19441. (a) The Franchise Tax Board or any person authorized in
writing by the Franchise Tax Board is authorized to enter into an
agreement in writing with any person (or the person or estate for
whom that person acts) in respect of any tax, interest, penalty, or
addition to tax levied under Part 10 (commencing with Section 17001),
Part 11 (commencing with Section 23001), or this part for any
taxable period.
(b) If the agreement is approved by the Franchise Tax Board,
itself, within the time as may be stated in the agreement, or later
agreed to, the agreement shall be final and conclusive, and except
upon a showing of fraud or malfeasance, or misrepresentation of a
material fact:
(1) The case shall not be reopened as to the matters agreed upon
or the agreement modified, by any officer, employee, or agent of the
state, and
(2) In any suit, action, or proceeding, the agreement, or any
determination, assessment, collection, payment, abatement, refund, or
credit made in accordance therewith, shall not be annulled,
modified, set aside, or disregarded.
19442. (a) It is the intent of the Legislature that the Franchise
Tax Board, its staff, and the Attorney General pursue settlements as
authorized under this section with respect to civil tax matters in
dispute that are the subject of protests, appeals, or refund claims,
consistent with a reasonable evaluation of the costs and risks
associated with litigation of these matters.
(b) (1) Except as provided in paragraph (3) and subject to
paragraph (2), the executive officer or chief counsel, if authorized
by the executive officer, of the Franchise Tax Board may recommend to
the Franchise Tax Board, itself, a settlement of any civil tax
matter in dispute.
(2) No recommendation of settlement shall be submitted to the
Franchise Tax Board, itself, unless and until that recommendation has
been submitted by the executive officer or chief counsel to the
Attorney General. Within 30 days of receiving that recommendation,
the Attorney General shall review the recommendation and advise in
writing the executive officer or chief counsel of the Franchise Tax
Board of his or her conclusions as to whether the recommendation is
reasonable from an overall perspective. The executive officer or
chief counsel shall, with each recommendation of settlement submitted
to the Franchise Tax Board, itself, also submit the Attorney General'
s written conclusions obtained pursuant to this paragraph.
(3) (A) A settlement of any civil tax matter in dispute involving
a reduction of tax or penalties in settlement, the total of which
reduction of tax and penalties in settlement does not exceed seven
thousand five hundred dollars ($7,500), may be approved by the
executive officer and chief counsel, jointly. The executive officer
shall notify the Franchise Tax Board, itself, of any settlement
approved pursuant to this paragraph.
(B) On January 1 of each calendar year beginning on or after
January 1, 2004, the Franchise Tax Board shall increase the amount
specified in subparagraph (A) to the amount computed under this
subparagraph. That adjustment shall be made as follows:
(i) The Department of Industrial Relations shall transmit annually
to the Franchise Tax Board the percentage change in the California
Consumer Price Index, as modified for rental equivalent homeownership
for all items, from June of the prior calendar year to June of the
current calendar year, no later than August 1 of the current calendar
year.
(ii) The Franchise Tax Board shall then:
(I) Compute the percentage change in the California Consumer Price
Index from the later of June 2003 or June of the calendar year prior
to the last increase in the amount specified in subparagraph (A).
(II) Compute the inflation adjustment factor by adding 100 percent
to the percentage change so computed, and converting the resulting
percentage to the decimal equivalent.
(III) Multiply the amount specified in subparagraph (A) for the
immediately preceding calendar year, as adjusted under this
paragraph, by the inflation adjustment factor determined in subclause
(II), and round off the resulting product to the nearest one hundred
dollars ($100).
(c) Whenever a reduction of tax or penalties or total tax and
penalties in settlement in excess of five hundred dollars ($500) is
approved pursuant to this section, there shall be placed on file in
the office of the executive officer of the Franchise Tax Board a
public record with respect to that settlement. The public record
shall include all of the following information:
(1) The name or names of the taxpayers who are parties to the
settlement.
(2) The total amount in dispute.
(3) The amount agreed to pursuant to the settlement.
(4) A summary of the reasons why the settlement is in the best
interests of the State of California.
(5) For any settlement approved by the Franchise Tax Board,
itself, the Attorney General's conclusion as to whether the
recommendation of settlement was reasonable from an overall
perspective.
The public record shall not include any information that relates
to any trade secret, patent, process, style of work, apparatus,
business secret, or organizational structure, that if disclosed,
would adversely affect the taxpayer or the national defense.
(d) The members of the Franchise Tax Board shall not participate
in the settlement of tax matters pursuant to this section, except as
provided in subdivision (e).
(e) (1) Any recommendation for settlement shall be approved or
disapproved by the Franchise Tax Board, itself, within 45 days of the
submission of that recommendation. Any recommendation for settlement
that is not either approved or disapproved by the Franchise Tax
Board, itself, within 45 days of the submission of that
recommendation shall be deemed approved. Upon approval of a
recommendation for settlement, the matter shall be referred back to
the executive officer or chief counsel in accordance with the
decision of the Franchise Tax Board.
(2) Disapproval of a recommendation for settlement shall be made
only by a majority vote of the Franchise Tax Board. Where the
Franchise Tax Board disapproves a recommendation for settlement, the
matter shall be remanded to Franchise Tax Board staff for further
negotiation, and may be resubmitted to the Franchise Tax Board, in
the same manner and subject to the same requirements as the initial
submission, at the discretion of the executive officer or chief
counsel.
(f) (1) All settlements entered into pursuant to this section
shall be final and nonappealable, except upon a showing of fraud or
misrepresentation with respect to a material fact.
(2) A settlement may include matters that may otherwise be
included in an agreement under Section 19441.
(3) Settlements pursuant to this section do not preclude
assessments or refunds under Section 19059, 19060, or 19311 (relating
to application of federal adjustments).
(g) (1) Any proceedings undertaken by the Franchise Tax Board
itself pursuant to a settlement as described in this section shall be
conducted in a closed session or sessions.
(2) Except as provided in subdivision (c), any settlement entered
into pursuant to this section shall constitute confidential tax
information for purposes of Article 2 (commencing with Section 19542)
of Chapter 7.
(3) Notwithstanding any other provision of law, no evidence of an
offer of settlement made during settlement negotiations is admissible
in any adjudicative proceeding or civil action, including, without
limitation, any appeal to the board, whether as affirmative evidence,
by way of impeachment, or for any other purpose, and no evidence of
conduct or statements related to the settlement negotiations is
admissible to prove liability for any tax, penalty, fee, or interest,
except to the extent provided for in Section 1152 of the Evidence
Code.
(4) A settlement approved by the Franchise Tax Board, itself,
shall be final and conclusive, to the same extent as an agreement
under Section 19441 approved by the Franchise Tax Board, itself.
(h) This section shall apply only to civil tax matters in dispute
existing on or after the effective date of the act adding this
subdivision.
(i) The Legislature finds that it is essential for fiscal purposes
that the settlement program authorized by this section be
expeditiously implemented. Accordingly, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code shall not apply to any determination, rule, notice, or guideline
established or issued by the Franchise Tax Board in implementing and
administering the settlement program authorized by this section.
(j) The amendments made to this section by Section 1 of Chapter
258 of the Statutes of 2002 shall apply to any settlements approved
on or after January 1, 2003.
(k) The amendments made to this section by the act adding this
subdivision shall apply to any settlement negotiations entered into
on or after the date of enactment, without regard to a taxable year.
19443. (a) (1) The Executive Officer and Chief Counsel of the
Franchise Tax Board, jointly, or their delegates, may compromise any
final tax liability in which the reduction of tax is seven thousand
five hundred dollars ($7,500) or less.
(2) Except as provided in paragraph (3), the Franchise Tax Board,
upon recommendation by its executive officer and chief counsel,
jointly, may compromise a final tax liability involving a reduction
in tax in excess of seven thousand five hundred dollars ($7,500). Any
recommendation for approval of an offer in compromise that is not
either approved or disapproved by the Franchise Tax Board, itself,
within 45 days of the submission of the recommendation shall be
deemed approved.
(3) The Franchise Tax Board, itself, may by resolution delegate to
the executive officer and the chief counsel, jointly, the authority
to compromise a final tax liability in which the reduction of tax is
in excess of seven thousand five hundred dollars ($7,500) but less
than ten thousand dollars ($10,000).
(b) For purposes of this section, "a final tax liability" means
any final tax liability arising under Part 10 (commencing with
Section 17001) or Part 11 (commencing with Section 23001) or related
interest, additions to tax, penalties, or other amounts assessed
under this part.
(c) For an amount to be compromised under this section, the
following conditions shall exist:
(1) The taxpayer shall establish that the:
(A) Amount offered in payment is the most that can be expected to
be paid or collected from the taxpayer's present assets or income,
and
(B) Taxpayer does not have reasonable prospects of acquiring
increased income or assets that would enable the taxpayer to satisfy
a greater amount of the liability than the amount offered, within a
reasonable period of time.
(2) The Franchise Tax Board shall have determined that acceptance
of the compromise is in the best interest of the state.
(d) A determination by the Franchise Tax Board that it would not
be in the best interest of the state to accept an offer in compromise
in satisfaction of a final tax liability shall not be subject to
administrative appeal or judicial review.
(e) When an offer in compromise is either accepted or rejected, or
the terms and conditions of a compromise agreement are fulfilled,
the Franchise Tax Board shall notify the taxpayer in writing.
(f) In the case of a joint and several liability, the acceptance
of an offer in compromise from one liable spouse shall not relieve
the other spouse from paying the entire liability. However, the
amount of the liability shall be reduced by the amount of the
accepted offer.
(g) Whenever a compromise of tax or penalties or total tax and
penalties in excess of five hundred dollars ($500) is approved, there
shall be placed on file for at least one year in the office of the
Executive Officer of the Franchise Tax Board a public record with
respect to that compromise. The public record shall include all of
the following information:
(1) The name of the taxpayer.
(2) The amount of unpaid tax, and related penalties, additions to
tax, interest, or other amounts involved.
(3) The amount offered.
(4) A summary of the reason why the compromise is in the best
interest of the state.
The public record shall not include any information that relates
to any trade secret, patent, process, style of work, apparatus,
business secret, or organizational structure, that if disclosed,
would adversely affect the taxpayer or the national defense. No list
shall be prepared and no releases distributed by the Franchise Tax
Board in connection with these statements.
(h) Any compromise made under this section may be rescinded, all
compromised liabilities may be reestablished (without regard to any
statute of limitations that otherwise may be applicable), and no
portion of the amount offered in compromise refunded, if either of
the following occurs:
(1) The Franchise Tax Board determines that any person did any of
the following acts regarding the making of the offer:
(A) Concealed from the Franchise Tax Board any property belonging
to the estate of any taxpayer or other person liable for the tax.
(B) Received, withheld, destroyed, mutilated, or falsified any
book, document, or record or made any false statement, relating to
the estate or financial condition of the taxpayer or other person
liable for the tax.
(2) The taxpayer fails to either:
(A) Comply with any of the terms and conditions relative to the
offer.
(B) File subsequent required returns and pay subsequent final tax
liabilities within 20 days after the Franchise Tax Board issues
notice and demand to the person stating that the continued failure to
file or pay the tax may result in rescission of the compromise.
(i) Notwithstanding any other provision of this section, if the
Franchise Tax Board determines that any portion of an application for
an offer in compromise or installment agreement submitted under this
section or Section 19008 meets the requirements of clause (i) or
(ii) of Section 6702(b)(2)(A) of the Internal Revenue Code, as
modified by Section 19179, then the Franchise Tax Board may treat
that portion as if it were never submitted and that portion shall not
be subject to any further administrative or judicial review.
(j) This section shall become operative on the effective date of
Chapter 931 of the Statutes of 1999 without regard to the taxable
year at issue.
19441. (a) The Franchise Tax Board or any person authorized in
writing by the Franchise Tax Board is authorized to enter into an
agreement in writing with any person (or the person or estate for
whom that person acts) in respect of any tax, interest, penalty, or
addition to tax levied under Part 10 (commencing with Section 17001),
Part 11 (commencing with Section 23001), or this part for any
taxable period.
(b) If the agreement is approved by the Franchise Tax Board,
itself, within the time as may be stated in the agreement, or later
agreed to, the agreement shall be final and conclusive, and except
upon a showing of fraud or malfeasance, or misrepresentation of a
material fact:
(1) The case shall not be reopened as to the matters agreed upon
or the agreement modified, by any officer, employee, or agent of the
state, and
(2) In any suit, action, or proceeding, the agreement, or any
determination, assessment, collection, payment, abatement, refund, or
credit made in accordance therewith, shall not be annulled,
modified, set aside, or disregarded.
19442. (a) It is the intent of the Legislature that the Franchise
Tax Board, its staff, and the Attorney General pursue settlements as
authorized under this section with respect to civil tax matters in
dispute that are the subject of protests, appeals, or refund claims,
consistent with a reasonable evaluation of the costs and risks
associated with litigation of these matters.
(b) (1) Except as provided in paragraph (3) and subject to
paragraph (2), the executive officer or chief counsel, if authorized
by the executive officer, of the Franchise Tax Board may recommend to
the Franchise Tax Board, itself, a settlement of any civil tax
matter in dispute.
(2) No recommendation of settlement shall be submitted to the
Franchise Tax Board, itself, unless and until that recommendation has
been submitted by the executive officer or chief counsel to the
Attorney General. Within 30 days of receiving that recommendation,
the Attorney General shall review the recommendation and advise in
writing the executive officer or chief counsel of the Franchise Tax
Board of his or her conclusions as to whether the recommendation is
reasonable from an overall perspective. The executive officer or
chief counsel shall, with each recommendation of settlement submitted
to the Franchise Tax Board, itself, also submit the Attorney General'
s written conclusions obtained pursuant to this paragraph.
(3) (A) A settlement of any civil tax matter in dispute involving
a reduction of tax or penalties in settlement, the total of which
reduction of tax and penalties in settlement does not exceed seven
thousand five hundred dollars ($7,500), may be approved by the
executive officer and chief counsel, jointly. The executive officer
shall notify the Franchise Tax Board, itself, of any settlement
approved pursuant to this paragraph.
(B) On January 1 of each calendar year beginning on or after
January 1, 2004, the Franchise Tax Board shall increase the amount
specified in subparagraph (A) to the amount computed under this
subparagraph. That adjustment shall be made as follows:
(i) The Department of Industrial Relations shall transmit annually
to the Franchise Tax Board the percentage change in the California
Consumer Price Index, as modified for rental equivalent homeownership
for all items, from June of the prior calendar year to June of the
current calendar year, no later than August 1 of the current calendar
year.
(ii) The Franchise Tax Board shall then:
(I) Compute the percentage change in the California Consumer Price
Index from the later of June 2003 or June of the calendar year prior
to the last increase in the amount specified in subparagraph (A).
(II) Compute the inflation adjustment factor by adding 100 percent
to the percentage change so computed, and converting the resulting
percentage to the decimal equivalent.
(III) Multiply the amount specified in subparagraph (A) for the
immediately preceding calendar year, as adjusted under this
paragraph, by the inflation adjustment factor determined in subclause
(II), and round off the resulting product to the nearest one hundred
dollars ($100).
(c) Whenever a reduction of tax or penalties or total tax and
penalties in settlement in excess of five hundred dollars ($500) is
approved pursuant to this section, there shall be placed on file in
the office of the executive officer of the Franchise Tax Board a
public record with respect to that settlement. The public record
shall include all of the following information:
(1) The name or names of the taxpayers who are parties to the
settlement.
(2) The total amount in dispute.
(3) The amount agreed to pursuant to the settlement.
(4) A summary of the reasons why the settlement is in the best
interests of the State of California.
(5) For any settlement approved by the Franchise Tax Board,
itself, the Attorney General's conclusion as to whether the
recommendation of settlement was reasonable from an overall
perspective.
The public record shall not include any information that relates
to any trade secret, patent, process, style of work, apparatus,
business secret, or organizational structure, that if disclosed,
would adversely affect the taxpayer or the national defense.
(d) The members of the Franchise Tax Board shall not participate
in the settlement of tax matters pursuant to this section, except as
provided in subdivision (e).
(e) (1) Any recommendation for settlement shall be approved or
disapproved by the Franchise Tax Board, itself, within 45 days of the
submission of that recommendation. Any recommendation for settlement
that is not either approved or disapproved by the Franchise Tax
Board, itself, within 45 days of the submission of that
recommendation shall be deemed approved. Upon approval of a
recommendation for settlement, the matter shall be referred back to
the executive officer or chief counsel in accordance with the
decision of the Franchise Tax Board.
(2) Disapproval of a recommendation for settlement shall be made
only by a majority vote of the Franchise Tax Board. Where the
Franchise Tax Board disapproves a recommendation for settlement, the
matter shall be remanded to Franchise Tax Board staff for further
negotiation, and may be resubmitted to the Franchise Tax Board, in
the same manner and subject to the same requirements as the initial
submission, at the discretion of the executive officer or chief
counsel.
(f) (1) All settlements entered into pursuant to this section
shall be final and nonappealable, except upon a showing of fraud or
misrepresentation with respect to a material fact.
(2) A settlement may include matters that may otherwise be
included in an agreement under Section 19441.
(3) Settlements pursuant to this section do not preclude
assessments or refunds under Section 19059, 19060, or 19311 (relating
to application of federal adjustments).
(g) (1) Any proceedings undertaken by the Franchise Tax Board
itself pursuant to a settlement as described in this section shall be
conducted in a closed session or sessions.
(2) Except as provided in subdivision (c), any settlement entered
into pursuant to this section shall constitute confidential tax
information for purposes of Article 2 (commencing with Section 19542)
of Chapter 7.
(3) Notwithstanding any other provision of law, no evidence of an
offer of settlement made during settlement negotiations is admissible
in any adjudicative proceeding or civil action, including, without
limitation, any appeal to the board, whether as affirmative evidence,
by way of impeachment, or for any other purpose, and no evidence of
conduct or statements related to the settlement negotiations is
admissible to prove liability for any tax, penalty, fee, or interest,
except to the extent provided for in Section 1152 of the Evidence
Code.
(4) A settlement approved by the Franchise Tax Board, itself,
shall be final and conclusive, to the same extent as an agreement
under Section 19441 approved by the Franchise Tax Board, itself.
(h) This section shall apply only to civil tax matters in dispute
existing on or after the effective date of the act adding this
subdivision.
(i) The Legislature finds that it is essential for fiscal purposes
that the settlement program authorized by this section be
expeditiously implemented. Accordingly, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code shall not apply to any determination, rule, notice, or guideline
established or issued by the Franchise Tax Board in implementing and
administering the settlement program authorized by this section.
(j) The amendments made to this section by Section 1 of Chapter
258 of the Statutes of 2002 shall apply to any settlements approved
on or after January 1, 2003.
(k) The amendments made to this section by the act adding this
subdivision shall apply to any settlement negotiations entered into
on or after the date of enactment, without regard to a taxable year.
19443. (a) (1) The Executive Officer and Chief Counsel of the
Franchise Tax Board, jointly, or their delegates, may compromise any
final tax liability in which the reduction of tax is seven thousand
five hundred dollars ($7,500) or less.
(2) Except as provided in paragraph (3), the Franchise Tax Board,
upon recommendation by its executive officer and chief counsel,
jointly, may compromise a final tax liability involving a reduction
in tax in excess of seven thousand five hundred dollars ($7,500). Any
recommendation for approval of an offer in compromise that is not
either approved or disapproved by the Franchise Tax Board, itself,
within 45 days of the submission of the recommendation shall be
deemed approved.
(3) The Franchise Tax Board, itself, may by resolution delegate to
the executive officer and the chief counsel, jointly, the authority
to compromise a final tax liability in which the reduction of tax is
in excess of seven thousand five hundred dollars ($7,500) but less
than ten thousand dollars ($10,000).
(b) For purposes of this section, "a final tax liability" means
any final tax liability arising under Part 10 (commencing with
Section 17001) or Part 11 (commencing with Section 23001) or related
interest, additions to tax, penalties, or other amounts assessed
under this part.
(c) For an amount to be compromised under this section, the
following conditions shall exist:
(1) The taxpayer shall establish that the:
(A) Amount offered in payment is the most that can be expected to
be paid or collected from the taxpayer's present assets or income,
and
(B) Taxpayer does not have reasonable prospects of acquiring
increased income or assets that would enable the taxpayer to satisfy
a greater amount of the liability than the amount offered, within a
reasonable period of time.
(2) The Franchise Tax Board shall have determined that acceptance
of the compromise is in the best interest of the state.
(d) A determination by the Franchise Tax Board that it would not
be in the best interest of the state to accept an offer in compromise
in satisfaction of a final tax liability shall not be subject to
administrative appeal or judicial review.
(e) When an offer in compromise is either accepted or rejected, or
the terms and conditions of a compromise agreement are fulfilled,
the Franchise Tax Board shall notify the taxpayer in writing.
(f) In the case of a joint and several liability, the acceptance
of an offer in compromise from one liable spouse shall not relieve
the other spouse from paying the entire liability. However, the
amount of the liability shall be reduced by the amount of the
accepted offer.
(g) Whenever a compromise of tax or penalties or total tax and
penalties in excess of five hundred dollars ($500) is approved, there
shall be placed on file for at least one year in the office of the
Executive Officer of the Franchise Tax Board a public record with
respect to that compromise. The public record shall include all of
the following information:
(1) The name of the taxpayer.
(2) The amount of unpaid tax, and related penalties, additions to
tax, interest, or other amounts involved.
(3) The amount offered.
(4) A summary of the reason why the compromise is in the best
interest of the state.
The public record shall not include any information that relates
to any trade secret, patent, process, style of work, apparatus,
business secret, or organizational structure, that if disclosed,
would adversely affect the taxpayer or the national defense. No list
shall be prepared and no releases distributed by the Franchise Tax
Board in connection with these statements.
(h) Any compromise made under this section may be rescinded, all
compromised liabilities may be reestablished (without regard to any
statute of limitations that otherwise may be applicable), and no
portion of the amount offered in compromise refunded, if either of
the following occurs:
(1) The Franchise Tax Board determines that any person did any of
the following acts regarding the making of the offer:
(A) Concealed from the Franchise Tax Board any property belonging
to the estate of any taxpayer or other person liable for the tax.
(B) Received, withheld, destroyed, mutilated, or falsified any
book, document, or record or made any false statement, relating to
the estate or financial condition of the taxpayer or other person
liable for the tax.
(2) The taxpayer fails to either:
(A) Comply with any of the terms and conditions relative to the
offer.
(B) File subsequent required returns and pay subsequent final tax
liabilities within 20 days after the Franchise Tax Board issues
notice and demand to the person stating that the continued failure to
file or pay the tax may result in rescission of the compromise.
(i) Notwithstanding any other provision of this section, if the
Franchise Tax Board determines that any portion of an application for
an offer in compromise or installment agreement submitted under this
section or Section 19008 meets the requirements of clause (i) or
(ii) of Section 6702(b)(2)(A) of the Internal Revenue Code, as
modified by Section 19179, then the Franchise Tax Board may treat
that portion as if it were never submitted and that portion shall not
be subject to any further administrative or judicial review.
(j) This section shall become operative on the effective date of
Chapter 931 of the Statutes of 1999 without regard to the taxable
year at issue.
19441. (a) The Franchise Tax Board or any person authorized in
writing by the Franchise Tax Board is authorized to enter into an
agreement in writing with any person (or the person or estate for
whom that person acts) in respect of any tax, interest, penalty, or
addition to tax levied under Part 10 (commencing with Section 17001),
Part 11 (commencing with Section 23001), or this part for any
taxable period.
(b) If the agreement is approved by the Franchise Tax Board,
itself, within the time as may be stated in the agreement, or later
agreed to, the agreement shall be final and conclusive, and except
upon a showing of fraud or malfeasance, or misrepresentation of a
material fact:
(1) The case shall not be reopened as to the matters agreed upon
or the agreement modified, by any officer, employee, or agent of the
state, and
(2) In any suit, action, or proceeding, the agreement, or any
determination, assessment, collection, payment, abatement, refund, or
credit made in accordance therewith, shall not be annulled,
modified, set aside, or disregarded.
19442. (a) It is the intent of the Legislature that the Franchise
Tax Board, its staff, and the Attorney General pursue settlements as
authorized under this section with respect to civil tax matters in
dispute that are the subject of protests, appeals, or refund claims,
consistent with a reasonable evaluation of the costs and risks
associated with litigation of these matters.
(b) (1) Except as provided in paragraph (3) and subject to
paragraph (2), the executive officer or chief counsel, if authorized
by the executive officer, of the Franchise Tax Board may recommend to
the Franchise Tax Board, itself, a settlement of any civil tax
matter in dispute.
(2) No recommendation of settlement shall be submitted to the
Franchise Tax Board, itself, unless and until that recommendation has
been submitted by the executive officer or chief counsel to the
Attorney General. Within 30 days of receiving that recommendation,
the Attorney General shall review the recommendation and advise in
writing the executive officer or chief counsel of the Franchise Tax
Board of his or her conclusions as to whether the recommendation is
reasonable from an overall perspective. The executive officer or
chief counsel shall, with each recommendation of settlement submitted
to the Franchise Tax Board, itself, also submit the Attorney General'
s written conclusions obtained pursuant to this paragraph.
(3) (A) A settlement of any civil tax matter in dispute involving
a reduction of tax or penalties in settlement, the total of which
reduction of tax and penalties in settlement does not exceed seven
thousand five hundred dollars ($7,500), may be approved by the
executive officer and chief counsel, jointly. The executive officer
shall notify the Franchise Tax Board, itself, of any settlement
approved pursuant to this paragraph.
(B) On January 1 of each calendar year beginning on or after
January 1, 2004, the Franchise Tax Board shall increase the amount
specified in subparagraph (A) to the amount computed under this
subparagraph. That adjustment shall be made as follows:
(i) The Department of Industrial Relations shall transmit annually
to the Franchise Tax Board the percentage change in the California
Consumer Price Index, as modified for rental equivalent homeownership
for all items, from June of the prior calendar year to June of the
current calendar year, no later than August 1 of the current calendar
year.
(ii) The Franchise Tax Board shall then:
(I) Compute the percentage change in the California Consumer Price
Index from the later of June 2003 or June of the calendar year prior
to the last increase in the amount specified in subparagraph (A).
(II) Compute the inflation adjustment factor by adding 100 percent
to the percentage change so computed, and converting the resulting
percentage to the decimal equivalent.
(III) Multiply the amount specified in subparagraph (A) for the
immediately preceding calendar year, as adjusted under this
paragraph, by the inflation adjustment factor determined in subclause
(II), and round off the resulting product to the nearest one hundred
dollars ($100).
(c) Whenever a reduction of tax or penalties or total tax and
penalties in settlement in excess of five hundred dollars ($500) is
approved pursuant to this section, there shall be placed on file in
the office of the executive officer of the Franchise Tax Board a
public record with respect to that settlement. The public record
shall include all of the following information:
(1) The name or names of the taxpayers who are parties to the
settlement.
(2) The total amount in dispute.
(3) The amount agreed to pursuant to the settlement.
(4) A summary of the reasons why the settlement is in the best
interests of the State of California.
(5) For any settlement approved by the Franchise Tax Board,
itself, the Attorney General's conclusion as to whether the
recommendation of settlement was reasonable from an overall
perspective.
The public record shall not include any information that relates
to any trade secret, patent, process, style of work, apparatus,
business secret, or organizational structure, that if disclosed,
would adversely affect the taxpayer or the national defense.
(d) The members of the Franchise Tax Board shall not participate
in the settlement of tax matters pursuant to this section, except as
provided in subdivision (e).
(e) (1) Any recommendation for settlement shall be approved or
disapproved by the Franchise Tax Board, itself, within 45 days of the
submission of that recommendation. Any recommendation for settlement
that is not either approved or disapproved by the Franchise Tax
Board, itself, within 45 days of the submission of that
recommendation shall be deemed approved. Upon approval of a
recommendation for settlement, the matter shall be referred back to
the executive officer or chief counsel in accordance with the
decision of the Franchise Tax Board.
(2) Disapproval of a recommendation for settlement shall be made
only by a majority vote of the Franchise Tax Board. Where the
Franchise Tax Board disapproves a recommendation for settlement, the
matter shall be remanded to Franchise Tax Board staff for further
negotiation, and may be resubmitted to the Franchise Tax Board, in
the same manner and subject to the same requirements as the initial
submission, at the discretion of the executive officer or chief
counsel.
(f) (1) All settlements entered into pursuant to this section
shall be final and nonappealable, except upon a showing of fraud or
misrepresentation with respect to a material fact.
(2) A settlement may include matters that may otherwise be
included in an agreement under Section 19441.
(3) Settlements pursuant to this section do not preclude
assessments or refunds under Section 19059, 19060, or 19311 (relating
to application of federal adjustments).
(g) (1) Any proceedings undertaken by the Franchise Tax Board
itself pursuant to a settlement as described in this section shall be
conducted in a closed session or sessions.
(2) Except as provided in subdivision (c), any settlement entered
into pursuant to this section shall constitute confidential tax
information for purposes of Article 2 (commencing with Section 19542)
of Chapter 7.
(3) Notwithstanding any other provision of law, no evidence of an
offer of settlement made during settlement negotiations is admissible
in any adjudicative proceeding or civil action, including, without
limitation, any appeal to the board, whether as affirmative evidence,
by way of impeachment, or for any other purpose, and no evidence of
conduct or statements related to the settlement negotiations is
admissible to prove liability for any tax, penalty, fee, or interest,
except to the extent provided for in Section 1152 of the Evidence
Code.
(4) A settlement approved by the Franchise Tax Board, itself,
shall be final and conclusive, to the same extent as an agreement
under Section 19441 approved by the Franchise Tax Board, itself.
(h) This section shall apply only to civil tax matters in dispute
existing on or after the effective date of the act adding this
subdivision.
(i) The Legislature finds that it is essential for fiscal purposes
that the settlement program authorized by this section be
expeditiously implemented. Accordingly, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code shall not apply to any determination, rule, notice, or guideline
established or issued by the Franchise Tax Board in implementing and
administering the settlement program authorized by this section.
(j) The amendments made to this section by Section 1 of Chapter
258 of the Statutes of 2002 shall apply to any settlements approved
on or after January 1, 2003.
(k) The amendments made to this section by the act adding this
subdivision shall apply to any settlement negotiations entered into
on or after the date of enactment, without regard to a taxable year.
19443. (a) (1) The Executive Officer and Chief Counsel of the
Franchise Tax Board, jointly, or their delegates, may compromise any
final tax liability in which the reduction of tax is seven thousand
five hundred dollars ($7,500) or less.
(2) Except as provided in paragraph (3), the Franchise Tax Board,
upon recommendation by its executive officer and chief counsel,
jointly, may compromise a final tax liability involving a reduction
in tax in excess of seven thousand five hundred dollars ($7,500). Any
recommendation for approval of an offer in compromise that is not
either approved or disapproved by the Franchise Tax Board, itself,
within 45 days of the submission of the recommendation shall be
deemed approved.
(3) The Franchise Tax Board, itself, may by resolution delegate to
the executive officer and the chief counsel, jointly, the authority
to compromise a final tax liability in which the reduction of tax is
in excess of seven thousand five hundred dollars ($7,500) but less
than ten thousand dollars ($10,000).
(b) For purposes of this section, "a final tax liability" means
any final tax liability arising under Part 10 (commencing with
Section 17001) or Part 11 (commencing with Section 23001) or related
interest, additions to tax, penalties, or other amounts assessed
under this part.
(c) For an amount to be compromised under this section, the
following conditions shall exist:
(1) The taxpayer shall establish that the:
(A) Amount offered in payment is the most that can be expected to
be paid or collected from the taxpayer's present assets or income,
and
(B) Taxpayer does not have reasonable prospects of acquiring
increased income or assets that would enable the taxpayer to satisfy
a greater amount of the liability than the amount offered, within a
reasonable period of time.
(2) The Franchise Tax Board shall have determined that acceptance
of the compromise is in the best interest of the state.
(d) A determination by the Franchise Tax Board that it would not
be in the best interest of the state to accept an offer in compromise
in satisfaction of a final tax liability shall not be subject to
administrative appeal or judicial review.
(e) When an offer in compromise is either accepted or rejected, or
the terms and conditions of a compromise agreement are fulfilled,
the Franchise Tax Board shall notify the taxpayer in writing.
(f) In the case of a joint and several liability, the acceptance
of an offer in compromise from one liable spouse shall not relieve
the other spouse from paying the entire liability. However, the
amount of the liability shall be reduced by the amount of the
accepted offer.
(g) Whenever a compromise of tax or penalties or total tax and
penalties in excess of five hundred dollars ($500) is approved, there
shall be placed on file for at least one year in the office of the
Executive Officer of the Franchise Tax Board a public record with
respect to that compromise. The public record shall include all of
the following information:
(1) The name of the taxpayer.
(2) The amount of unpaid tax, and related penalties, additions to
tax, interest, or other amounts involved.
(3) The amount offered.
(4) A summary of the reason why the compromise is in the best
interest of the state.
The public record shall not include any information that relates
to any trade secret, patent, process, style of work, apparatus,
business secret, or organizational structure, that if disclosed,
would adversely affect the taxpayer or the national defense. No list
shall be prepared and no releases distributed by the Franchise Tax
Board in connection with these statements.
(h) Any compromise made under this section may be rescinded, all
compromised liabilities may be reestablished (without regard to any
statute of limitations that otherwise may be applicable), and no
portion of the amount offered in compromise refunded, if either of
the following occurs:
(1) The Franchise Tax Board determines that any person did any of
the following acts regarding the making of the offer:
(A) Concealed from the Franchise Tax Board any property belonging
to the estate of any taxpayer or other person liable for the tax.
(B) Received, withheld, destroyed, mutilated, or falsified any
book, document, or record or made any false statement, relating to
the estate or financial condition of the taxpayer or other person
liable for the tax.
(2) The taxpayer fails to either:
(A) Comply with any of the terms and conditions relative to the
offer.
(B) File subsequent required returns and pay subsequent final tax
liabilities within 20 days after the Franchise Tax Board issues
notice and demand to the person stating that the continued failure to
file or pay the tax may result in rescission of the compromise.
(i) Notwithstanding any other provision of this section, if the
Franchise Tax Board determines that any portion of an application for
an offer in compromise or installment agreement submitted under this
section or Section 19008 meets the requirements of clause (i) or
(ii) of Section 6702(b)(2)(A) of the Internal Revenue Code, as
modified by Section 19179, then the Franchise Tax Board may treat
that portion as if it were never submitted and that portion shall not
be subject to any further administrative or judicial review.
(j) This section shall become operative on the effective date of
Chapter 931 of the Statutes of 1999 without regard to the taxable
year at issue.
