A Look at the Procedures Governing California Office of Tax Appeals Proceedings

JurisdictionCalifornia,United States
AuthorBy Shail Shah, Mike Shaik, & Rebecca Durham
CitationVol. 27 No. 2
Publication year2018
A Look at the Procedures Governing California Office of Tax Appeals Proceedings

By Shail Shah, Mike Shaik, & Rebecca Durham

When the California Legislature passed Assembly Bill 102 (A.B. 102), it signaled the beginning of a substantial change to how California administered its taxes and how taxpayers appealed adverse decisions from administrative tax agencies. A.B. 102 created two new tax agencies: the California Department of Tax and Fee Administration (CDTFA) and the Office of Tax Appeals (OTA). It transferred to these agencies many of the responsibilities previously held by the State Board of Equalization (BOE). One of these responsibilities included the authority to hear tax appeals from the FTB and CDTFA, which now rests solely with the OTA. In order to carry out its duties, the OTA issued Emergency Regulations on December 26, 2017. The Emergency Regulations draw language largely from the former BOE's Rules for Tax Appeals and incorporate portions of the Administrative Procedure Act (APA). This article looks at how the OTA applies the APA's informal and formal hearing procedures to its proceedings.

I. THE REGIME SHIFT
A. Assembly Bill 102

In June 2017, A.B. 102 was chaptered into law. This bill sought to create an appeals process "that is fair, transparent, consistent, equitable, and impartial,"1 and to issue decisions "in a transparent fashion, relying on well-established precedents in tax law, providing open public access and choice of representation, and building a record that both taxpayers and tax administration agencies can rely upon."2 As discussed above, A. B. 102 created the OTA, and vested it with "all of the duties, powers, and responsibilities of the State Board of Equalization necessary or appropriate to conduct appeals hearings."3

B. The OTA Emergency Regulations

A.B. 102 also required the OTA to adopt regulations "necessary or appropriate" to carry out its duties, powers, and responsibilities.4 The OTA's jurisdiction over tax appeals began on January 1, 2018,5 and due to this quick transition, A.B. 102 allowed the OTA to adopt emergency regulations pursuant to Government Code section 15679 for the period January 1, 2018 through December 31, 2018.6 While the OTA did promulgate those Emergency Regulations, it is required to pass permanent regulations to carry out its duties once these Emergency Regulations expire.

The Emergency Regulations consist of two chapters: one that governs appeals from the FTB (Chapter 1), and another that governs appeals from the CDTFA (Chapter 2). Each chapter includes information, such as procedures for submitting appeals, as well as relevant appeal deadlines. However, the double chapter format creates inconsistences regarding how the OTA handles appeals from each taxing agency. For example, under the Emergency Regulations the two chapters have different

  • Filing requirements;7
  • Time periods for perfecting an appeal letter;8
  • Briefing schedules;9 and
  • Procedures governing a petition for rehearing.10

The draft of the Proposed Regulations...

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