Update Regarding the New Office of Tax Appeals

As we inch closer to the January 1, 2018 official changeover of many responsibilities from the Board of Equalization to California's two new tax agencies (the Department of Tax and Fee Administration [TFA], and the Office of Tax Appeals [OTA]), legislators are refining and narrowing the details of future responsibilities and processes for taxpayers to avail themselves of these administrative bodies.

As of today, these are some of the key takeaway points:

  • The OTA is explicitly not a tax court, but will instead be understood as an administrative body;
  • CPAs will continue to be able to represent taxpayers before the OTA;
  • There are specific limitations on who may access taxpayer information during these administrative processes;
  • Taxpayers may opt to have a closed hearing, in the interest of protecting the privacy of their sensitive information; and
  • The Government Code has a new section 15679.5, which provides that all appeals hearings and proceedings are conducted pursuant to the Administrative Procedure Act. Where there is any conflict, the regulations in Division 2.1 of Title 18 of the California Code of Regulations will apply. Furthermore, and consistent with these provisions, regulations shall be adopted regarding the presentation of evidence and preparation for hearings and proceedings before a tax appeals panel that do not require application of specialized knowledge; and, finally, where applicable and not in conflict with the above, regulatory actions adopted to carry out this subdivision shall be consistent with the Model State Administrative Tax Tribunal Act dated August 2006 adopted by the American Bar Association.

The Taxation Section of the State Bar of California, as well as CPA organizations, will continue to advocate for changes to this bill and additional training for Administrative Law Judges to ensure that the new agencies provide the fairest outcomes for all parties. You can follow the progress of AB-131, Taxation, here.

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