Governor Brown Signs Legislation Dismantling Board of Equalization
Tuesday, July 18, 2017
Governor Brown signed Assembly Bill 102 in June to drastically scale down the California State Board of Equalization and create a singular new state department and state office to handle taxpayer appeals and settlements. The Board of Equalization currently collects billions of dollars in state revenue each year.
Of particular interest to title companies, insurance company assessments will not be transferred from the Board. In addition, the Board would continue to be responsible for county property tax assessment rules. Nevertheless, many of the Board’s duties will be assumed by the new California Department of Tax and Fee Administration. The tax appeals process will be taken over by an Office of Tax Appeals starting in January. Due to the short transition period, it is unclear what taxpayers can expect with their pending cases.
The Board of Equalization has faced mounting criticism since an audit report in March from the Department of Finance outlined major deficiencies and potential misuse of state funds by Board members. The report was especially critical of an operating environment created by some Board members where Board staff felt compelled to do work not directly related to the functions of the Board.
Under the new system the question arises as to whether taxpayers will be going into an appeal with two strikes against them, because the judges in the new Office of Tax Appeals may be more inclined to uphold the staff decisions. The judges hearing appeals will have specific expertise in tax laws and regulations. Currently, the ultimate decisions on appeals are made by the elected members of the Board, who are not necessarily tax experts, but may be more favorably inclined towards taxpayers.