Taxation: tax liability: collections.
If enacted, AB 2369 would significantly shift the handling of tax debts by the Franchise Tax Board (FTB). The existing law allows the FTB to collect tax liabilities for up to 20 years after they become due, but when AB 2369 was introduced, it proposed that interest and penalties would no longer extend this collection period. Thus, any accrued interest or fees would lapse at the same time as the underlying tax liability. This could ease the burden on taxpayers who owe amounts that have significantly increased due to penalties over time.
Assembly Bill 2369, introduced by Assembly Member Nazarian, proposes amendments to Section 19255 of the Revenue and Taxation Code concerning tax liabilities and their collections. The bill aims to redefine what constitutes a tax liability by excluding interest, penalties, costs, or fees from this definition, with an exception for a specific fee applicable to limited liability companies. This change seeks to clarify how such liabilities should be treated concerning the collection period and expiry of debts owed to the state.
Discussions surrounding AB 2369 may highlight concerns from different stakeholders, including taxpayer advocacy groups who might welcome the bill for reducing potential penalties. However, opponents may argue that the removal of these interest and penalties could limit the state’s capacity to enforce tax compliance effectively. This change could lead to discussions on the overall impact on revenue collection and how the state manages its financial obligations to ensure fair tax collection practices.