REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, MBA, City Controller/Director
Finance Department
BY: JOCELYN FREITAS, Assistant Director
Finance Department
SUBJECT
Title
RESOLUTION - Authorizing a Reciprocal Data Exchange Agreement with the California Franchise Tax Board for the City/County Business Tax Program to exchange of business license tax data
Body
RECOMMENDATION
Staff recommends that City Council authorize a reciprocal agreement with the California Franchise Tax Board for the Exchange of Business License Tax Data. Recommended actions include: Adopt a Resolution authorizing a reciprocal agreement with the California Franchise Tax Board for the exchange of business license tax data; and Authorize the City Manager, Finance Director or their respective designee(s) to execute a non-financial reciprocal agreement with the California Franchise Tax Board for the exchange of business license tax data for a term beginning July 1, 2026, through December 31, 2028, subject to non-substantive changes approved by the City Manager and City Attorney.
EXECUTIVE SUMMARY
The City of Fresno (City) Municipal Code (FMC) Chapter 7, Article 10, known as the Business Licenses - General Provisions Code, is intended to provide a revenue stream for the general operation of the City by the levy of a business license tax on all business transactions or activities carried on or occurring within Fresno and is not intended for regulation.
The data exchange program with the California Franchise Tax Board (FTB) enables both Fresno and the FTB to share information and identify non-compliant businesses. By participating in the data exchange program, the City will have the ability to ensure that the City receives the revenue it is legally entitled to collect.
The Agreement with the FTB is valid for two years and seven months at a time. Under the terms of the Agreement with the FTB, the City will be required to send data to the FTB annually each June. The data required includes ownership name, address information, Employer ID number, and business start date. The FTB will send the City similar information from their database each year in December, as well as information on taxpayers who file business-related income tax returns. Under the terms of this Agreement, the data exchange will continue through December 2028. Neither the FTB nor the City would be reimbursed for the cost of providing data and neither party will be charged for receiving data from the other agency. Should the City choose to discontinue participating in the data exchange program, the Agreement may be terminated within thirty (30) days written notice to the FTB.
Staff recommends the adoption of a Resolution authorizing a reciprocal agreement with the California Franchise Tax Board for the continued exchange of business data.
BACKGROUND
The California Revenue & Taxation Code (R&TC) provides statutory authority for the exchange of business tax and licensing data between local jurisdictions and the California Franchise Tax Board (FTB):
• R&TC Section 19551.1 authorizes cities to enter into reciprocal agreements with the FTB for the exchange of specified tax information
• R&TC Section 19551.5 requires cities to provide business license and tax information to the FTB upon request
The FTB’s City Business Tax Program is designed to improve business tax compliance by allowing FTB and local jurisdictions to exchange data that helps identify businesses operating without required local licensing or with incomplete or outdated information.
The Standard Agreement, which includes Exhibits A through G, outlines the responsibilities of both parties, confidentiality and data security requirements, and specific data formatting and transmission standards. Under Exhibit A, Item 10, the FTB requires the City to provide a Council-approved resolution or other governing-body authorization before the FTB will release any data to the City.
ENVIRONMENTAL FINDING
There is no environmental impact associated with this action.
LOCAL PREFERENCE
There is no local preference consideration with this action.
FISCAL IMPACT
There is no fiscal impact associated with this Ordinance adoption. Any staff time required to prepare and transmit the City’s data file or review incoming FTB data will be handled within existing departmental resources.
Attachments:
Resolution
FTB Agreement