BILL ANALYSIS Ó AB 1277 Page 1 Date of Hearing: May 13, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1277 (Brough) - As Amended April 29, 2015 ----------------------------------------------------------------- |Policy |Revenue and Taxation |Vote:|7 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill increases, from $1,500 to $2,300, for a variety of taxes administered by the Board of Equalization (BOE), the maximum amount of levied funds the Taxpayers' Rights Advocate may order returned to a taxpayer upon a finding that the levy or notice to withhold threatens the health or welfare of the taxpayer or the taxpayer's family, and requires the BOE to adjust the maximum amount for inflation on or before March 1 of each year, beginning March 1, 2016. FISCAL EFFECT: AB 1277 Page 2 Minor and absorbable administrative costs to BOE, expected annual GF revenue losses of approximately $4,600 based on an assumed return of funds by the Taxpayers' Rights Advocate twice a year. COMMENTS: 1)Purpose. According to the author, this bill provides additional relief for taxpayers in dire financial circumstances. AB 1277 increases the amount of levied funds the Taxpayers' Rights Advocate may return to taxpayers in cases where the levy threatens the health or welfare of the taxpayer, the taxpayer's spouse, or the taxpayer's family. The author asserts the amount has not been adjusted since the authority was established in 1996. The bill's sponsor, the BOE, claims the increase in the maximum returnable amount from $1,500 to $2,300 effectively adjusts for inflation since 1996, and the bill's inflation adjustment provision will provide future modifications as needed. The bill also includes levy return authority to the remaining BOE-administered tax and fee programs. 2)Return, Not Relief. The BOE is authorized to levy funds, including bank accounts, to collect delinquent tax due. Occasionally, the seized taxpayer funds are essential to pay the taxpayer's basic living expenses. Only the Taxpayers' Rights Advocate has the authority to return funds in such instances, and decisions are made based on documented need, not tax owed, and returned funds do not relieve the taxpayer of any taxes owed. While the amount returned is modest, the author and sponsor believe a reasonable increase in the maximum will help the amount returned keep pace with the cost of living. AB 1277 Page 3 Analysis Prepared by:Joel Tashjian / APPR. / (916) 319-2081