The poor, unfortunate, disadvantaged tax agencyPosted by Greg Hines, Legislative Director, Tax & Corporate Counsel on April 23, 2010
Today, all Californian’s can rest easy knowing that the State of California’s tax enforcement and administration functions are split between two agencies. The Franchise Tax Board (FTB), who administers the Personal Income and Corporation Tax laws, and the Board of Equalization (BOE), whose responsibilities include the administration of the state’s sales and use taxes, excise tax, special taxes and fees, as well as property valuation.
In addition to the BOE’s regular duties, the Board also serves as adjudicator of personal and corporate income and tax appeals after specific issues have exhausted the FTB’s administrative dispute process. Under current law, if the BOE denies the taxpayer's appeal, the taxpayer may bring action in state court. However, if the FTB's original decision is overturned, the taxpayer has prevailed and the issue is considered resolved.
The proponents claim this is all about leveling the playing field -- that the Board of Equalization is somehow inadequately prepared or unqualified to adequately adjudicate these taxpayer appeals. Remember this important fact: Two of the Franchise Tax Board’s three-member board are constitutionally elected members of the five-member Board of Equalization. SB 1113 would not only allow the state to appeal, but also would require the taxpayer to maintain the burden of proof throughout the entire process, both during administrative appeal, and then again in court should the FTB decide that they do not like the decision made by their own members.
Proponents of the measure seem to claim that the system is unfair. That the poor, disadvantaged tax agency of the State of California has somehow been abused and disadvantaged by the taxpayer for years as a result of an appeals process. Does the final adjudication by some of the FTB’s own members provides an advantage to the taxpayer? Under the guise of “leveling the playing field” SB 1113 gives the state's tax collection agencies on more bite at the apple -- apparently agencies representing a state with the 9th largest economy in the world are being abused by the unfair rights of taxpayers.
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