Annual Report 2011-2012
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 2011-12, taxpayers filed 41 property tax appeals with the Board:
- 36 petitions from state-assessed public utilities and
- 5 private railroad car companies, but
- 0 welfare exemption claims
Property tax appeals conferences may precede a 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:
- 1,169 sales and use tax appeals
- 821 consumer use tax appeals
- 744 special taxes and fees appeals
Please note: During 2011-12, Special Taxes received 744 appeals cases, including 146 appeals related to cigarette and tobacco products licensing violations, and 190 relating to other Special Taxes Programs. The remaining 408 appeals were filed with the SWRCB and CDPH. SWRCB received 399 appeals and CDPH received 9 appeals. The SWRCB is responsible for the decisions related to water rights appeals; CDPH is responsible for decisions related to the Childhood Lead Poisoning Prevention Fee program. However, the BOE is responsible for any adjustments made to water rights fees and Childhood Lead Poisoning Prevention 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 2011-12, staff settled 221 cases for a total settlement amount of $69.2 million. This included 195 sales and use tax cases for a settlement amount of $36.2 million and 26 special taxes or fees cases for a settlement amount of $33 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, 2018, 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 Corporation Tax Law and the Personal Income Tax 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 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 2011-12.
Corporate Franchise and Personal Income Tax Appeals
In 2011-12, the BOE received 1,084 appeals filed under the Corporation Tax Law and the Personal Income Tax Law. The Board issued 289 decisions, considering 27 of the cases at oral hearings and deciding the remaining appeals based upon a review of the written record. Of the 289 decisions, 30 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 2011-12.