Annual Report 2010-2011
The Board hears appeals concerning the assessed values of state-assessed properties, private railroad cars, and taxable properties owned by local governments but located outside their boundaries. The Board also hears appeals of timber tax decisions and welfare exemption claim denials. While disputes may be resolved through discussion with BOE staff, the Board makes the ultimate decision on all property tax appeals.
In 2010-11, taxpayers filed 36 property tax appeals with the Board:
- 33 petitions from state-assessed public utilities and
- 3 private railroad car companies, but
- 0 welfare exemption claims
Property tax appeals conferences precede any Board hearing on the appeal and are a means of clarifying and narrowing issues, exchanging information and records, and facilitating resolution of legal and valuation issues. The information elicited at the appeals conferences enable appeals attorneys to draft accurate and complete hearing summaries and recommendations for the Board's consideration in making decisions on these petitions.
Sales and Use Taxes and Special Taxes and Fees
Taxpayers who disagree with staff decisions regarding taxes or fees they owe may seek resolution through the BOE's administrative appeals process. The formal appeals process generally begins with filing a written appeal called a petition for redetermination. The appeal may progress through a series of steps to a hearing before the Board.
Petitions for redetermination filed this year included:
- 1,277 sales and use tax appeals
- 1,061 consumer use tax appeals
- 1,063 special taxes and fees appeals
Please note: During 2010-11, Special Taxes received 1,063 appeals cases, including 243 appeals related to cigarette and tobacco products licensing violations, 102 relating to other Special Taxes Programs, and 718 that were filed with the SWRCB. The SWRCB is responsible for the decisions related to water rights appeals; however, the BOE is responsible for any adjustments made to water rights fees resulting from the appeals decision.
A taxpayer whose appeal is denied by the Board must pay the tax or fee determined to be due, but may thereafter file a claim for refund. If the Board denies the claim, the taxpayer may file a refund action in superior court. The BOE offers a settlement program for certain tax and fee disputes. In 2010-11, staff settled 238 cases for a total settlement amount of $31.8 million. This included 235 sales and use tax cases for a settlement amount of $31.2 million and three special taxes or fees cases for a settlement amount of $0.6 million.
The BOE also has an Offer in Compromise Program for closed businesses that cannot pay the full tax or fee amounts they owe. Effective January 1, 2009, through January 1, 2013, the BOE will also consider an offer in compromise for open and active businesses under specific conditions.
Corporate Franchise and Personal Income Taxes
The Board serves as the administrative appeal body over final actions by the FTB. In that capacity, the Board interprets and applies the state’s franchise and income tax laws. The Board hears appeals filed under the following:
- Corporation Tax Law
- Personal Income Tax Law
- Homeowner and Renter Property Tax Assistance Law
If a taxpayer disagrees with a determination by the FTB, the taxpayer may appeal that determination to the Board. The BOE’s Appeals Division evaluates the issues of law and fact for each appeal based on the information provided by each party. The Board reviews the staff evaluation and any additional information found in the written record or provided at a hearing and makes a final determination. If the Board denies a taxpayer’s appeal, the taxpayer may file a refund action in superior court.
While any taxpayer dissatisfied with a final action of the FTB may file an appeal with the BOE, taxpayers who have paid their tax liability may choose instead to file an action in superior court. Consequently, the appeal figures in the following sections do not necessarily reflect the total number of California taxpayers who disputed a final action by the FTB in 2010-11.
Corporate Franchise and Personal Income Tax Appeals
In 2010-11, the BOE received 954 appeals filed under the Corporation Tax Law and the Personal Income Tax Law. The Board issued 378 decisions, considering 53 of the cases at oral hearings and deciding the remaining appeals based upon a review of the written record. Of the 378 decisions, 44 were petitions for rehearing.
Homeowner and Renter Property Tax Assistance Appeals
Funding for the homeowner and renter property tax assistance program has been exhausted, and the FTB no longer accepts homeowner and renter property tax assistance correspondence or pays any claims. As a result, the BOE received no homeowner and renter property tax assistance appeals during 2010-11. With regard to previously filed appeals, the Board issued 45 decisions, one of which was a petition for rehearing.