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Board of Equalization Rules for California Tax Administration and Appellate Review. Introduction & Overview. Proposed Board of Equalization Rules for California Tax Administration and Appellate Review (Proposed Rules).

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board of equalization rules for california tax administration and appellate review

Board of Equalization Rules for California Tax Administration and Appellate Review

Introduction & Overview

slide2
Proposed Board of Equalization Rules for California Tax Administration and Appellate Review (Proposed Rules)
  • Reviewing petitions, claims for refund, and requests for relief of penalties for all of theBusiness Taxes and Fees
  • Reviewing petitions and applications for Property Tax Programs administered by the Board
  • Acting on appeals of Franchise Tax Board actions

The Proposed Rules are Designed to Encompass all of the Board’s Procedures for:

intent of the proposed rules transparency and responsiveness
Intent of the Proposed RulesTransparencyand Responsiveness:
  • Provide a single source for all of the Board’s procedures from the initiation of administrative review to the Board’s final decision
  • Increase transparency by providing more detailed procedures for all the Board’s programs
  • Improve voluntary compliance and public trust by reorganizing the Board’s procedures to be more accessible to the public
  • Maintain responsiveness to the public by addressing specific concerns raised to the Board
increasing transparency these proposed rules will
Increasing TransparencyThese Proposed Rules Will:
  • Create new procedural regulations for Business Taxes and Fees to replace numerous operations memos and publications
  • Replace and augment current regulations with more detailed regulations for Property Tax petitions
  • Prescribe new procedures for the Franchise and Income Tax appeals briefing process
  • Create new Board Hearing Procedure regulations containing information that was not easily accessible to the public
reorganization of the board s procedures will improve public access
Currently, the Board’s procedures are spread throughout the:

Revenue and Taxation Code

California Code of Regulations

Board Publications, Forms, and Operations Memos

These Proposed Rules will reorganize the procedures into one location in the California Code of Regulations

Procedures will be organized by tax program and their chronological sequence in the administrative or appellate review process

Reorganization of the Board’s ProceduresWill Improve Public Access:
improving responsiveness to the public proposed rules address public concerns
Improving Responsiveness to the PublicProposed Rules Address Public Concerns
  • Appropriateness of communications with Board Members
  • Defining confidentiality of tax and fee payer information upon an oral hearing before the Board
  • Publication of Board Decisions
slide7
Organization of the Proposed RulesFor Discussion Purposes the Proposed Rules are Divided into Five Parts:
  • Part 1, Statement of Intent; Title
  • Part 2, Review of Sales and Use Taxes,Timber Yield Tax, and Special Taxes and Fees (Business Taxes and Fees)
  • Part 3, Administrative Review of Property Taxes
  • Part 4, Appeals of Franchise Tax Board Actions
  • Part 5, General Board Hearing Procedures
organization of the proposed rules the proposed rules are divided into five parts
Organization of the Proposed RulesThe Proposed Rules are Divided into Five Parts:
  • Section numbers within each part correspond to the part numbers
  • For example: Section 2000 is the first section in part 2
  • Please note that the Proposed Rules will be renumbered before they are placed into the California Code of Regulations
statement of intent part 1
Statement of IntentPart 1

Part 1 contains the Board’s Statement of Intent

for the proposed rules and provides that:

  • Tax collection is the most sensitive point of contact between citizens and their government; and
  • Access to government officials, along with clear, well organized, and understandable procedures will promote a positive relationship between citizens and their government
statement of intent part 110
Statement of IntentPart 1
  • The Proposed Rules also :
  • Declare that it is imperative for the Board Members to remain accessible to their constituents, subordinates, and other governmental agenciesat all times
  • Provide comprehensive procedures for all of the Board’s administrative and appellate review processes
  • Address specific concerns raised with regard to:
    • Issuance of decisions;
    • Publication of opinions; and
    • Nature of Board hearings
slide11
Review of Sales and Use Taxes,Timber Yield Tax, and Special Taxes and Fees (Business Taxes and Fees)Part 2
  • This part contains the procedures governing the administrative review of Business Taxes and Fees
  • Article 1 provides that Part 2 governs all:
    • Petitions for redetermination,
    • Late protests,
    • Applications for administrative review, and
    • Claims for refund
  • Part 2 applies to all requests for relief under the following taxes and fees:
business taxes and fees part 2
Sales and Use Tax

Motor Vehicle Fuel Tax

Use Fuel Tax

Tax on Insurers

Cigarette and Tobacco Products Tax

Alcoholic Beverages Tax

Timber Yield Tax

Emergency Resources Surcharges

Emergency Telephone Users Surcharges

Hazardous Substance Tax

Integrated Waste Management Fee

Oil Spill Response, Prevention, and Administration Fees

Underground Storage Tank Maintenance Fee

Diesel Fuel Tax

Business Taxes and FeesPart 2
business taxes and fees part 2 also covers procedures for these fees
Business Taxes and FeesPart 2 Also Covers Procedures For These Fees:
  • Covered Electronic Waste Recycling Fee
  • Tire Recycling Fee
  • Marine Invasive Species Fee
  • Natural Gas Surcharge
  • Water Rights Fee
business taxes and fees petitions for redetermination article 2a
Business Taxes and FeesPetitions for Redetermination, Article 2A:

This Article:

  • Identifies who may file a petition
  • Provides the applicable statute of limitation
  • Prescribes the contents of the petition
  • Provides the appropriate addresses for filing petitions
  • Explains how petitions will be reviewed by the appropriate section or group prior to any appeals conference
business taxes and fees article 2a also addresses
Business Taxes and FeesArticle 2A Also Addresses:
  • Petitioners’ ability to amend their petitions;
  • Continuing accrual of interest;
  • Scope of petitions filed under these programs:
    • Hazardous Substances Tax Law
    • Childhood Lead Poisoning Prevention Fee
    • Covered Electronic Waste Recycling Fee
    • Water Rights Fee Law
business taxes and fees late protests article 2b
Business Taxes and FeesLate Protests, Article 2B
  • Article 2B provides for the Board’s discretionto treat an untimely petition as a late protest
  • Provides that late protests will be reviewed in accordance with Article 2A
  • Except, however, that the Board will retain discretion as to whether to provide an appeals conference or oral hearing before the Board
business taxes and fees jeopardy determinations article 2c
Business Taxes and FeesJeopardy Determinations, Article 2C
  • Article 2C prescribes the contents of Petitions for Redetermination and Applications for Administrative Review of Jeopardy Determinations, and applicable statute of limitation
  • It prescribes the scope of applications for administrative review, and explains the review process
  • It explains the need to make a security deposit with the Board to prevent the seizure and sale of property
business taxes and fees claims for refund article 3
Business Taxes and FeesClaims for Refund, Article 3

Article 3 establishes the following:

  • Identifies those persons who may file a claim
  • Provides the statute of limitation for filing
  • Explains the effect of failing to file a timely claim (waiver of rights)
  • Prescribes the contents of a complete claim
business taxes and fees claims for refund article 319
Business Taxes and FeesClaims for Refund, Article 3

Article 3 also:

  • Provides the addresses for mailing claims
  • Describes the process for reviewing claims
  • Explains that the Board may credit or offset overpayments
  • Defines the scope of claims filed under theMotor Vehicle Fuel Tax Law, Hazardous Substances Tax Law, Covered Electronic Waste Recycling Fee, and the Water Rights Fee Law
business taxes and fees innocent spouse equitable relief article 4a
Business Taxes and FeesInnocent Spouse & Equitable Relief, Article 4A
  • Identifies those eligible for innocent spouse relief
  • Prescribes the contents of a request for innocent spouse relief
  • Provides the address for mailing requests
  • Explains the Board’s process for reviewing innocent spouse relief requests
business taxes and fees successors relief of penalties article 4b
Business Taxes and FeesSuccessors’ Relief of Penalties, Article 4B
  • Under Article 4B successors may request relief from penalties imposed on their predecessors pursuant to the Sales and Use Tax Law
  • A successor’s request for relief may be included in the successor’s petition for redetermination, if any
  • All such requests are required to include a written statement signed under penalty of perjury stating the facts upon which the request for relief is based
business taxes and fees other requests for relief of penalties article 4c
Business Taxes and FeesOther Requests for Relief of Penalties, Article 4C
  • Reasonable cause
  • Unreasonable error or delay
  • Reasonable reliance on written advice from the Board
  • Disaster
business taxes and fees distribution of local taxes article 5
Business Taxes and FeesDistribution of Local Taxes, Article 5

Addressing claims of incorrect or non-

distribution of local tax, Article 5 generally

incorporates the Board’s current procedures

contained in California Code of Regulations,

title 18, section 1807

business taxes and fees appeals conferences article 6
Business Taxes and FeesAppeals Conferences, Article 6

This article addresses:

  • Scheduling of an appeals conference
  • Functions of the Appeals Division
  • Submitting evidence to the Appeals Division
  • Prescribes those persons present at anappeals conference
  • How to postpone and reschedule conferences
  • How to expedite the appeals conference
business taxes and fees appeals conferences article 625
Business Taxes and FeesAppeals Conferences, Article 6

Article 6 also:

  • Prescribes the contents of decisions and recommendations issued by the Appeals Division
  • Explains that Board staff cannot request an oral hearing before the Board to contest a decision and recommendation favorable to a tax or fee payer
administrative review of property taxes part 3
Administrative Review of Property TaxesPart 3
  • Article 1 of Part 3 addresses petitions for reassessment of state-assessed property and private railroad cars
  • Board documents and underlying data will be available to state assessees annually after May 31st
  • Prescribes the hearings procedures applicable to assessment factors
property taxes petitions for reassessment of state assessed property
Property TaxesPetitions for Reassessment of State-assessed Property

Article 1 also:

  • Provides the statute of limitation applicable to state assessees’ petitions
  • Prescribes each petition’s contents
  • Sets forth the Board’s entire review process, including briefing
  • Explains that the Board will not reconsider or rehear such petitions after it has reached a decision
property taxes petitions for equalization of gov t owned property
Property TaxesPetitions for Equalization of Gov’t-Owned Property
  • Article 2 addresses petitions for review, equalization, and adjustment of assessments of publicly-owned property
    • Property assessed pursuant to Article XIII, §11, subdivision (g) of the California Constitution
  • Provides the applicable statute of limitation and prescribes the contents of petitions for review
property taxes petitions for equalization of gov t owned property29
Property TaxesPetitions for Equalization of Gov’t-Owned Property

Article 2 also:

  • Provides procedures for the county assessor to answer the petition
  • Explains that the Appeals Division will conduct a pre-hearing conference to clarify and focus the issues for Board Hearing
  • Guarantees access to information on Board assessed property to both the applicant andthe county assessor
property taxes welfare exemption appeals article 3
Property TaxesWelfare Exemption Appeals, Article 3

Article 3 addresses:

  • Petitions appealing Welfare Exemption ineligibility findings
    • Filed pursuant to Rev. & Tax. Code §254.6, and
    • Petitions appealing a denial of a supplemental clearance certificate requested pursuant to subdivision (g) of Rev. & Tax. Code §214
property taxes welfare exemption appeals article 331
Property TaxesWelfare Exemption Appeals, Article 3

Article 3 also:

  • Identifies the applicable statue of limitation
  • Prescribes the contents of petitions
  • Requires a pre-hearing conference with the petitioner to clarify facts and issues in dispute
  • Prescribes the briefing schedule
  • Lists the hearing documents to be distributed to the parties, and
  • Provides that the Board’s decisions are final
property taxes county assessment samples article 4
Property TaxesCounty Assessment Samples, Article 4
  • Article 4 addresses the Board’s property tax assessment sampling program (Gov. Code §15640)
  • Provides the statute of limitation applicable to county assessors’ petitions appealing appraisals made by the Board’s County Property Tax Division, and
  • Prescribes the contents of such petitions
property taxes county assessment samples article 433
Property TaxesCounty Assessment Samples, Article 4

This review process includes:

  • Acknowledgement of the petition
  • A pre-hearing conference
  • Briefing of the issues by the Legal Department and petitioner
  • Preparation of a hearing summary by the Appeals Division, and an
  • Oral hearing before the Board
appeals of franchise tax board actions statement of jurisdiction part 4 article 1
Appeals of Franchise Tax Board ActionsStatement of Jurisdiction,Part 4, Article 1
  • This article provides a clear and concise statement of the Board’s jurisdiction regarding:
    • Notices of action
    • Notices of determination not to abate interest
    • Notices granting or denying innocent spouse relief
    • Notices denying a claim for assistance under the Senior Citizens Homeowners andRenters Property Tax Assistance Law
  • Jurisdiction also arises if the Franchise Tax Board fails to act on a claim within 6 months
appeals of franchise tax board actions contents timing of appeals article 2
Appeals of Franchise Tax Board ActionsContents & Timing of Appeals,Article 2

Article 2:

  • Prescribes the contents of an appeal from the actions of the Franchise Tax Board
  • Delegates authority to the Chief of Board Proceedings to grant appellants additional time to perfect incomplete appeals
  • Establishes the time period in which to filea timely appeal
appeals of franchise tax board actions briefing process article 3
Appeals of Franchise Tax Board ActionsBriefing Process, Article 3

Article 3 describes the briefing process and the

following briefing schedules:

  • General (or default) schedule
  • Innocent spouse appeals schedule
    • Including participation by the non-appealing spouse
  • Homeowners’ and Renters Property Tax Assistance appeals schedules
  • New, streamlined elective briefing schedule applicable to appeals where the amount at issueis not more than $5,000 (including tax, penalties, fees and paid interest)
appeals of franchise tax board actions requests for oral hearing article 4
Appeals of Franchise Tax Board ActionsRequests for Oral Hearing, Article 4
  • Requires written requests for an oral hearing before the Board
  • Creates a new procedure allowing theAppeals Division to request additional briefing
  • Requires the Appeals Division to submit a hearing summary 30 days before an oral hearing
appeals of franchise tax board actions issuance of board decisions article 5
Appeals of Franchise Tax Board ActionsIssuance of Board Decisions, Article 5
  • Letter Decisions
    • Non-precedential
    • Provides a short explanation of the decision
  • Summary Decisions
    • Non-precedential
    • Sets forth findings of fact and conclusions of law
  • Formal Opinions
    • Creates Precedent
    • Sets forth findings of fact and conclusions of law
  • Dissenting Opinions
    • Containing a Board Member’s rationale for opposingthe adoption of a Formal Opinion
appeals of franchise tax board actions finality of decisions article 6
Appeals of Franchise Tax Board ActionsFinality of Decisions, Article 6

Article 6 addresses:

  • Finality of decisions
  • Board’s authority to hold decisions in abeyance before they become final
  • Prescribes the procedures for submitting and responding to a petition for rehearing, and
  • Establishes the grounds for granting such a petition
general board hearing procedures part 5
General Board Hearing ProceduresPart 5

This part of the Proposed Rules:

  • Reorganizes the Board’s hearing procedures into a chronological order
    • Beginning with the scheduling of all the Board meetings for the year
    • Ending with a discussion of the disclosable public records produced in the hearing process
  • Provides that Part 5 applies to all of the Board’s programs, but that the more specific provisions of Part 4 take precedent
general board hearing procedures scheduling of board hearings article 2
General Board Hearing ProceduresScheduling of Board Hearings, Article 2

This article is separated into 3 chapters:

  • Chapter 1 provides for the adoption of the Board’s meeting calendar for the year
  • Chapter 2 explains how cases are scheduled for an oral hearing and how a scheduled case may be dismissed, deferred or postponed
general board hearing procedures board hearings article 2
General Board Hearing ProceduresBoard Hearings, Article 2

Chapter 3 provides the following:

  • Identifies the 3 main pre-hearing documents:
    • Power of attorney form
    • Contribution disclosure form
    • Hearing summary
  • Information needed to prepare for the hearing
  • Describes the nature of the hearing
  • Allocates time and the presentation of evidence at the hearing
general board hearing procedures communication with board members 5015 1
General Board Hearing ProceduresCommunication with Board Members, §5015.1

Section 5015.1 implements the Board Members’ intent to be accessible to their constituents, their subordinates, and other governmental agencies at all times and states that:

“[S]uch persons and their authorized representatives, including members of theState Bar, may contact Board Membersat any time, including while a case orcontroversy involving such personis pending before the Board.”

general board hearing procedures preparation for board meetings article 3
General Board Hearing ProceduresPreparation for Board Meetings, Article 3

Article 3 of Part 5:

  • Explains how the Board prepares its agenda for a Board meeting
  • Includes a requirement that thePublic Agenda Notice be issued at least10-days prior to the applicable meeting
general board hearing procedures participating in board hearings article 4
General Board Hearing ProceduresParticipating in Board Hearings, Article 4

Article 4:

  • Identifies the time that participants should arrive for their oral hearings
  • Explains how to:
    • Sign-in for a hearing
    • Submit additional exhibits
    • Register witnesses
  • Emphasizes the need to submit completed contributions disclosure forms before the hearing
  • Indicates that the TRA staff will be available to assist tax and fee payers at the hearing
general board hearing procedures conducting board hearings article 5
General Board Hearing ProceduresConducting Board Hearings, Article 5
  • Article 5 identifies the laws applicable to the conduct of a Board meeting
  • It explains:
    • How the Chair calls meetings to order
    • Cases are called in the order provided in the Public Agenda Notice
    • General order of each hearing
    • That members of the public may address the Board on any agenda item
general board hearing procedures quorum motion requirements article 6
General Board Hearing ProceduresQuorum & Motion Requirements, Article 6

Article 6 requires:

  • That at least 3 Board Members (quorum) be present for the Board to render a decision
  • It prescribes:
    • the form of motions
    • motions are passed or defeated based upon the vote of the majority of Board Members participating in the vote
    • the procedures for reopening a prior vote
general board hearing procedures notification of decisions article 7
General Board Hearing ProceduresNotification of Decisions, Article 7

This article prescribes:

  • Procedures by which the Board will notify the parties of its decision and explains when that decision becomes final
  • Procedures applicable to:
    • the filing of a petition for rehearing
    • the Board’s action on the petition
    • holding a new hearing when granted
general board hearing procedures documents disclosable information article 8
General Board Hearing ProceduresDocuments & Disclosable Information, Article 8

Article 8 contains:

  • The Board Proceedings Division’s mailing address for correspondence
  • Timeliness of documents
  • Two sets of alternative provisions governing publicly disclosable information relevant toBoard hearings
general board hearing procedures disclosure alternative 1
General Board Hearing ProceduresDisclosure Alternative 1
  • Section 5033 contains provisions that are similar to the Board’s current policy regarding disclosure
  • The minutes and transcript from an oral hearing, and exhibits officially incorporated into the hearing record are disclosable public records
  • Documents distributed to Board Members for discussion and consideration at the hearing are also disclosable public records, unless their disclosure is prohibited by law
general board hearing procedures disclosure alternative 2
General Board Hearing ProceduresDisclosure Alternative 2
  • The Second Alternative, found in sections 5033-5033.3, contains much more detailed rules providing for the broader disclosure of information relating to Board hearings
  • Section 5033 (Second Alternative) provides that minutes and transcripts, as well as documents officially incorporated into the hearing record, are disclosable public records
general board hearing procedures disclosure alternative 252
General Board Hearing ProceduresDisclosure Alternative 2
  • Section 5033.1 (Second Alternative) provides for increased disclosure by stating that:
  • Tax and fee payers who request oral hearings before the Board waive their right to confidentiality with regard to information that is directly relevant to the issues to be discussed and decided at their oral hearings
  • Exceptions: certain personal information, irrelevant portions of tax returns, and information exempt from disclosure under section 5033.2
general board hearing procedures disclosure alternative 253
General Board Hearing ProceduresDisclosure Alternative 2
  • The waiver provided for in section 5033.1 becomes effective on the date the Board issues the first Public Agenda Notice scheduling the tax or fee payer’s case for a hearing
  • The tax or fee payer may prevent disclosure by requesting that certain harmful information be protected from disclosure pursuant to section 5033.2, or by waiving its right to an oral hearing
general board hearing procedures disclosure alternative 254
General Board Hearing ProceduresDisclosure Alternative 2
  • Section 5033.2 (Second Alternative) permits tax and fee payer’s to request that certain harmful information remain confidential
  • Requests must be submitted by the due date for the tax or fee payer’s response to its notice of hearing
  • Requires the Board to decide such requests at least 5 days prior to the issuance of the Public Agenda Notice
conclusion
Conclusion
  • This concludes the introduction of the Proposed Board of Equalization Rules for California Tax Administration and Appellate Review
  • The Board has not yet made any decisions as to whether it will adopt any of these proposed rules
  • No decision will be made and the formal rule making process will not begin until after the Board has received public input
conclusion56
Conclusion
  • In just a few moments, it is anticipated that the Chair will invite public comment onPart 5, General Board Hearing Procedures
  • The Board will also hold additional Board Meetings or interested parties meetings on the following dates to receive public comments on the other parts as indicated:
future meetings dates and topics
Future MeetingsDates and Topics
  • October 2005: Part 2, Business Taxes and Fees
  • November 2005: Part 3, Property Taxes
  • December 2005: Part 4, Appeals from Actions of the Franchise Tax Board, and Part 5, General Board Hearing Procedures (Combined)
  • See Handout
additional information on the boe web site
Additional InformationOn the BOE Web Site

Current information on this project and contact information is on the Board’s Web site at:

www.boe.ca.gov/regs/timelineCAtax.htm

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