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Updates on the New Office of Tax Appeals

This article is reproduced with permission from Spidell Publishing, Inc.

The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the California State Board of Equalization and separated its functions among these three separate entities:

  • The newly formed California Department of Tax and Fee Administration (CDTFA) now handles sales, use, and excise taxes, and most fee collection.
  • The State Board of Equalization (Board and BOE) will continue to perform the duties assigned to it by the State Constitution, which includes property taxes, insurance taxes, and alcoholic beverage taxes.
  • Beginning January 1, 2018, the newly formed Office of Tax Appeals (OTA) will begin conducting appeals on taxes and fees that are not related to the constitutional authority of the Board, such as franchise and personal income tax appeals, sales and use taxes, and other special taxes and fees.

The new OTA
The Governor appointed Kristen Kane as chief counsel for this department, and she will hire administrative law judges (ALJs) to hear the appeals. Each appeal will be heard by a panel of three ALJs, who will issue written decisions for each appeal. Since these changes were enacted in June, there have been a number of questions about which cases the OTA will start hearing, who can represent taxpayers before the OTA, and what the new procedures will be for filing these appeals.

Cleanup legislation enacted
AB 131 (Ch. 17-252) clarifies various issues related to the new OTA. The bill clarifies:

  • The five-member Board will only hear those appeals related to income and franchise and most business tax cases that are scheduled on their calendars prior to January 1, 2018, and only if the appeal will be heard, determined, decided, or is otherwise final before January 1, 2018. All other appeals will be heard by the OTA ALJ panels beginning January 1, 2018 (Note: The Board can decide cases currently scheduled on the calendar for hearing prior to January 1, 2018. Petitions for rehearing filed now will take several months, so they will be heard by the OTA).
  • As to who may practice before the OTA, the bill specifies that both CPAs and public accountants may represent clients before an ALJ panel. The bill makes it clear that all those who currently represent taxpayers before the five-member Board can continue to do so. This includes anyone over the age of 18 authorized by the taxpayer and, while it does not specify Enrolled Agents, this expansive provision encompasses Enrolled Agents.
  • The OTA may establish objective criteria under which a taxpayer may request a closed hearing.

For more information about this article, please contact our tax professionals at or toll free at 844.4WINDES (844.494.6337).
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