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AUTOMATIC EXTINGUISHMENT OF QUALIFIED DISCHARGE DEBTS

PURPOSE OF BULLETIN

To inform staff beginning October 29, 2009, automatic extinguishment of qualified discharge debts increased from $250 to $500.

BACKGROUND

In 2005, AB 911 amended Government Code Section 13943.1 requiring us to permanently extinguish any discharged debts that met one of the following criteria:

  • Over 30 years old.
  • Balance due under $250.
  • Permanent financial hardship.

Note: R&TC Section 19255 requires us to permanently abate unpaid debts after 20 years.

ADDITIONAL INFORMATION

On July 28, 2009, SBX4 16 amended Government Code Sections 13943.1 and 13943.2 increasing the balance due discharge amount to under $500. System changes will be implemented in both the Taxpayer Information System (TI) and Business Entities Tax System (BETS) for all debts that meet the criteria.

The new updated code that will display for the extinguish transaction has been modified.

There is no change to the TI displays. Users will continue to see “GC DB W/O” on each tax year that meets the automatic extinguishment criteria.

 

Back to Public Service Bulletins - 2009