Big Changes Are Happening to California Tax Law

By: Tamara B. Pow, Esq.

As of July 1 st , important changes are now being implemented regarding the administrative side of California tax law. The state Legislature has restructured the Board of Equalization (BOE) into three separate entities: the BOE, the California Department of Tax and Fee Administration (CDTFA), and the Office of Tax Appeals (OTA). This change is a result of the recently enacted Taxpayer Transparency and Fairness Act of 2017, signed into law by Governor Jerry Brown during the last week of June.

The reason for this new look, as described in the bill itself, came from a review by the Attorney General, the California State Auditor’s Office, and the State Personnel Board, which determined that the BOE’s workplace culture and practices severely hindered its ability to report exact and reliable information to the public, the administration, and the state Legislature.

Under the new law, the CDTFA will assume the BOE’s administrative and regulatory duties for managing programs involving sales and use taxes, and other business taxes and fees. The CDTFA will be housed within the Government Operations Agency, where the BOE used to be operated, and taxpayer and fee payer account information services and deadlines will remain the same until further notice. Governor Brown has appointed David Botelho, of San Leandro, as the Acting Director of the CDTFA. The BOE, on the other hand, will continue to administer property taxes, alcoholic beverage taxes, and insurance taxes as an independent agency.

The other important change is the creation of the OTA, which will hear tax appeals from the Franchise Tax Board, the BOE, and other tax collecting agencies. The OTA, which will be formed as an independent entity, has also been established as of July 1 st , 2017, but will not begin full operation and hearing appeals until January 1 st , 2018. In the meantime, a Director for the organization will be appointed from within the OTA and the governance structure will need to be established. Stakeholder meetings will be scheduled as the OTA takes form and prepares to take over cases for which the BOE will no longer have jurisdiction after December 31, 2017. The OTA will set up numerous three-member panels of Administrative Law Judges to hear tax appeals in Sacramento, Fresno, and Los Angeles. The number of panels set up within each city will depend on the volume of cases occurring in each geographical location.

More transition information can be found for the new department on its website, and on .