The Franchise Tax Board (FTB) administers California’s Personal Income Tax Law, Bank and Corporation Tax Law, and Homeowner and Renter Assistance Law, which are elements of the California Revenue and Taxation Code (R&TC).
During 1999, the three-member board was chaired by the current State Controller, Kathleen Connell. The other board members were Johan Klehs, Chair of the Board of Equalization, and B. Timothy Gage, Director of the Department of Finance.
Gerald H. Goldberg, the Board’s appointed Executive Officer, directed the activities of approximately 4,500 permanent full-time employees and approximately 2,200 seasonal employees. FTB had offices located throughout California and in Texas, Illinois, and New York.
Personal Income Tax (Full-Year California Residents)*
| Item |
1997 Filed in 1998) |
1998 (Filed in 1999) |
Percent Change |
| Number of Returns | 12,473,473 | 12,796,604 | 2.6 |
| Number of Taxable Returns | 8,879,183 | 8,211,743 | -7.5 |
| Taxable Income | $
473,083,814 |
$ 522,562,770
|
10.5 |
| Total Tax Liability | $
23,877,801 |
$
26,203,573 |
9.7 |
Bank and Corporation Tax*
| Item |
Income Years Ending in 1997 |
Income Years Ending in 1998 |
Percent Change |
| Number of Returns | 443,757 | 460,567 | 3.8 |
| Income Reported for Taxation | $
54,167,157 |
$
50,520,066 |
-6.7 |
| Total Tax Liability | $
5,203,526 |
$
5,023,555 |
-3.5 |
Homeowner and Renter Assistance*
| Item | 1998 | 1999** | Percent Change |
| Number of Claimants | 131,564 | 384,122 | 192.0 |
| Amount of Assistance | $
11,426 |
$
69,989 |
512.5 |
| * Dollars in thousands.
**See the HRA discussion regarding the legislative change. |
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During the 1999 calendar year, FTB processed the 1998 tax returns of individuals and corporations and the 1999 claims of homeowners and renters.
The Personal Income Tax Program experienced a 2.6 percent increase in the number of returns filed and a 7.5 percent decrease in the number of taxable returns filed. Taxable income increased by 10.5 percent and total tax liability increased by 9.7 percent.
The Bank and Corporation Program saw the number of returns filed increase by 3.8 percent. California net income decreased by 6.7 percent and total tax liability decreased by 3.5 percent.
The Homeowner and Renter Assistance Program experienced a 512.5 percent increase in assistance paid and a 192.0 percent increase in the number of claimants. This large increase was due to the legislative change.
More information about the department’s programs is presented in other sections of this report.
Legislation enacted in 1999 affected treatment of losses sustained as a result of a freeze or any related casualty that occurred during the winter of 1998-1999. Other legislation resulted in conformity to federal tax law provision, renter’s credit as a nonrefundable credit, and child support collection and enforcement. Also California added two new Voluntary Contribution Funds: the California Mexican American Veterans’ Memorial, and the Emergency Food Assistance Program.
For more information about these measures and other legislation enacted in 1999, see the legislation section.
For detailed information about Personal Income Tax, Bank and Corporation Tax, and Homeowner and Renter Assistance, see the attached appendices to this report.
During 1999, the department implemented significant technological advances and enhancements to improve the efficiency of the department’s programs. Some of these advances allowed certain qualified taxpayers to resolve their tax bills by using their credit cards. Taxpayers who filed electronic returns (e-filers) with a balance due had an electronic payment (e-pay) option. With this new option, e-filers with a balance due authorized FTB to debit their bank account on a specified date for the amount due. Also, the Direct Deposit was available to first-time filers or e-filers who had tax refunds. In 1999, FTB processed 462,000 direct deposit requests, an increase of 179.0 percent over 1998.
Responding to requests from practitioners for an easier power of attorney process, FTB unveiled a new automated power of attorney system in August. In the past, powers of attorneys were manually processed and maintained, and the original documents were difficult to track. The new system featured a new centralized computer database called the POA (Power of Attorney) file. It used automation technology and centralization procedures similar to those used by the IRS centralized authorization file. This database could retain valuable POA information to help improve the process.
The Modernization and Reengineering of the Cashiering System (MARCS) Project that was part of the overall Reengineering and Modernization of Processing (RAMP) was implemented in February, 1999. The goal of MARCS was to replace and modernize FTB’s cashiering process. The MARCS system, which uses state-of-the-art imaging technology was phased in with Personal Income Tax remittance workloads, such as income tax returns, estimates, bill payments, and voucher payments. Once fully implemented, it will ensure that the department can cashier revenue well into the next century.
The programs administered by the department collected over $38.7 billion, representing 62.0 percent of the General Fund revenue for 1999.
The Personal Income Tax Program accounted for nearly 53.0 percent of the General Fund total and the Bank and Corporation Tax Program accounted for over 9.0 percent.
General Fund Calendar Year Collections: Cash Basis*
|
Item |
1998 | 1999 | Percent |
||
| Amount (Millions) |
Percent Of Total |
Amount (Millions) |
Percent Of Total |
||
| Personal Income Tax | $ 29,062.5 |
51.8 | $ 33,001.7 |
52.8 | 13.6 |
| Bank and Corporation Tax | 5,748.9 | 10.2 | 5,751.4 | 9.2 | 0.0 |
| Subtotal | $34,811.3 | 62.0 | $38,753.1 | 62.0 | 11.3 |
| Retail Sales and Use Tax | 17,832.1 |
31.8 | 19915.5 | 31.9 | 11.7 |
| Estate, Gift and Inheritance Tax |
901.2 |
1.6 | 924.3 | 1.5 | 2.6 |
| Insurance Company Tax | 1,276.2
|
2.3 | 1275.1 | 2.0 | -0.1 |
| Cigarette Tax |
155.7 |
0.3 | 140.8 | 0.2 | -9.6 |
| Alcoholic Beverage Excise Tax |
269.1 |
0.5 | 279.3 | 0.4 | 3.8 |
| Horse Racing Fees |
43.7 |
0.1 | 13 | 0.0 | -70.3 |
| Other Revenues Plus Interest | |||||
| on Investments |
844.2 |
1.5 | 1212.7 | 1.9 | 43.7 |
| Subtotal | $21,322.2 | 38.0 | $23,760.7 | 38.0 | 11.4 |
| Total | $56,133.6 | 100.0 | $62,513.8 | 100.0 | 11.4 |
| *Derived from the monthly State Controller's Cash Receipts and Disbursements Report. These figures are not directly comparable to the data in the Personal Income Tax and Bank and Corporation Tax Appendices, which are expressed on a taxable year basis. Totals may not add due to rounding. |
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General Fund Revenues 1999 Calendar Year
| Franchise Tax Board - 62.0% |
|
|
|
|
| Personal Income Tax - 52.8% |
Bank and Corporation Tax - 9.2% |
All Other Sources - 38.0% |