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, 2019 through December 31, 2021. (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 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 2018, 2019, and 2020 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, 2019 through December 31, 2021. This agreement is for tax years 2019, 2020, and 2021 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 Amy R. Webber on March 21, 2019 and by Budget Management Officer Rhutu Amin Gharib on April 17, 2019.
TIMING CONSIDERATIONS
City Council action on this item is requested on May 7, 2019, to ensure the agreement is executed and transmitted to the State by June 1, 2019.
FISCAL IMPACT
It is anticipated that participation in this program will have a positive impact to General Fund revenue. This agreement is not expected to require additional staff hours beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. This agreement will provide additional support to our local economy by generating business license tax revenue in Long Beach.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER