Session ends: many bills signed and thwarted that impact CPAs.

• Author: Allen, Bruce C.

Another legislative session has ended in Sacramento. Updates on e-filing relief and the California Board of Accountancy can be found on pages 6 and 10, respectively. Other highlights include:

Taxpayer Privilege

AB 1416 (Bermudez) extends the sunset of California's taxpayer privilege to Jan. 1, 2009. CalCPA sponsored the original legislation that conformed California law to the IRC section enacted as part of the 1998 Taxpayer Bill of Rights, and also sponsored the extension.

Tax Amnesty--Enacted

SB 1100 (Budget Committee) establishes a tax amnesty period to allow individuals and corporations to voluntarily pay overdue income and sales taxes after applying to participate in the amnesty program. The amnesty period is February and March 2005, and payments must be made by June 2005. Failure to participate in the amnesty program would subject noncompliers to higher penalties and fines later.

Tax Court

SB 1424 (Burton) and AB 2472 (Wolk) proposed establishing a California Tax Court to hear income and sales tax appeals currently heard by the Board of Equalization. CalCPA has supported previous tax court legislation as long as CPAs were allowed to practice before the court. These bills would limit CPAs' ability to represent taxpayers in appeals. Legislation was not passed this year. It could be brought back next year, and CalCPA will oppose unless CPAs are allowed to represent clients without additional qualifying requirements.

FTB/BOE Trial De Novo

SB 548 (Burton) would allow the FTB to bring a trial de novo proceeding in superior court after the Board of Equalization had ruled in the taxpayer's favor. The proposal would expose the taxpayer to double jeopardy and unfairly tilt the playing field toward the FTB. The proposal would have limited the usefulness of a BOE appeal. The FTB could be motivated to begin the entire process again in court, which would dramatically increase the length of time required to resolve tax issues and increase costs to the state and taxpayer. CalCPA and others were able to convince the author to abandon this approach and the legislation failed.

SUTA Dumping

A last-minute amendment to AB 664 (Lowenthal) inserted California conformity to recently enacted federal law. The legislation specifically prohibits employers from setting up shell companies for the purpose of transferring all or some of an employer's workforce and payroll to decrease its unemployment experience rating. It also prohibits a new business entity from...