FTB to Tighten Belt: FTB Executive Director Warns CPAs of Cutbacks.

• Author: McCrary, Deanna
• Position: Franchise Tax Board - Brief Article

"The state of the state isn't good. We will have to have cutbacks, and some will effect you," announced FTB Executive Director Gerald Goldberg at the annual FTB liaison meeting with CalCPA's Committee on Taxation in October.

California's shortfall for the budget year that begins July 1, 2002, is predicted optimistically to be between $7 billion and $10 billion, "assuming that the energy bonds float," said Goldberg. If they don't, another $10 billion could be added to the shortfall.

"This is the largest shortfall I've ever experienced," Goldberg said. As a result, he says the department of finance has directed the FTB to cut anything from its budget that does not directly result in revenues.

Possible FTB cutbacks

Possible cuts may include closing all district offices for public service, reducing phone service and eliminating many toll-free FTB contact numbers.

There are currently 16 FTB district offices throughout the state. Goldberg said that over time some may be relocated to lower rent areas as leases expire.

"We are trying to get more and more taxpayers to deal with us over the phone," said Goldberg. He gave no indication of when cutbacks may occur, but reiterated that it is a serious possibility within the coming year.

Cuts to the practitioner hotline and limiting general assistance in all call centers also may occur in the coming year. "This will literally force people who want tax assistance to go to a tax practitioner," said Goldberg, adding a positive spin to the group of CPAs.

Mandatory e-filing for preparers who do a large number (100 or more) of returns also may be a result of the agency's scale-down efforts. Goldberg added that this won't happen right away, but that it "likely will happen."

This caused a stir among some committee members who claimed that some returns are not conducive to e-filing.

"It's harsh for any government to impose any extra compliance burden on the public," said COT member Stuart R. Josephs, CPA who has a San Diego-based Tax Assistance Practice (TAP). "If the FTB wants to induce e-filing they should offer carrots, not sticks."

Goldberg says he welcomes CalCPA member views on the mandatory e-filing initiative as well as any ideas members may have to stimulate employment growth in California and the state's economy as a whole. Ideas may be faxed to FTB Taxpayer Advocate Debbie Newcomb at (916) 845-6614.

Undoubtedly there will be an increase in audits and collections in response to the mandate to collect...