FTB Outlines Big Changes at Meeting with COT.

• Author: McCRARY, DEANNA
• Position: Federal Trade Commission, California CPA's Committee on Taxation - Brief Article

Sweeping changes to the FTB's policy on nonfilers as well as radical changes to its protest and audit regulations were outlined at this year's FTB liaison meeting with CalCPA's Committee on Taxation, Oct. 23. Updates on the state's e-government initiatives, power-of-attorney project and recent legislation as well as an extensive question-and-answer session were also on order at the meeting.

PROPOSED REGULATIONS

Calling it the most radical changes he's seen in his 20 years with the FTB, Executive Officer Gerald Goldberg announced that the FTB's Protest Regulation has been approved and now is working its way through to the Office of Administrative Law. The proposed regulation is an effort to speed up the protest process by allowing a two-year timeframe for all protests. This impacts audits and appeals, but does not allow the FTB to re-audit at the protest level. "This means that our audits will have to be more intensive and extensive than they have been in the past," said Goldberg. "With a two-year timeframe this will mean more subpoenas to get information and there will be more appeals."

Additionally, an audit regulation (Draft Reg. 19504), which calls for a one-year audit period, has been proposed. Currently, the audit period begins at the time of filing. Goldberg noted that this audit proposal probably will change significantly after a Dec. 1 symposium to consider public comment on the proposal.

E-GOVERNMENT INITIATIVES

"E-government is a revolution that could cause a shift in political and social power," said Frank Lanza, director of the Office of Electronic Tax Administration.

In addition to e-filing, electronic fund transfers and downloadable tax forms, the FTB is seeking to expand its e-services. One project that is still in the proof-of-concept pilot stage is "secure e-mail" by which the FTB provides a digital- and thus highly secure-certificate to CPAs and others who need to correspond confidentially via e-mail with attorneys, auditors and others.

The FTB was moving forward to offer the functional equivalent of telefiling by using a procurement method. H&R Block and Intuit objected to the method, on the grounds that the government was competing against commercial services, and sought to block its development with a lawsuit. As part of the settlement, the FTB is now developing a Web portal that will accept tax returns directly from taxpayers who prepare them using commercial software.

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