TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Isidro Figueroa, Community Development Director
DATE: November 13, 2024
SUBJECT: APPROVAL OF FRANCHISE TAX BOARD DATA SHARING
AGREEMENT
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Efficient, Responsive, and Effective City Services
Fiscally Responsible and Transparent City Government
BACKGROUND
The California Franchise Tax Board (FTB) offers a data sharing program where the City and State can share business license tax data in exchange for the State’s income tax information. This allows each agency to ensure that business owners are properly registered with both agencies and are properly reporting their taxes.
DISCUSSION
Since 2016, the City has participated in the City/County Business Tax Program (CCBT) with the California Franchise Tax Board (FTB). This data-sharing program allows the exchange of business license and income tax data to ensure proper registration and tax reporting by businesses.
On January 12, 2022, the City Council authorized the City Manager to renew the agreement, which is set to expire on December 31, 2024. If the City decides to continue participation, the agreement will be effective from January 1, 2025, to December 31, 2027.
Steven W. Huang, DDS, Mayor
Gretchen Shepherd Romey, Vice Mayor
Tony Chou, Council Member
Calvin Lo, Council Member
Steve Talt, Council Member
Key Features of the Program:
• The program authorizes the reciprocal exchange of limited confidential data between FTB and participating cities/counties.
• Participating cities/counties provide their local business license data to FTB. In exchange, FTB completes a data match for business activity in the respective city or county.
• This data exchange aids 1) FTB in finding businesses who do not file income tax returns and 2) cities and counties in identifying unlicensed businesses within their jurisdiction.
• There is no charge to either party for this reciprocal agreement.
Procurement review is not applicable.
• This program will identify unauthorized or unlicensed entrepreneurs or companies conducting business in the City without a business license.
This program will identify such action when the business files their personal or corporate state income tax.
• We transmit data using Secure Web Internet File Transfer (SWIFT) to securely transmit data to and from FTB.
• Participation in the program is voluntary.
In addition, California Revenue and Taxation Code Section 19551.5 mandates counties to provide city business licensing and tax information to the FTB upon request. Section 19551.1 authorizes such agreements for the purpose of sharing tax information.
FISCAL IMPACT & PROCUREMENT REVIEW
There is no cost to the City to participate in this program. Procurement review is not applicable.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends the Council approve the FTB Data Sharing Agreement and direct the City Manager to execute the agreement and future extensions as needed. If the City Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to approve the Franchise Tax Board Data Sharing Agreement and direct the City Manager to execute the agreement and future extensions as needed.”
ATTACHMENTS
1. Franchise Tax Board Data Sharing Agreement
2. Exhibits A, B, D, E, F & G to Agreement
3. GenAI Disclosure STD 1000