New Legislation to Reform the California Tax Appeal System

In light of a number of problems at the California State Board of Equalization (BOE), the California General Assembly has passed legislation that, if enacted, would strip the BOE of all but its constitutionally mandated tax functions. In addition, the legislation would create a new Department of Tax and Fee Administration (DTFA) and a new Office of Tax Appeals (OTA) to assume between the two of them all the other current duties, powers, and responsibilities of the BOE. Some of the changes would be operative as early as July 1, 2017.
Operational Culture
According to legislative findings in the bill, "the board’s operational culture severely impacts its ability to report accurate and reliable information to the public, the administration, and the Legislature."The findings enumerated specific problems with the current board, including:
  • inappropriate intervention by board members in administrative and appeal-related activities;
  • numerous complaints concerning attempts by the board members and their staffs to influence audits, investigations, and collection activities by civil service employees;
  • exertion of undue influence by board members and their staffs that handicapped employees in their efforts to fairly apply the law;
  • routine interference by board members or their staffs that effectively eliminated the ability of the executive director and upper management to operate the organization; and
  • significant errors in the allocation of sales and use tax revenue due to the board’s failure to focus on its core responsibilities.
If signed by the Governor, the legislation would cut back the duties, powers, and responsibilities of the board to various property tax assessment and equalization functions and assessment of taxes on insurers authorized by Article XIII of the state constitution; assessment and collection of excise taxes on alcohol pursuant to Article XX of the state constituted; and the duty to adjust the rate of the motor vehicle fuel tax for the 2018-19 fiscal year (residual responsibilities).
In relation to administrative matters, members of the BOE will not be permitted to appoint, remove, discipline, or issue orders to any BOE employee. BOE members are also prohibited from interfering with or influencing the process of the BOE’s or the DTFA’s legislative analyses, or any other form of technical assistance requested by the governor or the Legislature.
Department of Tax and Fee Administration
Operative July 1, 2017, the DTFA would be the successor to the duties, powers, and responsibilities of the BOE, except for the its residual responsibilities and its ability to conduct appeals hearings. Generally, unless the context clearly requires otherwise, whenever any reference to the BOE appears in any statute, regulation, contract, or other code, with respect to the functions transferred to the DTFA, it will be deemed to refer to the DTFA.
Office of Tax Appeals
Beginning January 1, 2018, the OTA would be the successor to all of the duties, powers, and responsibilities of the BOE necessary or appropriate to conduct appeals hearings, except as those powers relate to the BOE’s residual responsibilities. For purposes of this change, “appeal” means:
  • various types of petitions,
  • an administrative protest,
  • a claim for refund,
  • an appeal from an action by the Franchise Tax Board (FTB),
  • an application, including an application for administrative hearing, and
  • any other item that may be scheduled for a hearing, including requests for relief of taxes, fees, interest, or penalties.
Also beginning January 1, 2018, the BOE would not be permitted to conduct appeals, except as they relate to its residual responsibilities.
A.B. 102, Laws 2017, as sent to enrolling June 15, 2017

Wilsontaxlaw.com  


Popular posts from this blog

Wilson Tax Law Receives Global Award as Federal Tax Law Firm of the Year in the USA

Federal Court Permanently Bars Orange County Based Tax Preparer from Preparing Federal Tax Returns

Cali Resident Guilty Stealing Homeless IDs and Using Them to Seek Fraudulent Tax Refunds