Delinquent taxes? No license AB 1925, SB 1689 and NASBA.

• Author: Allen, Bruce C.
• Position: CapitolBeat

Sometimes success in Sacramento can best be gauged by what doesn't happen. AB 1925 (Eng) would have expanded the authority of the Franchise Tax Board to suspend all Occupational and Professional Licenses due to unpaid tax liabilities. Existing law, established in 1990, allows the Contractor's State License Board to refuse to issue, reinstate, renew or reactivate a contractor's license if he or she does not resolve all outstanding tax liabilities. When this action is taken, anyone listed on the contractor's license is prohibited from operating as a contractor. Additionally, current law allows licensing boards to suspend or deny renewal to individuals who fail to pay child support based on a referral from local child support agencies.

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The Franchise Tax Board estimates that 25,000 licensees are currently delinquent in paying taxes. The proposed license suspension would be automatic following completion of all of the current steps to collect, and a 60-day preliminary notice of license suspension. The license suspension period would continue until the tax is collected or the taxpayer files a hardship appeal and enters into a payment program.

Opponents successfully argued during a hearing for AB 1925 that the license suspension would deprive affected individuals of the ability to ever pay their taxes. The FTB argued that AB 1925 would remove the unfair competitive advantage that is gained by those businesses that do not report and pay the correct amount of tax and that AB 1925 would be an effective collection tool that would generate $13 million a year if implemented. AB 1925 was defeated in the Senate Revenue and Taxation Committee on June 25, but reconsideration was granted so it could resurface.

Redevelopment Agency Audits

SB 1689 (Lowenthal) is a major re-write of redevelopment agency (RDA) audit laws. The bill expands the authority of the Department of Housing and Community Development to review audit reports and make referrals to the Controller and the state Attorney General. The bill would allow the Controller to perform quality control reviews of the audits performed for RDAs.

The authority is very similar to that currently allowed for audits of school districts. The Controller would refer substandard audit reports to the California Board of Accountancy and, if the CBA agrees with the Controller and the Department of Housing and Community Development, the auditor would be prohibited from conducting audits of RDAs...