasonably rely on the representations, statements, findings, or agreements of the taxpayer or any other person. For example, the advice must not be based upon a representation or assumption the taxpayer knows, or has reason to know, is unlikely to be true, such as an inaccurate representation or assumption as to the taxpayer’s purposes for entering into a transaction or for structuring a transaction in a particular manner.
(4)A taxpayer may not rely on an opinion or advice that a regulation is invalid to establish that the taxpayer acted with reasonable cause and good faith unless the taxpayer adequately disclosed the position that the regulation in question is invalid.
(5)Advice is any written communication, including, but not limited to,
letters, electronic communications, such as emails and text messages, tax returns prepared by a professional tax advisor, or other written communication, setting forth the analysis or conclusion of a person, other than the taxpayer, provided to or for the benefit of the taxpayer and on which the taxpayer relies, directly or indirectly, with respect to the imposition of the Section 19777.6 amnesty penalty.
(d)