A modest proposal? California performance review says California Tax Commission needed.

• Author: Williams, Leonard W.
• Position: California tax

CalCPA's Committee on Taxation recently discussed a proposal by the California Performance Review that noted California's tax collection system is divided between four different agencies: the Board of Equalization administers the state's sales taxes, state assessed property taxes and a variety of excise taxes; the Franchise Tax Board collects income taxes; the Department of Motor Vehicles collects vehicle license fees; and the Employment Development Department collects employment taxes.

The Performance Review found that taxpayers are paying for multiple tax agencies to perform identical functions in areas ranging from return processing and collections to information processing.

The proposal is to retain the Board of Equalization, but consolidate the other revenue agencies into one California Tax Commission. The elected members of the Board of Equalization would serve as ex-officio member of the California Tax Commission, with the state controller serving as the commission's initial chairperson.

CalCPA's position is neutral on the report's recommendation, but the Franchise Tax Board is supportive. No definitive action has been taken by the state as of this writing.

TaxTalk Listserve Discussions

Separate elections for federal and California tax purposes. This discussion began when someone asked if it's possible not to elect Sec. 179 for federal income tax purposes, but elect it for California income tax purposes.

The answer is yes, and the applicable California Rev. & Tax Code sections are 17255, 17268, 24356 and 24356.8.

There is a handy reference beginning on Page 243 of the 2004 edition of Analysis & Explanation of California Taxes, published by Spidell Publishing. It lists about 200 distinct federal elections and whether or not California allows a separate election.

California sales taxes and nonprofit organizations. There often are large discrepancies between what tax statutes actually say or require, and the public's perception of what they say.

One example, which applies to both the Internal Revenue Code and California's Revenue and Taxation Code, is personal charity. Folk wisdom holds that if "A" gives something to "B," who is in need, then "A" is entitled to a charitable deduction. That simply isn't correct.

Sales taxes are an area of confusion because much of the general public think tax-exempt organizations don't pay sales taxes. Adding to the confusion is the fact that some states actually have such a provision.

In California...