Existing law authorizes the Franchise Tax Board to implement an alternative communication method that would allow the Franchise Tax Board to provide notification to the taxpayer in a preferred electronic communication method designated by the taxpayer that a specified notice, statement, bill, or other communication is available for viewing in the taxpayers folder on the Franchise Tax Boards internet website, and would allow the taxpayer to file a protest, notification, and other communication to the Franchise Tax Board in a secure manner. This provision ceases to be operative and is repealed on January 1, 2025.

This bill would extend that provision indefinitely.

Existing law authorizes the Franchise Tax Board to implement an alternative communication method that would allow the Franchise Tax Board to provide notification to the taxpayer in a preferred electronic communication method designated by the taxpayer that a specified notice, statement, bill, or other communication is available for viewing in the taxpayers folder on the Franchise Tax Boards internet website, and would allow the taxpayer to file a protest, notification, and other communication to the Franchise Tax Board in a secure manner. This provision ceases to be operative and is repealed on January 1, 2025.

This bill would extend that provision indefinitely.

Existing law authorizes the Franchise Tax Board to implement an alternative communication method that would allow the Franchise Tax Board to provide notification to the taxpayer in a preferred electronic communication method designated by the taxpayer that a specified notice, statement, bill, or other communication is available for viewing in the taxpayers folder on the Franchise Tax Boards internet website, and would allow the taxpayer to file a protest, notification, and other communication to the Franchise Tax Board in a secure manner. This provision ceases to be operative and is repealed on January 1, 2025.

This bill would extend that provision indefinitely.

 CONSENT  

Bill No: AB 3287

Author: Committee on Revenue and Taxation

Introduced: 3/19/24

Vote: 21

SENATE REVENUE AND TAXATION COMMITTEE: 6-0, 6/12/24

AYES: Glazer, Dahle, Bradford, Dodd, Padilla, Skinner

NO VOTE RECORDED: Ashby

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 71-0, 5/21/24 (Consent) - See last page for vote

SUBJECT: Electronic notifications

SOURCE: Franchise Tax Board (FTB)

DIGEST:

This bill repeals the January 1, 2025 sunset date on Franchise Tax Board’s authority to implement an alternative communication method with taxpayers.

ANALYSIS:

Existing law:

1. Generally requires tax agencies to communicate with taxpayers almost exclusively by postal delivery.
2. Authorizes the Franchise Tax Board (FTB) to implement an alternative communication method to provide electronic notifications to taxpayers at either their request or at the request of the taxpayer’s authorized representative.
3. Allows the alternative electronic communication method to be the preferred communication method designated by the taxpayer when a notice, statement, bill, or other communication is available for viewing in the taxpayer’s limited access secure folder on the FTB’s internet website.
4. Treats any notice, statement, bill, protest, or other communication under the alternative communication method as if it were sent by United States mail.
5. Sunsets the alternative communication method on January 1, 2025.

This bill:

1. Repeals the sunset date on FTB’s authority to implement an alternative communication method to provide notices to taxpayers electronically.
2. Makes a technical change.

Background

To improve customer service, tax enforcement agencies have evolved to communicate electronically. The Internal Revenue Service (IRS) allows a taxpayer to create an online account through which the taxpayer may elect to receive an email when there is a new notice in their online account. In addition, a taxpayer can view their account balances, personal information, payment information, and digital copies of past IRS notices. A taxpayer can also select an electronic payment option, set up an online payment agreement, access tax records, electronically sign Power of Attorney, and approve Tax Information Authorization requests for their tax professional.

In 2010, the Legislature first authorized FTB to implement an alternative communication method to provide electronic notifications to taxpayers at either their request or at the request of the taxpayer’s authorized representative (AB 2177, Beall, Chapter 136, Statutes of 2010). In January 2016, FTB implemented MyFTB for taxpayers and authorized representatives to have 24/7 access to account information, including estimated payments. Today, MyFTB also allows a taxpayer or a taxpayer’s representative to file a protest, notification, or other communication in a secure manner. MyFTB contains the accounting data, address data, account history data for each taxpayer, and a historical record of every notice or bill issued to the taxpayer. MyFTB is accessible online by all taxpayers or their authorized representative using their Social Security Number and a personal identification number supplied by FTB to authenticate the taxpayer’s access to MyFTB. In 2017, the Legislature extended AB 2177’s sunset until January 1, 2025 (AB 1720, Committee on Revenue and Taxation, Chapter 177, Statutes of 2017).

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 6/25/24)

None received

OPPOSITION: (Verified 6/25/24)

None received

ARGUMENTS IN SUPPORT: According to the author, “AB 3287 indefinitely extends the Franchise Tax Board's (FTB) authority to electronically notify taxpayers that a communication from the FTB is available for their review, if that taxpayer has authorized this method of notification. “

ASSEMBLY FLOOR: 71-0, 5/21/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Calderon, Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Mathis, Papan, Luz Rivas

Prepared by: Colin Grinnell / REV. & TAX. / (916) 651-4117

6/25/24 13:21:24

**** END ****

SENATE COMMITTEE ON REVENUE AND TAXATION

Senator Steven Glazer, Chair

2023 - 2024 Regular

Electronic notifications

Repeals the January 1, 2025 sunset date on Franchise Tax Board’s authority to implement an alternative communication method with taxpayers.

Background

Receiving notices from a tax agency in a timely fashion is critical to taxpayers since a failure to respond may cause the taxpayer to forfeit certain rights, or increase their tax liability. Traditionally, tax agencies would communicate with taxpayers almost exclusively by postal delivery, where weeks or even months can pass while an issue is resolved.

According to the Franchise Tax Board (FTB), personal income taxpayers typically correspond regarding:

• Balance due issues – includes penalties, payments, and withholding issues;
• Requests for payment options – includes questions on how to pay in full and how to set up or request a payment installment arrangement; and
• Refund issues – includes questions about where their refund is and why they have not received it yet.

Business entity taxpayers traditionally communicate regarding similar balance due and refund issues, but also pre-filing assistance, such as estimate payment verification, forms, and tax law questions.

To improve customer service, tax enforcement agencies have evolved to communicate electronically. The Internal Revenue Service (IRS) allows a taxpayer to create an online account through which the taxpayer may elect to receive an email when there is a new notice in their online account. In addition, a taxpayer can view their account balances, personal information, payment information, and digital copies of past IRS notices. A taxpayer can also select an electronic payment option, set up an online payment agreement, access tax records, electronically sign Power of Attorney, and approve Tax Information Authorization requests for their tax professional.

In 2010, the Legislature first authorized the Franchise Tax Board (FTB) to implement an alternative communication method to provide electronic notifications to taxpayers at either their request or at the request of the taxpayer’s authorized representative (AB 2177, Beall). AB 2177 allowed the alternative electronic communication method to be the preferred communication method designated by the taxpayer when a notice, statement, bill, or other communication is available for viewing in the taxpayer’s limited access secure folder on the FTB’s internet website. The bill treated any notice, statement, bill, protest, or other communication as if it were sent by United States mail. AB 2177’s included a sunset date of January 1, 2018.

In January 2016, FTB implemented MyFTB for taxpayers and authorized representatives to have 24/7 access to account information, including estimated payments. Today, MyFTB also allows a taxpayer or a taxpayer’s representative to file a protest, notification, or other communication in a secure manner. MyFTB contains the accounting data, address data, account history data for each taxpayer, and a historical record of every notice or bill issued to the taxpayer. MyFTB is accessible online by all taxpayers or their authorized representative using their Social Security Number and a personal identification number supplied by FTB to authenticate the taxpayer’s access to MyFTB.

In 2017, the Legislature extended AB 2177’s sunset until January 1, 2025 (AB 1720, Committee on Revenue and Taxation). The Franchise Tax Board wants to eliminate the sunset.

Proposed Law

Assembly Bill 3287 repeals the January 1, 2025 sunset date on FTB’s authority to implement an alternative communication method with taxpayers when they or their authorized representative request electronic communication to be their preferred method of communication.

State Revenue Impact

FTB estimates that SB 3287 has no fiscal impact.

Comments

1. Purpose of the bill. According to the author, “AB 3287 indefinitely extends the Franchise Tax Board's (FTB) authority to electronically notify taxpayers that a communication from the FTB is available for their review, if that taxpayer has authorized this method of notification. “

2. By the numbers. In the 2022-23 fiscal year, FTB processed more than 21.6 million tax returns, over 7.8 million payments, responded to more than 2.8 million telephone calls, serviced over 77 million internet contacts, and collected about $125 billion in revenue, representing approximately 74% of California’s General Fund revenue. Approximately 1 million taxpayers have registered for a MyFTB account; of those, approximately 50,000 have chosen to receive an electronic notification rather than receiving a notice via US Mail. In 2022-23, approximately 110,000 emails were sent to taxpayers advising them they have a notice available online in their MyFTB account. Taxpayers can also elect to receive a text messages in addition to or in lieu of receiving an email notification, which has resulted in approximately 65,000 text messages advising taxpayers they have a notice available online in their MyFTB account.

Assembly Actions

Assembly Revenue & Taxation Committee: 7-0
Assembly Appropriations Committee: 15-0
Assembly Floor: 71-0

Support and Opposition

(6/7/24)

Support: None received.

Opposition: None received.

-- END --

Date of Hearing: May 15, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 3287

Author:(Committee on Revenue and Taxation) – As Introduced Ver:March 19, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill repeals the January 1, 2025, sunset date on the Franchise Tax Board’s (FTB’s) authorization to communicate electronically with a taxpayer, thus allowing the practice to continue indefinitely.

FISCAL EFFECT:

Minor and absorbable costs to FTB.

COMMENTS:

1. Purpose. The author notes that existing law, until January 1, 2025, authorizes FTB to implement an alternative method of communicating with electing taxpayers, thus allowing FTB to notify the taxpayer in a preferred electronic communication method of certain notices, statements, bills, or other communications available for viewing in the taxpayer’s secure folder on FTB’s website. According to the author, this bill adopts a legislative proposal advanced by FTB to delete the 2025 sunset date on FTB’s authority to use alternative communication methods with electing taxpayers.
2. Trailer Bill Proposal. AB 2177 (Beall), Chapter 136, Statutes of 2010, authorized, until January 1, 2018, a taxpayer to elect to receive electronic communications from FTB. The authorization was subsequently extended to January 1, 2025, by AB 1720 (Committee on Revenue and Taxation), Chapter 177, Statutes of 2017. FTB notes approximately one million taxpayers have registered for a MyFTB account, with 50,000 of those taxpayers choosing to receive electronic notifications rather than notices via U.S. mail. This bill repeals the sunset date of this authorization. The Governor has also included identical trailer bill language as part of the administration’s proposed 2024-25 state budget.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 22, 2024

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Jacqui Irwin, Chair

ABPCA Bill Id:AB 3287 (

Author:Committee on Revenue and Taxation) – As Introduced Ver:March 19, 2024

Majority vote. Fiscal committee.

SUBJECT: Electronic notifications

SUMMARY: Indefinitely extends the authority of the Franchise Tax Board (FTB) to communicate with an electing taxpayer in an electronic method that the taxpayer designates. Specifically, this bill removes the January 1, 2025 sunset date for the statute authorizing:

1. The FTB to implement an alternative communication method allowing the FTB to notify a taxpayer, in a preferred electronic communication method the taxpayer designates, that a specified notice, statement, bill, or other communication is available for viewing in the taxpayer's folder on the FTB website; and,
2. A taxpayer or the taxpayer's authorized representative to file a protest, notification, or other communication with the FTB in a secure manner.

EXISTING LAW:

1. Authorizes the FTB to implement an alternative communication method allowing the FTB to notify a taxpayer, in a preferred electronic communication method the taxpayer designates, that a specified notice, statement, bill, or other communication is available for viewing in the taxpayer's folder on the FTB website. (Revenue and Taxation Code (R&TC) Section 18416.5.)
2. Allows a taxpayer or the taxpayer's authorized representative to file a protest, notification, or other communication with the FTB in a secure manner. (Id.)
3. Provides that this authority shall cease to be operative with respect to a notice, statement, bill, protest, or other communication between the FTB and a taxpayer on or after January 1, 2025, and is, as of that date, repealed. (Id.)

FISCAL EFFECT: Pending

COMMENTS:

1. Committee Staff Comments:
   1. Current law: R&TC Section 18416.5 currently authorizes the FTB, by regulation, to implement an alternative method for communicating with electing taxpayers. Specifically, this regulation allows the FTB, at the request of a taxpayer or the taxpayer's authorized representative, to notify the taxpayer in a preferred electronic communication method the taxpayer designates, that certain notices, statements, bills, or other communications are available for viewing in the taxpayer's secure folder on the FTB's website. Additionally, R&TC Section 18416.5 allows the taxpayer or the taxpayer's authorized representative to file a protest, notification, or other communication with the FTB in a secure manner.
      
      Before obtaining the taxpayer's consent to participate in this alternative communication method, the FTB must advise the taxpayer or the taxpayer's authorized representative of the ramifications of electing to receive notifications from the FTB in the manner selected, and of failing to take appropriate action in response to such notifications. Additionally, any electronic notification provided to a taxpayer using the alternative communication method must include plain language advising the taxpayer that a failure to act may cause the taxpayer to forego procedural or administrative rights to challenge the proposed action.

Currently, the authority outlined above will cease to be operative with respect to any notice, statement, bill, protest, or other communication between the FTB and a taxpayer on or after January 1, 2025, and is, as of that date, repealed.

• 1. This bill: This bill would adopt a legislative proposal advanced by the FTB to very simply delete the January 1, 2025 sunset date for the FTB's authority to use alternative communication methods with electing taxpayers.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098