California is the only state with an elected tax commission.1 The BOE is overseen by five elected members: four members elected from regional districts, and the state controller. The BOE administers the collection of California sales tax, state-assessed property taxes, and other business taxes and fees. The BOE also acts as the highest administrative appeal body for state-imposed taxes, including the income taxes administrated by the Franchise Tax Board.
Yesterday, June 15, the California Legislature approved A.B. 102 as part of the state budget, which strips the BOE of most of its tax administrative functions as of July 1, 2017, and of its role as a tax tribunal as early as January 1, 2018.
Under the bill, the following changes will take place:
- A newly formed agency, the California Department of Tax and Fee Administration (CDTFA), will assume the BOE’s administrative and regulatory functions for sales tax and other business taxes and fees.
- A newly established Office of Tax Appeals (OTA) will assume the BOE’s adjudicative functions. The OTA will be composed of administrative law judges (ALJs) hearing tax appeals in three-judge panels. These ALJs will be attorneys with experience in tax law.
- The BOE will only be left with the responsibility of overseeing property tax assessments, utility tax assessments, and tax assessments on insurers.
The recent push for legislative reform of the BOE’s functions was prompted by Governor Jerry Brown’s public criticism of the BOE following the State Department of Finance’s release of a March 30 audit report. The major overhaul proposal was publicly endorsed by at least two current BOE members: State Controller Betty Yee and member Fiona Ma.