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HomeMy Public PortalAbout13-033RESOLUTION NO. 13-033 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA, SUPPORTING SENATE BILL 211 TO REPEAL THE SUNSET DATE OF THE FRANCHISE TAX BOARD'S CITY BUSINESS TAX PROGRAM WHEREAS, Assembly Bill 63 (AB 63) and subsequently Senate Bill 1146 (SB 1146) authorized the City Business Tax Program which has been a leading source of revenue to many cities and the State of California since 2002; and WHEREAS, AB 63/SB 1146 contained a provision which will sunset the Franchise Tax Board (FTB) City Business Tax Program on December 31, 2013; and WHEREAS, AB 63/SB 1146 authorized the California State Franchise Tax Board to disclose certain income tax records related to business activities of residents, corporations, and other entities to cities; and WHEREAS, the City of Carson utilizes the FTB data to check existing business license records and identify unregistered businesses with the City; and WHEREAS, the City of Carson generates additional revenues from the FTB City Business Tax Program. NOW, THEREFORE, be it resolved by the City Council of the City of Carson, California, that: Section 1. The above recitals are true and correct and incorporated herein by this reference. Section 2. SB 211 will provide stability and reliability to the tax data -sharing program in order to help the City locate businesses that have not paid business license taxes and related fees. Section 3. Based on the foregoing recitations and all evidence presented to and considered by the City Council, it does hereby declare its support for SB 211 and urges the California State Legislature and Governor to support SB 211. [MORE] PASSED, APPROVED and ADOPTED this 16'h day of April, 2013. Mayor Jim Dear ATTEST: City Clerk Donesia L. Gause, CMC APPROVED AS TO FORM: (ni y �kttornK 74' STATE OF CALIFORNIA COUNTY OF LOS ANGELES ) ss. CITY OF CARSON RESOLUTION NO. 13-033 Page 2 of 2 1, Donesia L. Gause, City Clerk of the City of Carson, California, do hereby certify that the whole number of members of the City Council is five; that the foregoing resolution, being Resolution No. 13-033 was duly and regularly adopted by said Council at a regular meeting duly and regularly held on the 16 th day of April, 2013, and that the same was passed and adopted by the following vote: AYES: COUNCIL MEMBERS: Mayor Dear, Gipson, Davis -Holmes and Robles NOES: COUNCIL MEMBERS: None ABSTAIN: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Santarina City Clerk Donesia L. Gause, CMC City of Carson Report to Mayor and City Council April 16, 2013 New Business Consent SUB ECT: CONSIDER RESOLUTION NO. 13-033 SUPPORTING SENATE BILL 211 TO REPEAL THE SUNSET DATE OF THE FRANCHISE TAX BOARD'S CITY BUSINESS TAX PROGRAM Anitted b acq el n Aco Approved by David C. Biggs y y City Manager S ed by acquelyn Aco Director of Administrative S ices SUMMARY The City Council is asked to approve Resolution No. 13-033 (Exhibit No. 1) in support of Senate Bill (SB) 211 (Price) (Exhibit No. 2) which would permanently repeal the sunset date of the reciprocal sharing of tax information between the Franchise Tax Board (FTB) and a city's tax officials. RECOMMENDATION 1. WAIVE further reading and ADOPT Resolution No. 13-033, "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA, SUPPORTING SB 211 TO REPEAL THE SUNSET DATE OF THE FRANCHISE TAX BOARD'S CITY BUSINESS TAX PROGRAM." 2. SEND executed copies of Resolution No. 13-033 to State Senators Ted Lieu, Curren Price, Roderick Wright, and Ryan Eisberg; Assemblyman Isadore Hall, III; Congresswoman Janice Hahn, and to members of the Senate Governance and Finance Committee. ALTERNATIVES TAKE the following actions: 1. MODIFY and APPROVE Resolution No. 13-033 as the City Council may require. 2. TAKE another action that the City Council deems appropriate. IV. BACKGROUND Previously AB 63 and SB 1146 authorized the FTB to enter into agreements with local jurisdictions to share income tax information. FTB's program, known as the City Business Tax Program, is scheduled to sunset on December 31, 2013. There is no charge to participate in the program if information is transferred between the City and FTB. SB 211 repeals permanently the sunset of the City Business Tax Program that authorizes the FTB to exchange tax information with city tax officials in order to city of Carson Report to Mayor and City Council April 16, 2013 identify businesses not satisfying both State and local business license tax requirements. FTB data on local business-related income tax filers assists the City in identifying thousands of unlicensed businesses and generates business license revenue. SB 211 is fully supported by the California Municipal Revenue & Taxation Association (CMRTA), a statewide association of municipal revenue and taxation officials. it is scheduled to be heard before the Senate Governance and Finance Committee on April 24, 2013 and staff is requesting the City Council's support for passage of this bill. If approved, copies of the adopted Resolution will be sent to all local state representatives and other appropriate state representatives and organizations. V. FISCAL IMPACT Approval of SB 211 will enable the City to receive its revenue stream of approximately $1.7 million annually in business license and related fees from this program. V1. EXHIBITS 1. Resolution No. 13-033. (pgs. 3 - 4) 2. Senate Bill 211 Text. (pgs. 5 - 9) Prepared by: Boris Sztorch, Revenue Manager TO:RevO9-04-2012 Reviewed by: city Treasurer EAdCity Clerk i istr j ministrative Services Public Works Community Development Community Services Date Action taken by City Council UATM RESOLUTION NO. 13-033 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARSON, CALIFORNIA, SUPPORTING SENATE BILL 211 TO REPEAL THE SUNSET DATE OF THE FRANCHISE TAX BOARD'S CITY BUSINESS TAX PROGRAM WHEREAS, Assembly Bill 63 (AB 63) and subsequently Senate Bill 1146 (SB 1146) authorized the City Business Tax Program which has been a leading source of revenue to many cities and the State of California since 2002; and WHEREAS, AB 63/SB 1146 contained a provision which will sunset the Franchise Tax Board (FTB) City Business Tax Program on December 31, 2013 - and WHEREAS, AB 63/SB 1146 authorized the California State Franchise Tax Board to disclose certain income tax records related to business activities of residents, corporations, and other entities to cities; and WHEREAS, the City of Carson utilizes the FTB data to check existing business license records and identify unregistered businesses with the City; and WHEREAS, the City of Carson generates additional revenues from the FTB City Business Tax Program. NOW, THEREFORE, be it resolved by the City Council of the City of Carson, California, that: Section 1. The above recitals are true and correct and incorporated herein by this reference. Section 2. SB 211 will provide stability and reliability to the tax data -sharing program in order to help the City locate businesses that have not paid business license taxes and related fees. Section I Based on the foregoing recitations and all evidence presented to and considered by the City Council, it does hereby declare its support for SB 211 and urges the California State Legislature and Governor to support SB 211. [MOREI EXHIBIT NO. o i /3 PASSED, APPROVED and ADOPTED this day of April, 2013 Mayor Jim Dear ATTEST: City Clerk Donesia L. Gause, CMC APPROVED AS TO FORM: City Attorney RESOLUTION NO. 13-033 0 SB 211 Senate Bill — INTRODUCED SENATE BILL introduced by Senator Price February 11, 2013 No. 211 An act to amend Sections 19551.1 and 19551.5 of, and to amend and repeal Section 19551 of, the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST SB 211, as introduced, Price. Tax administration: disclosure of information: Franchise Tax Board and cities. ecember 31, 2013, a city that has entered into a Existing law authorizes, until D reciprocal agreement, as defined, with the Franchise Tax Board, to exchange tax information, as provided. Existing law limits the use of the tax data received from the Franchise Tax Board for business tax administration purposes and provides that any other use or disclosure of the information is punishable as a misdemeanor. This bill would delete the repeal date of the provisions relating to the reciprocal agreements between the Franchise Tax Board and cities, thus indefinitely extending the duration for these provisions. Because this bill would continue the operation of the reciprocal agreement tax information agreement, and the unauthorized use of such information would be a crime, it 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. ired by this act for a specified This bill would provide that no reimbursement is requ reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State -mandated local program: yes. The people of the State of California do enact as follows: P2 1 SECTION 1. Section 19551 of the Revenue and Taxation Code, 2 as amended by Section 1 of Chapter 345 of the Statutes of 2008, 3 is amended to read: 4 19551. (a) The Franchise Tax Board may permit the 5 Commissioner of Internal Revenue of the United States, other tax 6 officials of this state, the Multistate Tax commission, the proper 7 officer of any state imposing an income tax or a tax measured by 8 income or the authorized representative of that officer, or the tax 9 officials of Mexico, if a reciprocal agreement exists, to inspect the 10 income tax returns of any taxpayer, or may furnish to the 11 commission, or the officer or the authorized representative thereof 12 an abstract of the return or supply thereto information concerning 13 any item of income contained in any return or disclosed by the 14 report of any investigation of the income or return. The information 15 shall be furnished to the Multistate Tax Commission, the federal 16 or state officer or his or her representative, or the officials of 17 Mexico for tax purposes only. Except when furnished pursuant to 18 a written agreement, information furnished pursuant to this sectior 19 shall be furnished only if the request is in the form of an affidavit EXHIBIT NO. 0 2 http://wv,rw.leginfo.ca.gov/pub/13-14/bill/sen/sb-0201-0250/sb-21 1bill2013021 1—introduced.htm[3/26/2013 10:15:59 AM] SB211 Senate Bill — tNTRODUCED 20 under penalty of perjury stating that the purpose for the request 21 relates to an investigation of the tax specified in the request and 22 that the information will be used in the ordinary performance of 23 the applicant's official duties. otherwise 24 (b) Notwithstanding subdivision (a) and except as 25 provided in Section 19551.1, tax officials of political subdivisions 26 of this state shall request information from the Franchise Tax Board 27 by affidavit only. At the time a tax official makes the request, he 28 or she shall provide the affected person with a copy of the affidavit 29 and, upon request, make the information obtained available to that 30 person. 31 (c) For purposes of this section, "reciprocal agreement" means 32 a formal agreement to exchange information between national 33 taxing officials of Mexico and taxing authorities of the State Board 34 of Equalization, the Franchise Tax Board, and the Employment 35 Development Department. Furthermore, the reciprocal agreement 36 shall be limited to the exchange of information that is essential for 37 tax administration purposes only. Taxing authorities of the State 38 of California shall be granted tax information only on California P3 1 residents. Taxing authorities of Mexico shall be granted tax 2 information only on Mexican nationals. 3 (d) This seetion shall rermain in effeet thfeut-h��� 4 Deee nber 31, 2GI3, and sh ill be rle����, 2014. 5 SEC. 2. Section 19551 of the Revenue and Taxation Code, as 6 added by Section 2 of Chapter 345 of the Statutes of 2008, is 7 repealed. 6 19551. "a' The Franeh Tax Board iiinay pefff4t-� k ) 9 eern iissioner of internal Revefttte-af the-IJI::liI::J;;;,Jil offieer: of a iy state ifn 2)asing an ineeme ta x a - a ta ii� rn e a stlfe4-b�- +-2- or the atitheriped repre -e��� +3 of Mexiee, if a reeipreeal agre fnent exists, -t -o +4 ineeme tax i-eturns of I- rnish to the +-5 c-angfflissiam, or t te-eff+eel or ih� authorized repre entative ther i ecif +6 an abstraet of the return or stipply thereto infer iation eane - I II—J +-7 any item of rt4tiflil-01, di, 1, !)sed 5y the repart of an ehirm. The infefntatieft- Ef)mmts-s�, the fedi 1-9 shall De fitirnished to f I &at+ve-,-or the offleia 2-a or state off' when ftjrnis4te4-ptlf-���� furnished Pdr9dant tO this-3eetierff- -a writteit-agfeeffteftt-,-tftf,,,I"�lI -273 shall be furnishei only if the requ �st is in the ferfn of an affidavit -24 tinder penalty of I - , . - itEiii::: the request -275 relates to an investigation of the tax and 276 that the information wH4-be used in the or 4ftaf-���� -1 VP I z-7 the applieant's offleial duties. -2�B (h) liletwithsta iding subdivision (a), it ix off z ag sitibdivi5ions of tai st Ae sha+Pfecltte7FyiHniferrmation4rom -3-e Franehise Tax B(5,at:d by a fifida iv+� � ::!,,nll tiline a to-)t-offieial -3+ n9akes the -request, he or she shall pmvade the -affeeted-pefsoft-wMi`i I �! :!,F:!!;i;�—,n=i the inforntatioit- -3-2- a eapy of the affidatil: :ll:iiilJ; 1:1 Pf:1 1:1 -3-3 obtained available-t&-t��- -34 (e) For purposes of -3-5 a formal agreement to exeha national- % taxing offleialg )f Mexieo and taxing authorities of the State -Boa -rd- -3-7 of Eqtializati0iiii the Franehil5e Tax Baard—,and-We��� -3-B Development Department. Furthermore, the reeipraea4-agfeeffteiiii httpl/www.leginfo.ca.gov/pub/'13-14/bill/ser�sb-0201-0250/sb-21 1bill2013021 1—introduced.htm[3/26/2013 10:15:59 AM] SB211 Senate Bill —INTRODUCED -3,9, shall fte+f�to of information that is of the i:19:19HI )1!::!! 1 1 2 1:) lav&"t�7 -3 infor �! Itis f) :11 11;;11 :11 J 51_r�, 4 �dH 5 SEC. 3. Section 19551.1 of the Revenue and Taxation Code 6 is amended to read: 7 19551.1. (a) (1) The Franchise Tax . Board may permit the tax 8 officials of any city to enter into a reciprocal agreement with the 9 Franchise Tax Board to obtain tax information from the Franchise lo Tax Board, as specified in subdivision (b). ment" means 11 (2) For purposes of this section, "reciprocal agree 12 a formal agreement to exchange information for tax administration 13 purposes between tax officials of a city and the Franchise Tax 14 Board. 15 (b) The information furnished to tax officials of a city under 16 this section shall be limited as follows: 17 (1) The tax officials of a city are authorized to receive 18 information only with respect to taxpayers with an address as 19 reflected on the Franchise Tax Board's records within the 20 jurisdictional boundaries of the city who report income from a 21 trade or business to the Franchise Tax Board. 22 (2) The tax information that may be provided by the Franchise 23 Tax Board to a city is limited to a taxpayer's name, address, social 24 security or taxpayer identification number, and business activity 25 code. vided to the taxing authority of a city 26 (3) Tax information pro 27 may not be furnished to, or used by, any person other than an 28 employee or agent of that taxing authority. by 29 (4) The information provided to the tax officials of the city 30 the Franchise Tax Board under this section is subject to Section 31 19542, and may not be used for any purpose other than the city's 32 tax enforcement, or as otherwise authorized by state or federal 33 law. plies to this section. 34 (5) Section 19542.1 ap ot provide any information 35 (c) The Franchise Tax Board may n 36 pursuant to this section until all of the following have occurred: 37 (1) An agreement has been executed between a city and the 38 Franchise Tax Board, that provides that an amount equal to all 39 first year costs necessary to furnish the city information pursuant 40 to this section shall be received by the Franchise Tax Board before P5 1 the Franchise Tax Board incurs any costs associated with the. 2 activity permitted by this section. For purposes of this section, first 3 year costs include costs associated with, but not limited to, the 4 purchasing of equipment, the development of processes, and labor. 5 (2) An agreement has been executed between a city and the 6 Franchise Tax Board, that provides that the annual costs incurred 7 by the Franchise Tax Board, as a result of the activity permitted 8 by this section, shall be reimbursed by the city to the Franchise 9 Tax Board. scribed in paragraph (1), the 10 (3) Pursuant to the agreement de 11 Franchise Tax Board has received an amount equal to the first year 12 costs. he type of tax information 13 (d) Any information, other than t 14 specified in subdivision (b), may be requested by the tax officials 15 of a city from the Franchise Tax Board by affidavit. At the time a http://viv.,w,)eginfo.ca.gov/pub/13-14/bill/seri/sb-0201-0250/sb-21 1bill2013021 1 —introduced. htrn [3/26/2013 10:15:59 AM] 1-77 SB211 Senate Bill —INTRODUCED 16 tax official makes the request, he or she shall provide the person 17 whose information is the subject of the request, with a copy of the 18 affidavit and, upon request, make the information obtained 19 available to that person. t invalidate any other law. This section 20 (e) This section does no from obtaining information 21 does not preclude any city or county 22 about individual taxpayers, including those taxpayers not subject 23 to this section, by any other means permitted by state or federal 24 law. on shall be construed to affect any 25 (f) Nothing in this secti 26 obligations, rights, or remedies regarding personal information 27 provided under state or federal law. 28 (g) Notwithstanding subdivision (c) , the Franchise Tax Board 29 shall waive a city's reimbursement of the Franchise Tax Board's 30 cost if a city enters into a reciprocal agreement as defined in 31 paragraph (2) of subdivision (a). The reciprocal agreement shall 32 specify that each party shall bear its own costs to furnish the data 33 involved in the exchange authorized by this section and Section 34 19551.5, and a city shall be precluded from obtaining 35 reimbursement as specified under Section 5 of the act adding this 36 subdivision. and ineludin 3-7 �h) This seetion shall remain in effeet+�rr� 9__ -3-B Beeember-B!, 23!3, and shall be - :1,14:11J 11:1 39 SEC. 4. Section 19551.5 of the Revenue and Taxation Code 40 is amended to read: P6 1 19551.5. (a) Notwithstanding any other law, each city that 2 assesses a city business tax or requires a city business license shall, 3 upon the request of the Franchise Tax Board, annually submit to 4 the Franchise Tax Board the information that is collected in the 5 course of administration of the city's business tax program, as 6 described in subdivision (b). . f the 7 (b) Information, collected in the course of administration o 8 city's business tax program, shall be limited to the following: 9 (1) Name of the business, if the business is a corporation, 10 partnership, or limited liability company, or the owner's name if 11 the business is a sole proprietorship. 12 (2) Business mailing address. 13 (3) Federal employer identification number, if applicable, or 14 the business owner's social security number. 15 (4) Standard Industrial Classification (SIC) Code or North 16 American Industry Classification System (NAICS) Code. 17 (5) Business start date. 18 (6) Business cease date. 19 (7) City number. 20 (8) Ownership type. is section shall be filed on 21 (c) The reports required under th 22 magnetic media such as tapes or compact discs, through a secure 23 electronic process, or in other machine- readable form, according 24 to standards prescribed by regulations promulgated by the 25 Franchise Tax Board. 26 (d) Cities that receive a request from the Franchise Tax Board 27 shall begin providing to the Franchise Tax Board the information 28 required by this section as soon as economically feasible, but no 29 later than December 31, 2009. The information shall be furnished 30 annually at a time and in the form that the Franchise Tax Board 31 may prescribe by regulation. ax Board under 32 (e) The city data provided to the Franchise T httpi/iwww.leginfo.ca.gov/pub/13-14/bilUsen/sb-0201-0250/sb—�l 1bill2013021 I —introduced. htmf 3/26/2013 10:15:59 AM] SB 211 Senate Bill — [NTRODUCED this section is subject to Section 19542, and may not be used for any purpose other than state tax enforcement or as otherwise authorized by law. reciprocal agreement with the Franchise (f) if a city enters into a Tax Board pursuant to subdivision (a) of Section 19551.1, the city shall also waive reimbursement for costs incurred to provide information required under this section and shall be precluded from obtaining reimbursement as specified under Section 5 of Chapter 345 of the Statutes of 2008. The reciprocal agreement shall specify that each party shall bear its own costs to furnish the data involved in the exchange authorized by Section 19551.1 and this section, and the Franchise Tax Board shall be precluded from obtaining reimbursement as specified under subdivision (c) of Section 19551-1. quired to provide information to the (g) A city shall not be re Franchise Tax Board pursuant to this section if the Franchise Tax Board fails to provide tax information to the city pursuant to a reciprocal agreement entered into pursuant to subdivision (a) of Section 19551 . 1 for reasons other than concerns related to confidentiality of tax information provided to the city. i n--effeII::::J:: Ell J::I! 11! ta*-be-fepe; SEC. 5. 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. 33 34 35 36 37 38 39 40 P7 1 2 3 4 5 6 7 8 9 10 11 12 4-3 +4 15 16 17 18 19 20 21 22 23 0 99 http:/Jwww.leginfo.ca-gov/pub/13-14/bill/sen/sb-0201-0250/sb-21 1bill2013021 I_introduced.htm[3/26/2013 10:15�59 AM]