BILL ANALYSIS Ó
AB 2323
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Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2323 (Perea) - As Amended: May 15, 2012
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the State Board of Equalization (BOE) to
publish and make available on its Internet Web site a written
formal opinion, a written memorandum opinion, or a written
summary decision for each case in which the amount in
controversy is five hundred thousand dollars ($500,000) or more.
Specifically, this bill:
1)Requires each published opinion to include specified sections,
including disposition and the concurring board members.
2)Authorizes any BOE member to write a dissenting opinion should
he/she disagree with the majority opinion.
3)Provides that the BOE shall determine the precedential value
of each formal legal opinion and each memorandum opinion at
its discretion.
FISCAL EFFECT
Administrative costs annually for BOE in the hundreds of
thousands of dollars.
COMMENTS
1)Purpose. The author explains that BOE members hear appeals
arising from the various tax and fee programs the BOE
administers and also serves as the administrative appellate
body for final actions of the Franchise Tax Board. The author
states given BOE's quasi-judicial role in hearing and deciding
taxpayer disputes, taxpayers must have full confidence in the
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process by which the BOE renders its decisions. The author
argues AB 2323 would promote taxpayer confidence by requiring
the BOE to publish written opinions for each case in which the
amount in controversy is $500,000 or more. The author notes
the number of published decisions has decreased dramatically
in recent years. For example, during the 1980s, the BOE
published a total of 1,615 formal opinions, for an average of
161.5 decisions a year. During the period from 2000 to 2010,
however, the BOE only published 32 formal opinions, an average
of 3.2 decisions each year. The author contends publishing
these opinions would provide a formal record, for both the
taxpayers involved and other interested parties, of the legal
analysis applied to resolve significant cases.
2)Support. The California Tax Reform Association supports AB
2323 because even though BOE is a quasi-judicial body it
issues very few formal opinions even though the decisions may
be a precedent that would be useful to the public. They argue
since the bill only requires written opinions for decisions
greater than $500,000, there is a substantial amount of
revenue at issue in these appeals and the public has a right
to know the basis and reasoning of BOE decisions. They
conclude that requiring written opinions with the information
about the case will provide public information about these
proceedings.
3)Opposition . Opponents, including Price Waterhouse Coopers
(PwC) and BOE member George Runner, oppose the bill arguing it
is burdensome and unnecessary and will be costly and delay the
appeals process. PwC, in particular, notes the bill, without
defining a problem needing to be solved, proposes to spend
hundreds of thousands of dollars annually to require the BOE
to arbitrarily publish decisions, irrespective of their
significance.
The California Taxpayers Association opposes the bill, unless
it is amended, seeking amendments that eliminate the $500,000
threshold requirement and requiring publishing of precedential
decisions regardless of the dollar amount. They argue that
the BOE decisions may be helpful or even set precedent for
future taxpayers, even if they are below the threshold and, in
those cases, the public may be precluded from important
information that would help them determine whether to file an
appeal for a tax dispute.
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4)Background . If a taxpayer's dispute cannot be resolved
through discussions with BOE staff, the taxpayer's case may be
referred to the Appeals Division for conference by an Appeals
Division attorney or auditor with no prior involvement with
the case. The Appeals Division will thereafter issue a
decision and recommendation in the appeal based on all
relevant arguments and evidence. If the taxpayer disagrees
with the D&R, the taxpayer may request a public hearing before
the members of the BOE.
The decisions of BOE are reflected in the meeting minutes,
often with a simple notation of the action taken. In many
cases, the BOE's Appeals Division will also prepare a "Letter
Decision," which contains a short explanation of the reasons
for the BOE's decision, and provide one copy to each party to
the case. Letter Decisions may not be cited as precedent in
any appeal or proceeding before the BOE. The BOE does,
however, have the discretion to adopt a several types of
opinions as defined "Formal Opinion," "Memorandum Opinion," or
a "Summary Decision." Any Formal Opinion or Memorandum
Opinion may be cited as precedent in any matter or other
proceeding before the BOE, unless the opinion has been
depublished, overruled or superseded.
5)Prior legislation. Before being amended to a different
subject, AB 1655 (Horton), of 2005 required the BOE to make
public and readily available on the Internet all BOE decisions
and determinations. The BOE's staff analysis of AB 1655 noted
the bill's publication provisions seemed premature, given that
the BOE was then engaged in a comprehensive review of its
Rules of Practice. Specifically, the BOE analysis noted the
review includes, developing criteria for publishing decisions
and that BOE legal staff is researching the California Rules
of Court for requirements the Courts of Appeal use in
publishing decisions. The BOE staff analysis concludes that
the review will also involve an interested party meeting
process, in which all stakeholders can have their concerns
addressed.
Only 10 formal opinions were published between 2006 and 2010.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 2323
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