California Assembly Bill AB2605 Amended / Bill

 BILL NUMBER: AB 2605AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 27, 2010 INTRODUCED BY Assembly Member De La Torre FEBRUARY 19, 2010 An act to amend Section 19525 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 2605, as amended, De La Torre. Income and corporation taxes: fraud reporting: reward program. Existing tax laws impose various taxes and fees, and authorize the Franchise Tax Board to administer the assessment, audit, and collection of various taxes and fees. Existing law authorizes the Franchise Tax Board to establish a reward program for information resulting in the identification of underreported or unreported income subject to taxes. This bill would instead require the Franchise Tax Board to establish a reward program under specified circumstances where, if the Franchise Tax Board proceeds with an administrative or judicial action based on information brought to the board's attention by  a person, the person   an individual, the individual  would receive a percentage of any collected proceeds, as defined, of the administrative action, judicial action, or settlement in response to that action.  This bill would apply only to information that is initially received by the Franchise Tax Board on or after January 1, 2011.  This bill would require the information provided to the board to be submitted under the penalty of perjury. This bill, by expanding the definition of an existing crime, 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. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 19525 of the Revenue and Taxation Code is amended to read: 19525. (a) The Franchise Tax Board, under regulations prescribed by the Franchise Tax Board, shall establish a reward program for information resulting in the identification of underreported or unreported income subject to taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). (b) (1) If the Franchise Tax Board proceeds with an administrative or judicial action based on information brought to the Franchise Tax Board's attention by  a person, the person   an   individual, the individual  shall, subject to paragraph (2), receive as a reward  at least 15   25  percent  but not more than 30 percent  of the collected proceeds of the administrative or judicial action, or related action, or from any settlement in response to that action  , not to exceed two hundred fifty thousand dollars ($250,000)  .  The determination of the amount of the reward by the Franchise Tax Board shall depend upon the extent to which the person substantially contributed to the administrative or judicial action.  (2) (A) In the event the administrative or judicial action is one which the Franchise Tax Board determines to be based principally on disclosures of specified allegations arising from an administrative or judicial hearing, from a governmental report, hearing, audit, or investigation, or from the news media, the Franchise Tax Board may award  a sum that it deems appropriate that does not exceed  10 percent of the collected proceeds resulting from the administrative or judicial action, or related action, or from any settlement in response to that action  , not to exceed one hundred thousand dollars ($100,000)  . In determining the reward amount, the Franchise Tax Board shall take into account the significance of the  person's   individual's  information and the role of the  person   individual  , and any legal representative of the  person   individual  , in contributing to the administrative hearing, judicial hearing, or settlement. (B) The reward limitation described in this paragraph shall not apply if the information resulting in the administrative or judicial action was originally provided by the  person   individual  . (c) The reward program shall apply to administrative or judicial actions against any taxpayer whose tax liability arose under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), but in the case of a person whose income is subject to taxes under Part 10 (commencing with Section 17001), only if the person's gross income  as adjusted  exceeds two hundred  fifty  thousand dollars  ($200,000)   ($250,000)  for any taxable year subject to the administrative or judicial action and the tax, penalties, interest, additions to tax, and additional amounts in dispute  in the administrative or judicial action  exceed two million dollars ($2,000,000).  Whether the amount in dispute exceeds two million dollars ($2,000,000) shall be determined by the Franchise Tax Board after the administrative or judicial action has been finalized by the Franchise Tax Board.  (d) For purposes of this section, "collected proceeds" includes, but is not limited to, penalties,  interests   interest  , additions to tax, and any additional amounts.  (e) A determination regarding the amount or denial of a reward may, within 30 days of the determination, be appealed to the State Board of Equalization.   (f)   (e)  A contract with the Franchise Tax Board shall not be necessary for any  person  individual  to receive a reward under this section.  (g) A person   (f)     An individual  who may receive a reward under this section may be represented by counsel.  (h) Any person employed   (g)     Any individual employed or formerly employed  by or under contract with any state or federal tax collection agency shall not be eligible for a reward provided for pursuant to this section.  (i)   (h)  No reward shall be made under this section based on information submitted to the Franchise Tax Board unless the information is submitted under penalty of perjury.  (i) The Franchise Tax Board shall pay the reward amount 60 days after the last of the following has occurred:   (1) The collected proceeds resulting from the administrative or judicial action, or related action, or from any settlement in response to that action are deposited into the General Fund.   (2) All legal remedies have been exhausted.   (3) The statute of limitations for filing a claim for refund for, or otherwise for contesting, any tax or penalty has expired.   (j) The Franchise Tax Board shall have full discretion in determining whether the information provided by and individual warrants further investigation.   (k) The amendments made to this section by the act adding this subdivision shall apply to information resulting in the identification of underreported or unreported income subject to taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) that is initially received by the Franchise Tax Board on and after January 1, 2011. Any information resulting in the identification of underreported or unreported income subject to taxes imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) that was received by the Franchise Tax Board before January 1, 2011, shall not be eligible for the reward program.  SEC. 2. 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.