Sacramento, Calif. • Off and on for nearly a century, California lawmakers pondered breaking up an obscure elected board that now collects a third of the state’s revenue — more than $60 billion a year in sales, alcohol, tobacco and other taxes.
They pulled the trigger last month, with Gov. Jerry Brown and legislators backing a plan to strip nearly all power from the Board of Equalization. The move took effect Saturday, less than three weeks after legislation was introduced, forcing Brown’s administration to scramble to create a new agency to oversee tax collections and audits in a matter of weeks.
In six months, an even bigger change takes effect when another new department, the Office of Tax Appeals, will assume the authority to resolve most disputed tax bills. Panels of administrative law judges stationed around the state will hear and decide appeals in place of the elected Board of Equalization members.
The rapid transition creates a period of uncertainty for the taxpayers that deal with the Board of Equalization, which will retain about 200 of its 4,700 staff positions. The board mostly handled taxes paid by businesses but also adjudicated income tax appeals.
“It’s going to be interesting times for the next year at least as we all try to figure out the day-to-day ramifications of this rather short but potentially very impactful bill that was just passed,” said Dennis Brager, a tax litigation attorney with the Brager Law Group in Los Angeles.
Brager praised a move he said will put lawyers with expertise in tax law in charge of tax appeals, rather than politicians unfamiliar with California’s intricate tax code. But big questions remain about how the administrative law judges will work, he said, and state officials face a difficult task to resolve them in short order.
The judges will be selected through the state’s traditional civil service hiring process and report to a director appointed by Brown, said H.D. Palmer, a spokesman for Brown’s Department of Finance.
They’ll decide questions like whether a business paid all the sales tax it owes or if a particular good or service is taxable.
The changes were prompted by a scathing ….
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