Cal. Code Regs. Tit. 18, §§ 19195-1 - Hearing on Requests for Release Under Section 494.5 of the Business and Professions Code
(a)
Applicability of Regulation. This regulation applies to hearings provided by
the Franchise Tax Board in connection with requests for release under section
494.5
of the Business and Professions Code.
(b) Right to Request Hearing, Notification of
Right, and Limitation on Scope and Effect of Hearing.
(1) Unless the Franchise Tax Board determines
to send a release to the appropriate state governmental licensing entity under
section
494.5
of the Business and Professions Code without a hearing under this regulation,
an applicant or licensee who receives a preliminary notice or preliminary
notices under subdivision (e)(2) of section
494.5
of the Business and Professions Code and who has made a request for release to
the Franchise Tax Board under section
494.5
of the Business and Professions Code shall have the right to one (1) hearing
before a Franchise Tax Board hearing officer related solely to the issue of
whether the Franchise Tax Board shall send a release to the appropriate state
governmental licensing entity under section
494.5
of the Business and Professions Code. An applicant or licensee who has had a
hearing under this regulation related to a request for release shall have the
right to a hearing under this regulation related to another request for release
only upon a showing of a material change of circumstances.
(2) If an applicant or licensee is entitled
to a hearing under subsection (b)(1) and if the Franchise Tax Board has not
done so previously, the Franchise Tax Board shall, within five (5) business
days after the Franchise Tax Board receives a request for release, send written
notification to the applicant or licensee requesting the release of the
applicant's or licensee's right to submit a written request for a hearing in
accordance with this regulation.
(3) The applicant or licensee shall not be
permitted to contest the applicant's or licensee's obligation to pay the
outstanding tax obligation through the procedures contained in section
494.5
of the Business and Professions Code or in this regulation.
(4) The decision of the hearing officer, the
Taxpayers' Rights Advocate or the Taxpayers' Rights Advocate's designee under
this regulation shall be binding on the applicant or licensee and the Franchise
Tax Board only in connection with the request for release that was the subject
of the hearing and not in connection with any other request for release or any
other matter.
(c) Time,
Date, Place and Manner of Hearing.
(1) Upon
receipt of a written request for a hearing in accordance with this regulation,
the Franchise Tax Board shall use reasonable diligence to hold a hearing in
accordance with this regulation within twenty (20) business days of the
Franchise Tax Board's receipt of the request for a hearing. The failure of the
Franchise Tax Board to hold a hearing within twenty (20) business days shall
not require the Franchise Tax Board to send a release under section
494.5
of the Business and Professions Code, except as required by subdivision (h)(2)
of section
494.5
of the Business and Professions Code.
(2) The time, date and place of the hearing
under this regulation shall, when possible, be determined by mutual agreement
of the applicant or licensee and the Franchise Tax Board. If a mutual agreement
cannot be reached as to the time, date and place of the hearing, the Franchise
Tax Board shall determine the time, date and place of the hearing and send
written notification to the applicant or licensee of that
determination.
(3) Hearings shall
be held at a Franchise Tax Board office and scheduled Monday through Friday
during normal business hours for the office where the hearing is to be held
(generally between 8:00 a.m. and 4:30 p.m., local time).
(4) A hearing may be conducted by telephone,
videoconferencing or similar means if the applicant or licensee and the
Franchise Tax Board mutually consent.
(5) The applicant or licensee may request
that the hearing be rescheduled; however, the determination of whether to
reschedule the hearing shall be made by the Franchise Tax Board.
(6) An applicant or licensee who does not
appear at the scheduled hearing shall be deemed to have waived the right to a
hearing under this regulation unless good cause, not within the applicant's or
licensee's control, exists for the failure to appear. The hearing officer will
determine whether good cause exists. If good cause exists, the hearing shall be
rescheduled as soon as practical.
(d) Hearing.
(1) Hearing Officer and Hearing Witnesses.
(A) The Franchise Tax Board shall designate a
member of its staff as the hearing officer for the hearing in connection with
the request for release under section
494.5
of the Business and Professions Code. The Franchise Tax Board shall not appoint
any member of its staff as the hearing officer if that staff member had any
prior involvement with respect to the applicant or licensee.
(B) The hearing officer shall have the
authority to conduct the hearing and make the determination as to whether the
Franchise Tax Board should send a release.
(C) The Franchise Tax Board may designate one
or more members of its staff as hearing witnesses for the hearing in connection
with a request for release.
(2) Representative.
(A) The applicant or licensee shall have the
right to have one representative at the hearing, provided such representative
is designated by the applicant or licensee in a written notice signed by the
applicant or licensee that is received by the Franchise Tax Board at or prior
to the commencement of the hearing.
(B) The representative may be any person of
the applicant's or licensee's choosing, including, but not limited to, an
attorney, accountant, bookkeeper, employee, consultant or business
associate.
(3) Conduct of
Hearing.
(A) Purpose of Hearing. The purpose
of the hearing is to allow the hearing officer and the applicant or licensee to
address the relevant issues raised by the request for release and to develop
the factual basis for a decision on the request for release.
(B) Reasonable Accommodations. The Franchise
Tax Board shall provide reasonable accommodations to any applicant, licensee,
representative or witness who has a disability and requires such accommodations
to facilitate the hearing process. An applicant or licensee shall notify the
Franchise Tax Board in writing of the need for reasonable accommodations at the
same time that the applicant or licensee submits a written request to the
Franchise Tax Board for a hearing in accordance with this regulation. Such
notification shall specify the accommodations needed.
(C) Language Assistance.
1. An applicant or licensee who cannot speak
or understand English or who can do so only with difficulty shall receive
language assistance at the hearing if:
a. The
applicant or licensee supplies an interpreter,
b. The applicant or licensee requests in
accordance with subsection (d)(3)(C)2. that the Franchise Tax Board supply an
interpreter who is a member of the Franchise Tax Board's staff, other than the
hearing officer, and one is available, or
c. The applicant or licensee requests in
accordance with subsection (d)(3)(C)2. a certified hearing interpreter from the
list of such interpreters maintained by the State Personnel Board, and one is
available.
2. An
applicant or licensee requesting the Franchise Tax Board to supply language
assistance services under subsection (d)(3)(C)1.b. or c. shall notify the
Franchise Tax Board of the request at the same time as the applicant or
licensee submits a written request to the Franchise Tax Board for a hearing in
accordance with this regulation. Such notification shall specify the language
assistance needed.
3. If the
applicant or licensee requests a certified administrative hearing interpreter
pursuant to subsection (d)(3)(C)1.c. and one is supplied, the cost of supplying
the interpreter shall be paid by the applicant or licensee, unless, upon
request of the applicant or licensee, the hearing officer directs the Franchise
Tax Board to pay such cost. The hearing officer's decision to direct the
Franchise Tax Board to pay such cost shall be based upon an equitable
consideration of all the circumstances of the case, such as the ability of the
applicant or licensee to pay.
4. A
person providing language assistance under subsection (d)(3)(C)1.a. shall not
be considered a representative for purposes of subsection (d)(2), unless so
designated by the applicant or licensee.
(D) Confidentiality. The hearings under this
regulation are part of the administrative process of the Franchise Tax Board
and are covered by the confidentiality provisions contained in Article 2 of
Chapter 7 of Part 10.2 of the Revenue and Taxation Code.
(E) Attendance of Persons Other Than
Applicant, Licensee, Staff of the Franchise Tax Board, Hearing Witnesses of the
Franchise Tax Board, and Hearing Officer. No person other than the applicant,
licensee, staff of the Franchise Tax Board, hearing witnesses of the Franchise
Tax Board and the hearing officer shall be entitled to attend the hearing
unless the hearing officer receives:
1.
Written notice signed by the applicant or licensee authorizing such person to
attend the hearing, and
2. Such
person provides the hearing officer with a signed written statement that:
a. Such person shall not record the hearing
by means of an audio or video recording or any other means, and
b. Such person shall follow any instructions
given by the hearing officer.
(F) Recording Transcript and Records of
Hearing.
1. The Franchise Tax Board is not
required to record the hearing by means of an audio or video recording or any
other means or to prepare a transcript of a hearing under this
regulation.
2. The Franchise Tax
Board is not required to maintain a record of the documents submitted or
statements made during the course of a hearing after the applicant's or
licensee's entitlement to a release has been decided.
3. No one other than the Franchise Tax Board
shall have the right to record the hearing by means of an audio or video
recording or any other means.
(G) Witnesses and Documentary Evidence. At a
hearing, the applicant or licensee may present witnesses and/or offer
documentary evidence in support of the applicant's or licensee's request that
the Franchise Tax Board send a release under section
494.5
of the Business and Professions Code and to rebut evidence of the Franchise Tax
Board.
1. Witnesses.
a. Oral testimony will be evaluated by the
hearing officer in making a decision on the request for release.
b. Oral testimony will be under
oath.
c. The applicant or licensee
and the Franchise Tax Board shall exchange a list of the names of witnesses who
will be present at the hearing so that such lists are received at least five
(5) business days prior to the hearing.
d. The hearing officer may limit the
testimony of witnesses if and when the hearing officer determines testimony to
be repetitious, redundant, or irrelevant.
e. The Franchise Tax Board is not required to
compel witnesses to appear at a hearing.
2. Documentary Evidence.
a. Documentary evidence will be evaluated by
the hearing officer in making a decision on the request for release.
b. Documentary evidence will be submitted
under penalty of perjury.
c. The
applicant or licensee and the Franchise Tax Board shall exchange a copy of any
documentary evidence to be offered in support of their positions so that such
documentary evidence is received at least five (5) business days prior to the
hearing.
d. The Franchise Tax Board
is not required to compel production of documents at a
hearing.
(H)
Termination of Hearing. The hearing officer shall have the authority to
terminate a hearing. Grounds for terminating a hearing include, but are not
limited to:
1. The applicant or licensee or
the applicant's or licensee's representative persists in making repetitious or
irrelevant statements, or
2. The
applicant or licensee, the applicant's or licensee's representative, or any
other individual permitted to be at the hearing by the applicant or licensee
behaves in a disruptive manner or does not follow the hearing officer's
instructions.
(e) Decision.
(1) In reaching a decision, the hearing
officer shall consider the following:
(A) Any
documents or other evidence, including, but not limited to, any financial
statements, submitted by or on behalf of the Franchise Tax Board in accordance
with this regulation,
(B) Any
documents or other evidence, including, but not limited to, any financial
statements, submitted by or on behalf of the applicant or licensee in
accordance with this regulation,
(C) Whether the applicant or licensee has
submitted the information and documentation related to assets, income or
expenses or any other information or documentation requested by the Franchise
Tax Board for the purposes of making the determination of whether the applicant
or licensee is unable to pay the outstanding tax obligation due to a current
financial hardship under subdivision (h)(3) of section
494.5
of the Business and Professions Code in the form requested by the Franchise Tax
Board and under penalty of perjury,
(D) Whether the applicant or licensee has
acted with diligence in responding to notices from the applicable state
governmental licensing entity and the Franchise Tax Board as required by
subdivision (i) of section
494.5
of the Business and Professions Code,
(E) Any argument made by the applicant or
licensee, the applicant's or licensee's representative or the Franchise Tax
Board, and
(F) The hearing
officer's experience, technical competence and specialized
knowledge.
(2) In
determining whether the applicant or licensee is entitled to a release under
section
494.5
of the Business and Professions Code, the hearing officer shall apply
Regulation section
19195-2.
(3) Within five (5) business days of the
completion of the hearing, the hearing officer shall decide whether the
applicant or licensee is entitled to a release under section
494.5
of the Business and Professions Code.
(A) If
the hearing officer decides that the applicant or licensee is entitled to a
release under section
494.5
of the Business and Professions Code, the Franchise Tax Board shall immediately
send a release to the applicant or licensee and the applicable governmental
licensing entity.
(B) If the
hearing officer decides that the applicant or licensee is not entitled to a
release under section
494.5
of the Business and Professions Code, the Franchise Tax Board shall, within
five (5) business days of the completion of the hearing, send a written
notification to the applicant or licensee that:
1. Informs the applicant or licensee that the
hearing officer has decided that the applicant or licensee is not entitled to a
release, and
2. Provides the
applicant or licensee with the hearing officer's written decision that the
applicant or licensee is not entitled to a release. The decision shall be based
on the items described in subsection (e)(1) and shall include a statement of
the factual and legal basis of the decision related to whether the applicant or
licensee is entitled to a release under section
494.5
of the Business and Professions Code and the names of all persons in attendance
at the hearing. If the decision is based substantially on the credibility of
one or more witnesses, the decision shall identify any specific evidence of the
observed demeanor, manner or attitude of the witnesses that supports the
determination, and
3. Informs the
applicant or licensee of the right to request reconsideration of the hearing
officer's decision under this regulation and the procedure for requesting
reconsideration, and
4. Informs the
applicant or licensee of the right to request review of the hearing officer's
decision by the Taxpayers' Rights Advocate or the Taxpayers' Rights Advocate's
designee under this regulation and the procedure for requesting
review.
(4) If
a hearing is provided, the Franchise Tax Board shall be deemed to have
completed its release review and to have sent notice of its findings to the
applicant or licensee as required by subdivisions (h)(2) of section
494.5
of the Business and Professions Code once the Franchise Tax Board has either
sent:
(A) A release to the applicant or
licensee and the applicable governmental licensing entity, or
(B) The notification as required by
subsection (e)(3)(B) to the applicant or
licensee.
(f)
Request for Reconsideration by Hearing Officer.
(1) The applicant or licensee has the right
to submit one (1) written request that the hearing officer reconsider the
hearing officer's decision that the applicant or licensee is not entitled to a
release, provided:
(A) The applicant or
licensee submits the request so that it is received by the Franchise Tax Board
within ten (10) business days of the date the applicant or licensee receives
the notification under subsection (e)(3)(B), and
(B) The applicant or licensee has not and
does not request a review of the hearing officer's decision by the Taxpayers'
Rights Advocate or the Taxpayers' Rights Advocate's designee under this
regulation prior to the time the hearing officer makes a decision related to
the request for reconsideration by the applicant or
licensee.
(2) Within
seven (7) business days of the Franchise Tax Board's receipt of the request for
reconsideration, the hearing officer shall decide whether the applicant or
licensee is entitled to a release based on the items described in subsection
(e)(1), the information and argument included in the request for
reconsideration, and any documents and information relevant to the matter that
are under the control of the Franchise Tax Board.
(A) If the hearing officer decides that the
applicant or licensee is entitled to a release under section
494.5
of the Business and Professions Code, the Franchise Tax Board shall immediately
send a release to the applicant or licensee and the applicable governmental
licensing entity.
(B) If the
hearing officer decides that the applicant or licensee is not entitled to a
release under section
494.5
of the Business and Professions Code, the Franchise Tax Board shall immediately
send a written notification to the applicant or licensee that:
1. Notifies the applicant or licensee that
the hearing officer has decided that the applicant or licensee is not entitled
to a release, and
2. Notifies the
applicant or licensee of the right to request review of the hearing officer's
decision by the Taxpayers' Rights Advocate or the Taxpayers' Rights Advocate's
designee and the procedure for requesting such
review.
(3) The
applicant or licensee shall not have a right to a hearing in connection with a
request for reconsideration under this subsection (f).
(g) Request for Review by Taxpayers' Rights
Advocate.
(1) The applicant or licensee has
the right to submit one (1) written request for review of the hearing officer's
decision that the applicant or licensee is not entitled to a release to the
Taxpayers' Rights Advocate or the Taxpayers' Rights Advocate's designee,
provided:
(A) The applicant or licensee
submits the request so that it is received by the Franchise Tax Board on or
before the later of:
1. Ten (10) business days
after the date the applicant or licensee receives the notification under
subsection (e)(3)(B), and
2. Ten
(10) business days after the date the applicant or licensee receives
notification from the Franchise Tax Board under subsection (f)(2)(B), if the
applicant or licensee has submitted a request for reconsideration that complies
with subsection (f)(1)(A) and (B), and
(B) If the applicant or licensee has
submitted a request for reconsideration that complies with subsections
(f)(1)(A) and (B), the applicant or licensee has received notification under
subsection (f)(2)(B).
(2)
If an applicant or licensee submits a request for review by the Taxpayers'
Rights Advocate or the Taxpayers' Rights Advocate's designee prior to receiving
notification from the Franchise Tax Board under subsection (f)(2)(B), the
applicant or licensee waives the right to a decision on reconsideration by the
hearing officer under subsection (f)(2).
(3) Within seven (7) business days of the
Taxpayers' Rights Advocate's receipt of a request that complies with
subsections (g)(1)(A) and (B), the Taxpayers' Rights Advocate or the Taxpayers'
Rights Advocate's designee shall decide whether the applicant or licensee is
entitled to a release based on the items described in subsection (e)(1), the
decision of the hearing officer, the information and argument included in the
request for review and any documents and information relevant to the matter
that are under the control of the Franchise Tax Board.
(A) If the Taxpayers' Rights Advocate or the
Taxpayers' Rights Advocate's designee decides that the applicant or licensee is
entitled to a release under section
494.5
of the Business and Professions Code, the Franchise Tax Board shall immediately
send a release to licensee or applicant and the applicable governmental
licensing entity.
(B) If the
Taxpayers' Rights Advocate or the Taxpayers' Rights Advocate's designee decides
that the applicant or licensee is not entitled to a release under section
494.5
of the Business and Professions Code, the Taxpayers' Rights Advocate or the
Taxpayers' Rights Advocate's designee shall immediately send a written
notification to the applicant or licensee that the Taxpayers' Rights Advocate
or the Taxpayers' Rights Advocate's designee has decided that the applicant or
licensee is not entitled to a release.
(4) The applicant or licensee shall not have
a right to a hearing in connection with a request for review under this
subsection (g).
(h)
Resolution Outside Hearing Process.
At any time, an applicant or licensee may discuss with the collector assigned to the applicant's or licensee's account the resolution of the request for release and resolve the request for release.
(i) Other Requests
for Release.
Even if an applicant or licensee is not entitled to a hearing under this regulation, the Franchise Tax Board shall consider and respond to any request for release received from an applicant or licensee, provided that, in the case of multiple requests for release in connection with the same preliminary notice or preliminary notices, such request is based on a material change of circumstances.
(j) Notifications, Notices and Requests.
(1) Notifications and Notices to Applicant or
Licensee. All notifications and notices to the applicant or licensee under this
regulation shall be mailed by first-class mail to the address of the applicant
or licensee on the request for a release or, in the absence of such address, to
the last known address of the applicant or licensee pursuant to section
18416
of the Revenue and Taxation Code, unless the applicant or licensee notifies the
Franchise Tax Board in a writing signed by the applicant or licensee of an
alternative address. If the applicant or licensee notifies the Franchise Tax
Board in a writing signed by the applicant or licensee of an alternative
address, all future notices to the applicant or licensee under this regulation
shall be mailed by first-class mail to that address. In addition to sending
notices and notifications by first-class mail, all notifications and notices to
the applicant or licensee under this regulation may be sent by facsimile or
encrypted email, if the applicant or licensee requests in writing that the
Franchise Tax Board send notifications and notices to the applicant or licensee
by facsimile or encrypted email and provides sufficient instructions to do
so.
(2) Notifications, Notices and
Requests to Franchise Tax Board. All notifications, notices and requests to the
Franchise Tax Board under this regulation shall be mailed by first-class mail
to the address and unit that the Franchise Tax Board shall designate by FTB
Notice. In addition to sending notifications, notices and requests by
first-class mail, all notifications, notices and requests may also be sent by
facsimile or email, if such method is described in the FTB
Notice.
(k) Applicable
Date of Regulation. This regulation shall apply to any request for release
under section
494.5
of the Business and Professions Code received by the Franchise Tax Board on or
after the effective date of this regulation.
Notes
2. Editorial correction of NOTE (Register 2017, No. 21).
3. Certificate of Compliance as to 11-17-2016 order, including amendment of subsections (e)(3)(B), (g)(1)(A)2. and (k), transmitted to OAL 4-20-2017 and filed 5-24-2017; amendments operative 5-24-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 21).
Note: Authority cited: Section 494.5, Business and Professions Code; and Section 19503, Revenue and Taxation Code. Reference: Section 494.5, Business and Professions Code; Section 19195, Revenue and Taxation Code; and Sections 11435.20 and 11435.25, Government Code.
2. Editorial correction of Note (Register 2017, No. 21).
3. Certificate of Compliance as to 11-17-2016 order, including amendment of subsections (e)(3)(B), (g)(1)(A)2. and (k), transmitted to OAL 4-20-2017 and filed 5-24-2017; amendments operative 5-24-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 21).
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