California's Fast Track to Tax Reform

As of July 1, 2017, California's State Board of Equalization will likely be a thing of the past. Lawmakers voted on June 15th to pass Senate Bill 86, The Taxpayer Transparency and Fairness Act of 2017, which will rapidly create a new Department of Tax and Fee Administration that will fall under the umbrella of the Government Operations Agency and take over all of the Board's non-Constitutional functions from headquarters in Sacramento. The only responsibilities left to the Board will be property tax administration, tax rate setting, and some other minor duties.

Once approved, SB 86 will also create an Office of Tax Appeals under the control of a Governor-appointed director. Panels of three administrative law judges will hear and issue written opinions on taxpayer appeals at offices in Sacramento, Fresno, and Los Angeles on matters such as claims for refund, administrative protests, and petitions for redetermination.

The general aims of the bill include reforming the taxpayer appeals process to make it more consistent and transparent; increasing efficiency; and restoring public trust in the state taxation system. The State Board of Equalization was established in 1879 to govern fair collection of property taxes by county assessors, and its powers have been greatly expanded by statute and regulations. Groups have been calling for the dissolution of the Board since 1929. The audit this March that revealed significant inefficiencies and misappropriations strengthened the arguments in favor of this new bill.

Many of the details for how the new department will operate remain undecided; we will provide updates as they arise. To read the draft bill, click here.

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