The California Office of Tax Appeals (OTA) recently reversed a Franchise Tax Board (FTB) proposed assessment of a Texas-based independent contractor working for a California-based company. The OTA found that income reported to the contractor on a Form 1099-MISC did not have a California source because the end clients were located out-of-state, and therefore the contractor had no requirement to file a nonresident California return. To read the decision in full, click here.
The new California Office of Tax Appeals (OTA) just released its first seven opinions. All seven opinions were decided in the favor of the Franchise Tax Board (FTB); none of the taxpayer-appellants opted for representation by an attorney, although three appellants were represented by an Enrolled Agent or Certified Public Accountant. The first appeals heard by the OTA covered a variety of issues, including penalty and interest assessments, filing status, and ridesharing credits. Six of the opinions are confirmed as "nonprecedential," and one opinion is pending precedential status. To read the opinions in full, click here: https://ota.ca.gov/opinions/
The new state Office of Tax Appeals (OTA) began hearing appeals cases as of January 1, 2018. California taxpayers may file an appeal with the OTA after receiving a Notice of Action or Notice of Determination from the Franchise Tax Board (FTB) or the new California Department of Tax and Fee Administration (CDTFA) with an appeal deadline. Appeals will be heard by three-member panels of Administrative Law Judges in Sacramento, Fresno, and Los Angeles. Draft emergency regulations governing the appeals process are available here.
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.
The Internal Revenue Service (IRS) is launching a pilot program to offer a web-based virtual conference option for taxpayers and their representatives in Appeals cases. The Office of Appeals hears over 100,000 cases each year for taxpayers who would like to resolve their tax disputes outside the Tax Court, and is hoping this new program will be a convenient, efficient, and flexible way to address the needs of taxpayers, particularly those who live far from an IRS Appeals office.
On Tuesday, June 27, 2017, California Governor Jerry Brown signed into law the Taxpayer Transparency and Fairness Act of 2017. Sweeping changes to the administration of taxes and fees formerly administered by the Board of Equalization take effect on July 1, 2017. A new Office of Tax Appeals will begin hearing tax appeals of California income tax, sales tax, use tax, hazardous waste fees, and other taxes and fees effective January 1, 2018. The rules and regulations that will govern the two newly created state agencies remain a work in progress. For more information, click here.