1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 DECEMBER 15, 2011 10 11 12 13 14 ITEM P OTHER ADMINISTRATIVE MATTERS 15 ITEM P3 SALES AND USE TAX DEPUTY DIRECTOR'S REPORT 16 2. UPDATE ON THE TAXPAYER NOTICE PROCESS 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 Marcy Jo Mandel Appearing for John 10 Chiang, State Controller (per Government Code 11 Section 7.9) 12 Diane G. Olson 13 Chief Board Proceedings Division 14 15 16 For the Staff: Jeff McGuire Deputy Director 17 Sales and Use Tax Department 18 Richard Reger 19 Business Taxes Administrator III 20 Compliance & Technology 21 ---oOo--- 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 DECEMBER 15, 2011 4 ---oOo--- 5 MR. HORTON: Ms. Olson. 6 MS. OLSON: Our next item is P3.2, Update on 7 Taxpayer Notice Process. 8 MR. MCGUIRE: It's me again. 9 My second item today is an update on the 10 expansion of our existing procedures to send all policy 11 directives to Members' offices for a three-day preview 12 before they are disseminated to staff. 13 So in an effort to keep your offices informed, 14 not only of directives to staff but also general notices 15 to the public, we are expanding the three-day preview 16 process to include general mailings and website notices 17 to external parties. 18 Some examples of these notices would include 19 notices such as tax rate changes, recent law regulatory 20 changes, um, notices about use tax obligations, special 21 industry or practitioner notices, etcetera. This would 22 not include, however, a specif -- individual taxpayer 23 specific notices such as notices of determination, 24 refund notices or statements of account. 25 The goal with expanding this preview process is 26 to allow you, the Members, and your staff to be better 27 informed to respond to possible constituents inquiries 28 that you may receive as a result of these general 3 1 notices and mailings that we disseminate to your 2 constituents. 3 That concludes my remarks, and I'm available to 4 answer any questions you may have. 5 MR. HORTON: Member Yee. 6 MS. YEE: Um, thank you. I may have misread 7 the memo. Um, I hope I did. 8 MR. MCGUIRE: Okay. 9 MS. YEE: But I'm reading this sentence: 10 "Additionally, upon Member request, routine 11 account statement notices and billing notices 12 will be forwarded to all Members for a 13 three-day preview." 14 Is that really true? 15 MR. MCGUIRE: No. 16 MS. YEE: What's that? Okay. 17 MR. MCGUIRE: It's only if we revised the 18 notice to have a different, like, statement blurb, but 19 not an individual taxpayer notice. 20 MS. YEE: Oh, no. I get -- 21 MR. MCGUIRE: The general notices that go out, 22 like when we make changes to them, those are part of, 23 like, the policy process. So we would send those to 24 you, too, when we change the wording that, you know, 25 maybe says -- 26 MS. YEE: You know, this really feels like 27 we're bordering on the line of micromanaging. I really 28 don't like this. I don't -- I really appreciate the 4 1 heads-up with respect to information on law changes, 2 regulatory changes. Obviously, you know, I like my 3 office -- I and my staff to be informed about those, um, 4 and a heads-up about that. But, um, some of the more 5 routine things -- 6 MR. MCGUIRE: Yeah. If I could clarify in the 7 memo, as I re-read the sentence -- 8 MS. YEE: Okay. 9 MR. MCGUIRE: Thank you for bringing that up. 10 It was just that occasionally we do get inquiries from 11 different Members' offices about, like, standard notices 12 that we send out, maybe like a notice of determination 13 or account statement. And they want to actually see 14 what do those statements say. And so when we do, we 15 want to basically let everyone look at those at the same 16 time. 17 MS. YEE: Mm-hmm. 18 MR. MCGUIRE: That was just our intent there. 19 MS. YEE: All right. 20 I don't know. When it comes to statement and 21 billing notices, I just -- I kind of draw a line in my 22 mind about those. But it crosses the line in terms of 23 whether that's policy or not, that's all. And maybe, 24 you know, some slight changes to them may constitute a 25 policy change. But I -- it just feels like we're really 26 being extreme here. 27 MR. HORTON: Yeah. I, um -- I think, um, it 28 might be wise of us to encourage our team members to 5 1 exercise their professional judgment, uh, as to when 2 this -- when these items rises to a policy perspective. 3 I would share Mrs. Yee's concerns and would not 4 necessarily -- would see this as an administrative 5 function, uh, and that you should have certain latitude 6 in this particular area but still conscious of there are 7 certain notices that have gone out this past year that 8 has created, uh, a fire storm, uh, and possible review 9 by the Board Members may have minimized that. 10 But to set a, uh -- to standardize this would 11 be inherently dangerous and would probably increase our 12 work load of reviewing, uh, these items when the outcome 13 would probably not change, from my perspective. 14 So let's exercise some discretion and 15 professional judgment. Uh, for me, you can send it to 16 the Executive Director, uh, from my perspective. And if 17 it gets through her to me, uh, I'm good. If it doesn't, 18 I'm good. 19 MS. YEE: Can I ask one clarifying question? 20 I -- I know -- 21 MR. HORTON: Member Yee. 22 MS. YEE: -- the reference has been to a 23 three-day preview. And I wish it were just that. I 24 mean, you're inviting input with a preview and you 25 probably are getting input. 26 MR. MCGUIRE: But it -- 27 MS. YEE: Yes? 28 MR. MCGUIRE: Yeah, I guess, just the general 6 1 idea was it was really to give the Members' offices a 2 heads-up -- 3 MS. YEE: Okay. 4 MR. MCGUIRE: -- before something goes out to 5 others that you may get an inquiry on. So the -- the 6 preview versus review, we're not putting it through a 7 clearance process necessarily to the Board Members. 8 It's really just so you have a heads-up. But to be 9 quite honest with you occasionally -- 10 MS. YEE: Does that truly happen? 11 MR. MCGUIRE: -- we will get inquiries from all 12 of your offices at different times, on different things 13 that we've sent through the preview. And if they're 14 substantive things, then we might make some changes and 15 then preview it back through all of you again. 16 Sometimes they're just nonsubstantive minor 17 changes that, you know, some suggestion, and we take 18 those and make them. But it's really to give a 19 heads-up, but it does turn into somewhat of a review 20 process. 21 MS. YEE: Yeah. I mean, I -- I -- I appreciate 22 the effort in terms of the heads-up. That, I -- I 23 really appreciate. What I don't want to have is 24 everything get bogged down and then all of a sudden it 25 does become a review and then clearance process, which I 26 think is just not workable. 27 MS. MANDEL: It would need to come to the 28 Board -- 7 1 MS. YEE: Right. 2 MS. MANDEL: -- if it's something like that 3 because this is not a -- this is not a process for the 4 Board to be acting. 5 MS. YEE: So, um -- 6 MR. HORTON: So -- 7 MS. MANDEL: And I think staff is very 8 sensitive to that. 9 MS. YEE: Mm-hmm. Okay. 10 I -- I concur with your direction, 11 Mr. Chairman. Let's have the staff exercise its best 12 professional judgment about this. Knowing that, uh, 13 even as a preview, you are inviting input. 14 MR. MCGUIRE: We realize that. 15 MS. YEE: Okay. Thank you. 16 MS. MANDEL: And, Mr. Chair. 17 MR. HORTON: Sure. 18 MS. MANDEL: I mean, if the -- if there were 19 concerns about, uh, you know, changing language on very 20 routine notices that it might, you know, unnecessarily 21 create some issue with a taxpayer, you know, your 22 process where you probably show it to, I don't know, the 23 people in external affairs who are not the total tax 24 techies (verbatim), you know, that -- that probably 25 gives you a good outside, um -- outside of the tax brain 26 view of how the man on the street's going to read that 27 notice when it comes in his mailbox, his or her 28 mailbox. 8 1 So, that -- that -- and, you know, to the 2 extent you make those kind of changes, um, that might be 3 just somebody who reads it and says, oh, you know -- 4 because we -- if you're really tax-techie (verbatim), 5 you read it and you -- you know, your brain sees 6 something different than what -- 7 MR. MCGUIRE: Right. 8 MS. MANDEL: -- other people, even a 9 taxpayer -- 10 MR. MCGUIRE: Right. 11 MS. MANDEL: -- would see. 12 MR. HORTON: Excellent. 13 MR. MCGUIRE: Thank you. 14 MR. HORTON: Is that helpful? 15 MR. MCGUIRE: That's helpful. 16 MR. HORTON: All right. Thank you. 17 MR. MCGUIRE: Thank you. 18 MR. HORTON: That concludes your presentation? 19 MR. MCGUIRE: That concludes my remarks. 20 MR. HORTON: Thank you very much and welcome. 21 MR. REGER: Thank you. 22 ---oOo--- 23 24 25 26 27 28 9 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 December 15, 2011 I recorded verbatim, in shorthand, to 10 the 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: January 5, 2012 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 10