1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 MARCH 16, 2009 9 10 CUSTOMER SERVICES AND 11 ADMINISTRATIVE EFFICIENCY COMMITTEE 12 13 14 15 16 17 18 19 20 Reported by: Juli Price Jackson 21 No. CSR 5214 22 23 24 25 26 27 28 1 1 2 P R E S E N T 3 4 For the Board Bill Leonard of Equalization: Chair 5 Betty T. Yee 6 Member 7 Judy Chu Member 8 Michelle Steel 9 Member 10 Marcy Jo Mandel Appearing for John 11 Chiang, State Controller (per Government Code 12 Section 7.9) 13 Diane G. Olson Chief, Board 14 Proceedings Division 15 16 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MARCH 16, 2009 4 ---oOo--- 5 MS. OLSON: Good morning. This is the Customer 6 Service and Administrative Efficiency Committee. 7 Mr. Leonard is the Chair of this committee. 8 MR. LEONARD: Good morning, good morning, 9 Members. We have an update on our electronic transition 10 plan from our staff. 11 And I invite Kari or Jeff to start -- to begin 12 this morning, Miss Hammond, Mr. McGuire? 13 MR. MC GUIRE: I guess that will be me. 14 Good morning, I am Jeff McGuire with the Sales 15 and Use Tax Department. And this morning, as 16 Mr. Leonard indicated, I'll be providing an update on 17 the status of our electronic transition plan, which is 18 transitioning our sales and use tax accounts from paper 19 filing to e-filing. 20 As you know, under the transition plan each 21 quarter we're transitioning a different group of our 22 existing seller's permit holders to e-filing. In 23 addition, all new seller's permit holders are 24 transitioned to e-filing when they take out their 25 seller's permits. 26 So far we've had three groups that have been 27 transitioned and we've had great success. Our new 28 seller's permit holders are currently filing at a rate 3 1 of 43 percent. Our quarterly pre-payment, single 2 location, non-EFT accounts are filing at a rate of 3 69 percent and our monthly accounts at 53 percent. 4 Overall for this current fiscal year, '08-'09, 5 we are projecting that 33 percent of all of our sales 6 tax returns and pre-payments will be filed 7 electronically. 8 In addition, for fiscal year '09-'10, we are 9 estimating that 47 percent of the all of our returns and 10 pre-payments will be e-filed. This is a significant 11 jump from the 3 and a half percent rate that we had last 12 year. 13 One of things that we've been monitoring 14 closely related to the transition is our delinquency 15 rate. We want to make sure that our taxpayers who we 16 are transitioning are not ending up not filing any 17 return at all. We have been monitoring this for the 18 first three groups and so far we haven't found any 19 problems. However, we will continue to monitor all of 20 our continuing groups to make sure that we don't create 21 a delinquency problem as a result of the transition to 22 e-filing. 23 Due to the success of the plan so far, we are 24 actually realizing the savings that were anticipated in 25 the move from paper processing to e-filing. 26 As you may recall, the Board's budget was cut 27 by $1.4 million this fiscal year in anticipation of 28 savings due to e-filing. Based on our calculations, we 4 1 will achieve this level of savings this year. And, in 2 addition, for fiscal year '09-'10, we are projecting 3 additional savings of $1.26 million, which is equivalent 4 to 25 full-time positions. 5 At this point any personal services savings 6 will be achieved, we believe, through reduced overtime, 7 reduction of temporary help and through normal attrition 8 by eliminating vacant positions. 9 Our Administration Department's currently 10 working actively with the union and impacted employees 11 on a changed management plan that will provide career 12 counseling, upward mobility assistance and other job 13 help for employees in the impacted sections. 14 BOE will be submitting a supplemental report to 15 the legislature at the end of this month that will 16 address our e-file participation rate, as well as our 17 anticipated savings for '09-'10. 18 One area, though, where we actually haven't 19 achieved as much savings as we were initially 20 anticipating in our cashiering and key data units due to 21 the number of taxpayers that are e-filing, but 22 continuing to pay with paper checks. And, so far, about 23 40 percent of our e-filers still do choose to pay with a 24 paper check. And those are processed in our cashiering 25 unit and our key data area. 26 Another area whether we've actually had a 27 workload growth due to e-filing is in our call center. 28 That was anticipated. And since the beginning of 5 1 October, our call center has seen record numbers of 2 calls every month. We did anticipate this increase, 3 though, and we are using staff from other sections 4 during peak periods to assist with the incoming calls. 5 And, so far, this is working pretty smoothly, but we're 6 monitoring it closely. 7 Overall, BOE staff have been some of our 8 greatest advocates for e-filing and have done a 9 tremendous job of marketing the transition plan and 10 assisting taxpayers. 11 For example, in January our district offices 12 assisted over 3,000 taxpayers with return preparation 13 assistance. And of those 98 percent e-filed in the 14 district office. 15 Without the full support of our staff we could 16 not be achieving, we don't believe, the same rates of 17 participation that we are seeing. 18 In addition to our staff, taxpayers have given 19 us overwhelmingly positive feedback on the e-filing 20 system. In fact, a number of taxpayers who file in 21 multiple states have indicated to us that our system is 22 easy to use and is one of the best that they've seen of 23 any of the states. 24 Of course, we aren't resting on our early 25 success and we continue to hold lessons learned meetings 26 to identify enhancements that will make the system 27 easier to use and we are developing outreach plans for 28 how we reach those who have not made the switch 6 1 voluntarily with us so far. 2 Over the next four quarters we will transition 3 the remaining sales and use taxpayers. And that will 4 include our annual filer as well as our largest EFT 5 accounts. 6 Of course, we're encouraged by the initial 7 success of the transition plan and we are optimistic 8 that we will have similar success with these new groups 9 of taxpayers. 10 That concludes my update this morning. If you 11 have any questions, I'd be glad to answer those. 12 MR. LEONARD: Thank you so much. 13 Members, any questions? 14 Ms. Mandel? 15 MS. MANDEL: I have a question because it was 16 asked of me Saturday and, you know, rather than rolling 17 you the e-mail and making you think about it on Saturday 18 and Sunday, I figured I'd hold it. 19 Your -- on the first page, when you talk 20 about -- and you mentioned it here, the Group 1, new 21 seller's permit holders, it says, 22 "Beginning July 1, 2008, all new e-file 23 eligible taxpayers that register for seller's 24 permits," 25 which raised the question because I thought all -- 26 everyone who registered for a seller's permit was now in 27 e-file -- supposed to be an e-file person. 28 So, I'm getting asked about a breakdown of 7 1 filers. Who's not a new e-file eligible or are some 2 people -- 3 MR. MC GUIRE: Okay. There is about 1 or 4 2 percent of our sales and use tax seller's permit 5 holders who aren't eligible. Those would be our G and 6 SG accounts, the gas distributors and gas retailers. 7 There's also a small group of taxpayers, like our lender 8 bad debt accounts that file a specific schedule that are 9 currently e-file eligible. And there is one or two 10 other really minor -- 11 MS. MANDEL: So, the gas distributors and 12 retailers and lender accounts? 13 MR. MC GUIRE: Right. And we are currently 14 working on the system for the gas retailers under the 8 15 to 10 project. 16 MS. MANDEL: Can you get me -- 17 MR. MC GUIRE: The numbers? 18 MS. MANDEL: -- the numbers on those? 19 MR. MC GUIRE: Absolutely. 20 MS. MANDEL: Because the Controller was asking 21 me. 22 Thanks. 23 MR. MC GUIRE: Okay. -- 24 MR. LEONARD: Very good. 25 Copy all of us, that would be great -- 26 MR. MC GUIRE: Absolutely. 27 MR. LEONARD: -- to have that breakdown. 28 Any other questions? 8 1 I'm sure pleased to hear about the great jump 2 and that we're on, if not, I guess, ahead of schedule in 3 terms of transition on e-filing and encourage you to 4 continue on the outreach discussion. 5 Some of these groups may get a little harder 6 and we have to look at how to outreach to them or 7 possible incentives or other ways to serve them and to 8 convince them it's in their best interest, as well as 9 ours, to e-file and also e-pay. 10 But thank you and your team and to all of our 11 BOE staff, particularly those in the field and the call 12 center, who are the first line of service on this 13 project. 14 Thank you all very much. 15 MS. STEEL: I have just one -- 16 MR. LEONARD: Yes. 17 MS. STEEL: Actually we had a seminar in 18 Costa Mesa last week and we had over 200 people. And 19 Miss Hammond worked very hard. 20 And thank you very much for that. 21 MR. LEONARD: I think we all agree with that. 22 Any further questions? 23 Hearing none, the Committee is adjourned. 24 Thank you all very much. 25 ---o0o--- 26 27 28 9 1 REPORTER'SCERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON Hearing Reporter for the 8 California State Board of Equalization certify that on 9 MARCH 16, 2009 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 9 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: May 7, 2009 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 10