Long Beach, CA
File #: 22-0359    Version: 1 Name: FM - Agrmnt w/the FTB for records obtained from the FTB Taxpayer Information System and Business Entity Tax System
Type: Agenda Item Status: Approved
File created: 3/15/2022 In control: City Council
On agenda: 4/5/2022 Final action: 4/5/2022
Title: Recommendation to authorize City Manager, or designee, to execute an agreement with the California Franchise Tax Board (FTB) for records obtained from the FTB Taxpayer Information System and Business Entity Tax System, at no cost to the City, for the term of June 1, 2022, through December 31, 2024. (Citywide)
Sponsors: Financial Management
Attachments: 1. 040522-C-9sr.pdf
Related files: 36275_000

TITLE

Recommendation to authorize City Manager, or designee, to execute an agreement with the California Franchise Tax Board (FTB) for records obtained from the FTB Taxpayer Information System and Business Entity Tax System, at no cost to the City, for the term of June 1, 2022, through December 31, 2024.  (Citywide)

 

DISCUSSION

In 2001, the State of California passed Assembly Bill 63 (AB 63), the Local Government Sharing Program (Program), which permits the State to share certain income tax information with local governments. Under the Program, participating cities are provided a list of businesses within the City of Long Beach (City) that filed California income tax returns. The City can then ensure these businesses have applied for and received City business licenses.

 

The agreement will authorize the City to continue participating in the Program for the 2022, 2023, and 2024 tax years. The information that will be provided by the FTB is the taxpayer name, address, social security number or taxpayer identification number, and principal business activity code. This information allows the Financial Management Department to identify businesses in the City that are operating without a business license.

 

The City has been participating in the Program since the 2002 tax year. Since then, the identification of unlicensed businesses from the Program has resulted in additional revenue to the General Fund. The City will continue to devote additional staff time to the Program to ensure the receipt of business license revenue from identified businesses.

 

Along with other participating cities, this agreement allows FTB and the City to enter into a reciprocal agreement to exchange tax data specific to City business license information for tax administration purposes.

 

The proposed agreement contains the following major provisions:

 

                     Length of term: June 1, 2022 through December 31, 2024. This agreement is for tax years 2022, 2023, and 2024 only. To participate in future years, a new agreement will be required.

 

                     Confidentiality: Each City employee with access to the FTB records will be required to sign a confidentiality agreement. The City will destroy FTB records within three years of receipt.

 

                     Compensation: The City will pay the State of California $0.

 

This matter was reviewed by Deputy City Attorney Arturo D. Sanchez on March 14, 2022 and by Revenue Management Officer Geraldine Alejo on March 15, 2022.

 

TIMING CONSIDERATIONS

City Council action on this item is requested on April 5, 2022, to ensure the agreement is executed and transmitted to the State by June 1, 2022.

 

FISCAL IMPACT

Participation in this program will continue to support the City’s business license revenue collection efforts and is anticipated to result in a positive impact to General Fund revenue. This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. By ensuring that businesses operating in the City are licensed, approval of this recommendation will provide continued support to the local economy.

 

SUGGESTED ACTION

Approve recommendation.

 

Respectfully Submitted,

KEVIN RIPER

DIRECTOR OF FINANCIAL MANAGEMENT

 

 

 

APPROVED:

 

THOMAS B. MODICA

CITY MANAGER