BILL NUMBER: AB 2175INTRODUCED BILL TEXT INTRODUCED BY Assembly Members Harkey and Ma FEBRUARY 23, 2012 An act to amend Sections 6757, 7872, 8996, 11496, 30322, 32363, 38532, 40158, 41124.1, 43413, 45451, 46421, 50123, 55141, and 60445 of the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST AB 2175, as introduced, Harkey. Taxation: state tax liens. Existing law requires the payment of taxes, fees, and surcharges that are administered by the State Board of Equalization under the provisions of the Sales and Use Tax Law, the Motor Vehicle Fuel Tax Law, the Use Fuel Tax Law, the Private Railroad Car Tax Law, the Cigarette and Tobacco Products Tax Law, the Alcoholic Beverage Tax Law, the Timber Yield Tax Law, the Energy Resources Surcharge Law, the Emergency Telephone Users Surcharge Act, the Hazardous Substances Tax Law, the Integrated Waste Management Fee Law, the Oil Spill Response, Prevention, and Administration Fees Law, the Underground Storage Tank Maintenance Fee Law, the Fee Collection Procedures Law, and the Diesel Fuel Tax Law. Existing law also creates a state tax lien that attaches to the property of any person who fails to pay any amount imposed under these laws when that amount becomes due and payable, but remains unpaid. Existing law requires that this state tax lien continue in effect for 10 years unless sooner released or discharged, or unless a notice of state tax lien is filed, as provided. This bill would authorize the State Board of Equalization or the Controller, as to liens filed under the Motor Vehicle Fuel Tax Law, to withdraw notice of a state tax lien if the liability that gave rise to the state tax lien, including penalties, interest, and fees, is paid in full. This bill would further require that any withdrawn state tax lien be applied as if notice of the state tax lien had not been filed, and require, as specified, written notice of the withdrawal of the state tax lien. 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 6757 of the Revenue and Taxation Code is amended to read: 6757. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. The lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent; (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board; (3) For amounts determined under Section 6536 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued; (4) For all other amounts, the date the assessment is final. (c) The lien provided by this section shall not arise during any period that Section 362 of the United States Bankruptcy Code applies to the person against whom the lien would otherwise apply. (d) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 2. Section 7872 of the Revenue and Taxation Code is amended to read: 7872. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent; (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board; (3) For amounts determined under Section 7698 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued; (4) For all other amounts, the date the assessment is final. (c) (1) The Controller may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the Controller shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 3. Section 8996 of the Revenue and Taxation Code is amended to read: 8996. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent; (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board; (3) For amounts determined under Section 8826 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued; (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 4. Section 11496 of the Revenue and Taxation Code is amended to read: 11496. (a) The board may at any time release all or any portion of the property subject to any lien provided for in this part from the lien or subordinate the lien to other liens and encumbrances if it determines that the amount, interest, and penalties are sufficiently secured by a lien on other property or that the release or subordination of the lien will not jeopardize the collection of the amount, interest, and penalties. (b) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 5. Section 30322 of the Revenue and Taxation Code is amended to read: 30322. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent; (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board; (3) For amounts determined under Section 30241 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued; (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 6. Section 32363 of the Revenue and Taxation Code is amended to read: 32363. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent; (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board; (3) For amounts determined under Section 32311 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued; (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 7. Section 38532 of the Revenue and Taxation Code is amended to read: 38532. (a) If any amount required to be paid to the state under this part is not paid at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For amounts received under Section 38431 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued. (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 8. Section 40158 of the Revenue and Taxation Code is amended to read: 40158. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 9. Section 41124.1 of the Revenue and Taxation Code is amended to read: 41124.1. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 10. Section 43413 of the Revenue and Taxation Code is amended to read: 43413. (a) If any person fails to pay any amount imposed pursuant to this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For amounts determined under Section 43350 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued. (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 11. Section 45451 of the Revenue and Taxation Code is amended to read: 45451. (a) If any person fails to pay any amount imposed pursuant to this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. A lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are due and payable on the following dates: (1) For amounts disclosed on a report received by the board before the date the return is delinquent, the date the amount would have been due and payable. (2) For amounts disclosed on a report filed on or after the date the return is delinquent, the date the return is received by the board or the year following the fee due date pursuant to Section 45151, whichever is later. (3) For amounts determined under Section 45351, pertaining to jeopardy assessments, the date the notice of the board's finding is mailed or issued. (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 12. Section 46421 of the Revenue and Taxation Code is amended to read: 46421. (a) If any person fails to pay any amount imposed pursuant to this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable lien. The lien shall be subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the amount would have been due and payable. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For amounts determined under Section 46301 pertaining to jeopardy assessments, the date the notice of the board's finding is mailed or issued. (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 13. Section 50123 of the Revenue and Taxation Code is amended to read: 50123. (a) If any person fails to pay any amount imposed pursuant to this part at the time that it becomes due and payable, the amount, including interest and penalties, together with any costs in addition to the amount, are a perfected and enforceable state tax lien which is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 14. Section 55141 of the Revenue and Taxation Code is amended to read: 55141. (a) If any person fails to pay any amount imposed pursuant to this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. Such a lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For amounts determined under Section 55101, the date the notice of the board's finding is mailed or issued. (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice. SEC. 15. Section 60445 of the Revenue and Taxation Code is amended to read: 60445. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. That lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code. (b) For the purpose of this section, amounts are "due and payable" on the following dates: (1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent. (2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board. (3) For amounts determined under Section 60330 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued. (4) For all other amounts, the date the assessment is final. (c) (1) The board may withdraw notice of a state tax lien, and the withdrawal shall be applied as if notice of the state tax lien had not been filed, if the liability represented by the state tax lien, including any interest, penalty, and fee, is paid in full. A withdrawal shall be made by filing a notice of withdrawal at the same office in which the notice of the state tax lien was filed. A copy of the notice of withdrawal shall be provided to the taxpayer. (2) Upon written request by the taxpayer with respect to whom a notice of a state tax lien was withdrawn, the board shall make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address are specified in that request, of the withdrawal of the notice.