Despite actions taken by the Board to address issues found in recent audits by the Department of Finance and State Controller, legislative leaders have proposed drastic changes to the State Board of Equalization (BOE).
AB 102 and SB 86 would strip the BOE of many functions and transfer them to the new California Department of Tax and Fee Administration, which would fall under direct authority of the governor.
The legislation would also revoke the Board’s ability to hear tax appeals, reassigning that authority to a newly created Office of Tax Appeals. Instead of having appeals decided by elected board members, a panel of administrative law judges appointed by the governor would decide them.
As a California taxpayer, I wanted you to be aware of this sweeping legislation that could impact you and your business. If you have concerns about this proposal, I would encourage you to contact your elected representatives.
Yesterday, I sent an opposition letter to members of the legislature, highlighting my concerns with this bill. Changes of this magnitude should not be rushed through the budget process, bypassing the deliberative process. Instead they should go through the normal policymaking process to allow public input.
As always, if you or your clients have questions or comments, you may contact me at (916) 445-2181 or george.runner@boe.ca.gov.
George Runner
Vice chair
California Board of Equalization
This bill has nothing to do with the BOE procurement or taxpayer event issues recently in the news; instead, it replaces the current adjudicatory process with bureaucrats, with no accountability to the voters, who will decide the equity of audits of taxpayers by bureaucrats. It eliminates the firewall between the agency and the trier of fact and the employer, giving one person authority to hire and fire the trier of fact based on performance measurements and will cause bias in the resulting decisions depending on who makes the appointment of the director— much like what we face with the Supreme Court appointments.
I agree that there is a need for BOE reforms based on historical challenges dating back 25 years; however, this measure adds an additional layer of bureaucracy and will eventually cost taxpayers billions for separate computer systems, administration, lawyers and facilities. This bill will also place minorities and small business at a serious disadvantage in their appeals of taxation. It definitely requires additional thought, deliberation and study.
To protect taxpayers, I suggest an amendment to require that the administrative law judges (ALJs) be elected to eliminate the potential for “pay-to-play,” allow small-business taxpayers to band together to file class-action lawsuits against the agency on key tax issues using the normal rules of civil procedure, create an independent Taxpayers’ Advocate Office to assure fairness in the process, prohibit performance evaluations of ALJs based on tax revenue collected and create a firewall between the ALJs and the agency.
Jerome E. Horton
Member
Board of Equalization
