A potential sweeping change was made to California tax law and policy when the legislature passed AB 102, the Taxpayer Transparency and Fairness Act of 2017. This act divests the Board of Equalization of several key functions and creates two new government tax agencies–the Department of Tax and Fee Administration an the Office of Tax Appeals.
Under current law, the BOE administers various tax and fee programs, including the sales and use tax; adopts rules and regulations to clarify tax laws; acts as an appellant body for the review of property, business and income tax assessments; assesses and allocates the property tax values of railroads and specified utilities; and oversees the property tax assessment practices of all 58 counties.
Effective July 1, 2017, the Act confers all of the BOE’s collection and administrative responsibilities related to various taxes and fees, such as tobacco taxes, cannabis taxes, and sales and use tax, on the California Department of Tax and Fee Administration. The Act also grants the Office of Tax Appeals the authority to perform the BOE’s appellate duties. The BOE would maintain its duties as provided in the California Constitution, which include reviewing and adjusting certain property tax assessments and setting certain tax rates.
The Act establishes that within the Office of Tax Appeals there will be tax panels consisting of three administrative law judges. Essentially, the Office of Tax Appeals will hear the same types of appeals previously heard by the BOE.
The tax panels would begin conducting appeals January 1, 2018.
While opinions vary, it is my guess that the move from an elected tax appeals board to three administrative law judges will create a somewhat higher burden on taxpayers, and result in less leniency on close cases. In particular, one key feature of the board was that taxpayers could communicate with board members prior to hearings. Such correspondence was unquestionably helpful to the taxpayer.