Without much fanfare, the State of California enacted legislation (California Revenue & Tax Code § 19266) that will impact virtually every bank, credit union, thrift and brokerage firm doing business in California. This new program will place a new burden on financial institutions in order to help the State collect delinquent taxes.

The FIRM Program -

Starting in April 2012, account information of global financial institutions must be matched against the list of the Franchise Tax Board’s (“FTB”) delinquent tax debtors on a quarterly basis. The FTB is the agency charged with enforcement of California corporate and individual income tax laws. Both business entity and individual tax debts are included in the program. The FTB refers to the program as the Financial Institution Record Match (“FIRM”). A FIRM Program Administrator will be designated by the FTB to receive the information from the financial institutions. Regulations detailing the FIRM program are expected to be released soon.