Tax administration: Franchise Tax Board: State Board of Equalization.

(1) The Sales and Use Tax Law generally provides, for a transaction not subject to sales tax, that every person storing, using, or otherwise consuming in this state tangible personal property purchased from a retailer for storage, use, or other consumption in this state is liable for use tax, and must pay the use tax to the State Board of Equalization, unless that person has paid the use tax to a retailer registered to collect the tax. Existing law authorizes an eligible person to make an irrevocable election to report qualified use tax, as defined, on that person's income tax return. This bill would, for taxable years beginning on or after January 1, 2011, authorize an eligible person, for one or more single nonbusiness purchases of individual items of tangible personal property each with a sales price of less than $1,000, to either report the estimated amount of use tax due based on the person's California adjusted gross income as reflected in the use tax table shown in the accompanying instructions of the acceptable tax return or the actual amount of use tax that was not paid to a registered retailer. This bill would require the Franchise Tax Board to revise the accompanying instructions for the income tax forms to include the use tax table. (2) The Personal Income Tax Law, in modified informality with federal income tax laws, authorizes a refundable credit against the taxes imposed by that law for household and dependent care expenses necessary for gainful employment, as provided. This bill would make that credit nonrefundable. (3) Existing law imposes various duties on the Franchise Tax Board with respect to the imposition of penalties in connection with tax avoidance, and partially conforms to federal income tax laws with respect to the penalties imposed. This bill, in modified conformity with federal income tax laws, would revise the penalties imposed on underpayments, as specified. The bill would also require the Franchise Tax Board to develop and administer a voluntary compliance initiative, as specified, to be conducted during the period from August 1, 2011, to October 31, 2011, inclusive, and to apply to tax liabilities attributable to the use of abusive tax avoidance transactions and unreported income from the use of offshore financial arrangements, as specified, for taxable years beginning before January 1, 2011. The bill would require the Franchise Tax Board to issue forms and instructions, and to publicize the initiative to maximize public awareness and participation. The bill would authorize any taxpayer meeting the requirements to elect to participate in the voluntary compliance initiative, subject to specified requirements and limitations. For a taxpayer who elects to comply, this bill would waive or abate all penalties, including criminal penalties, as a result of the unreported tax liabilities, except as specified. The bill would extend the timeframe in which a notice of a proposed deficiency assessment for an abusive tax avoidance transaction may be mailed to a taxpayer from within 8 to 12 years after the return was filed, for notices mailed on or after August 1, 2011. (4) Existing laws require the Franchise Tax Board to administer specified taxes and collect those taxes from delinquent tax debtors. This bill would require the board, in coordination with financial institutions doing business in this state, to operate a Financial Institution Record Match System utilizing automated data exchanges to the maximum extent feasible in order to allow the board to match its list of delinquent tax debtors with the lists provided by the financial institutions. The bill would authorize the board to disclose specified taxpayer information for purposes of data matching, to institute civil proceedings to enforce specified provisions of the bill, and would impose specified penalties on financial institutions for failure to provide records in connection with the match system, as provided. This bill would provide that the specified use of certain data is a misdemeanor. 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. (5) This bill would appropriate $1,000 from the General Fund to the State Board of Equalization for administrative operations. (6) The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. Governor Schwarzenegger issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on December 6, 2010. Governor Brown issued a proclamation on January 20, 2011, declaring and reaffirming that a fiscal emergency exists and stating that his proclamation supersedes the earlier proclamation for purpose of that constitutional provision. This bill would state that it addresses the fiscal emergency declared and reaffirmed by the Governor by proclamation issued on January 20, 2011, pursuant to the California Constitution. (7) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.