Bill Text: CA SB421 | 2011-2012 | Regular Session | Amended

California Senate Bill 421 (Prior Session Legislation)

Bill Title: Sales and use taxes: underpayment: interest.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB421 Detail]

Download: California-2011-SB421-Amended.html

BILL NUMBER: SB 421	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 3, 2011
	AMENDED IN SENATE  MARCH 22, 2011

INTRODUCED BY   Senator Correa

                        FEBRUARY 16, 2011

   An act to amend Section 6591.5 of the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 421, as amended, Correa. Sales and use taxes: 
underpayment:  interest.
   Existing law provides that interest is paid by taxpayers and
feepayers with respect to underpayments of various taxes, surcharges,
and fees at the modified adjusted rate, as defined by reference to a
specified federal statute,  and that interest is paid to
taxpayers and feepayers with respect to overpayments of various
taxes, surcharges, and fees as determined in accordance with a
specified federal statute, which requires that the rate paid on
overpayments be based on the rate of 13-week treasury bills, as
specified   as modified, plus 3 percentage points 
.
   This bill would delete the requirement  that interest on
overpayments be based on the rate of 13-week treasury bills and would
instead require that interest on both underpayments and overpayments
be determined in accordance with the specified federal statute, as
modified   to add 3 percentage points  .
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 6591.5 of the  
Revenue and Taxation Code   is amended to read: 
   6591.5.  (a) (1) For interest required to be paid to the state
upon underpayments of tax to the state, "modified adjusted rate per
annum" means the adjusted annual rate established pursuant to
subdivision (c)  , plus three percentage points  .
   (2) For interest required to be paid by the state upon
overpayments of tax, "modified adjusted rate per annum" means the
adjusted annual rate established pursuant to subdivision (d).
   (b) "Modified adjusted rate per month, or fraction thereof" means
the modified adjusted rate per annum divided by 12.
   (c) The rate established for interest to be paid upon
underpayments of tax shall be determined in accordance with the
provisions of Section 6621 of the Internal Revenue Code which
establish the underpayment rate, except that the determination
specified in Section 6621(b) of the Internal Revenue Code shall be
modified to be determined semiannually as follows:
   (1) The rate for January shall apply for the following July 1 to
December 31, inclusive.
   (2) The rate for July shall apply for the following January 1 to
June 30, inclusive.
   (d) (1) Except as provided in paragraph (2), the rate established
for interest to be paid by the state upon overpayments of tax shall
be equal to the bond equivalent rate of 13-week treasury bills
auctioned, rounded to the nearest full percent (or if a multiple of
one-half of 1 percent, the rate shall be increased to the next
highest full percent), as follows:
   (A) The bond equivalent rate of 13-week treasury bills established
at the first auction held during the month of January shall apply
for the following July 1 to December 31, inclusive.
   (B) The bond equivalent rate of 13-week treasury bills established
at the first auction held during the month of July shall apply for
the following January 1 to June 30, inclusive.
   (2) For the period July 1, 1991, through June 30, 1992, the rate
to be paid by the state upon overpayments of tax shall be equal to
the bond equivalent rate of 13-week treasury bills established at the
auction held on July 1, 1991, rounded to the nearest full percent
(or if a multiple of one-half of 1 percent, the rate shall be
increased to the next highest full percent).
   (e) For purposes of this part, and any other provision of law
referencing this method of computation, in computing the amount of
any interest required to be paid by the state or by the taxpayer, or
any other amount determined by reference to that amount of interest,
that interest and that amount shall be computed as simple interest,
not compound interest. 
  SECTION 1.    Section 6591.5 of the Revenue and
Taxation Code is amended to read:
   6591.5.  (a) "Modified adjusted rate per annum" means the adjusted
annual rate established pursuant to subdivision (c), plus three
percentage points.
   (b) "Modified adjusted rate per month, or fraction thereof" means
the modified adjusted rate per annum divided by 12.
   (c) The rate established shall be determined in accordance with
the provisions of Section 6621 of the Internal Revenue Code, except
that:
   (1) The overpayment rate specified in Section 6621(a)(1) of the
Internal Revenue Code shall be modified to be equal to the
underpayment rate determined under Section 6621(a)(2) of the Internal
Revenue Code.
   (2) The determination specified in Section 6621(b) of the Internal
Revenue Code shall be modified to be determined semiannually as
follows:
   (A) The rate for January shall apply for the following July 1 to
December 31, inclusive.
   (B) The rate for July shall apply for the following January 1 to
June 30, inclusive.
   (d) For purposes of this part, and any other provision of law
referencing this method of computation, in computing the amount of
any interest required to be paid by the state or by the taxpayer, or
any other amount determined by reference to that amount of interest,
that interest and that amount shall be computed as simple interest,
not compound interest.