BILL ANALYSIS �
AB 2323
Page A
ASSEMBLY THIRD READING
AB 2323 (Perea)
As Amended May 25, 2012
Majority vote
REVENUE & TAXATION 8-0 APPROPRIATIONS 11-6
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|Ayes:|Perea, Harkey, Beall, |Ayes:|Fuentes, Blumenfield, |
| |Cedillo, Wagner, Fuentes, | |Bradford, Charles |
| |Gordon, Nestande | |Calderon, Campos, Davis, |
| | | |Gatto, Ammiano, Hill, |
| | | |Lara, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Harkey, Donnelly, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Wagner |
| | | | |
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SUMMARY : Requires the State Board of Equalization (BOE) to
publish on its Web site a written formal opinion, a written
memorandum opinion, or a written summary decision for each BOE
decision in which the amount in controversy is $500,000 or more,
within 120 days of rendering the decision. Specifically, this
bill :
1)Requires each published opinion to include findings of fact, the
legal issue(s) presented, applicable law, analysis, disposition,
and the names of adopting BOE members.
2)Authorizes any BOE member to submit a concurring or dissenting
opinion.
3)Vests the BOE with discretion to determine the precedential
value of each decision.
4)Provides that the publication requirement does not apply to any
consent calendar actions taken by BOE.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, administrative costs annually for BOE in the hundreds
of thousands of dollars. Possible savings from avoiding
litigation by providing a fuller explanation of decisions.
AB 2323
Page B
COMMENTS : The author has provided the following statement in
support of this bill:
BOE members hear appeals arising from the various tax
and fee programs the BOE administers. In addition, the
BOE serves as the administrative appellate body for
final actions of the FTB. Given the BOE's
quasi-judicial role in hearing and deciding taxpayer
disputes, taxpayers must have full confidence in the
process by which the BOE renders its decisions. AB 2323
would promote taxpayer confidence by requiring the BOE
to publish a written opinion for each non-consent
decision in which the amount in controversy is $500,000
or more. 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.
The BOE does publish certain decisions. Indeed, the
BOE's website provides access to formal opinions dating
all the way back to 1930. The number of published
decisions, however, 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 published only 32 formal opinions
- an average of 3.2 decisions each year.
Thus, AB 2323 is needed to restore a very useful BOE
practice that will, in turn, promote the twin goals of
transparency and sound governance.
Assembly Revenue and Taxation Committee Staff Comments:
1)How many cases would this bill apply to ? As noted above, this
bill only applies to BOE decisions in which the amount in
controversy is $500,000 or more. In addition, amendments taken
in the Assembly Appropriations Committee exempt all consent
calendar items from this bill's publication requirements. The
BOE notes that in all of 2011, there were only 20 non-consent
cases where the amount in controversy was $500,000 or more.
2)Recent Court of Appeal decision : The Court of Appeal's May 23,
AB 2323
Page C
2012, decision in City of Palmdale v. State Board of
Equalization , 2012 Cal.App. LEXIS 610, points to the need for
greater transparency in BOE's decision-making process. In this
case, the Court of Appeal denied the parties' motion to vacate a
trial court judgment that faulted the BOE "for rendering a
decision without due regard for the statutory and constitutional
laws that govern its decision-making." Id . at 3. The Court
held that, "To vacate the judgment and reinstate �BOE's]
decision would not only imply the agency acted properly, it
would also undermine the effectiveness of the judgment in
exposing �BOE's] deficiencies in handling the administrative
appeal." Id .
The trial court's judgment found that the BOE's decision
granting the City of Pomona's petition for a reallocation of
local sales tax was a "quasi-judicial ruling" governed by Code
of Civil Procedure Section 1094.5. Id . at 12. Thus, the trial
court reasoned that the BOE's decision "had to set forth express
findings and a discussion of the evidence supporting them."<1>
Id . The trial court found, however, that the BOE did "not even
hint at the reasons for �its] decision" and, as a result, the
trial court was "forced into unguided and resource-consuming
explorations . . . ." Id .
In refusing to vacate the trial court's judgment, the Court of
Appeal noted that, under the BOE's decision, the City of Los
Angeles stands to lose $2.32 million in tax revenues and that
cities and their residents "have a right to know why a city is
losing or gaining millions in local sales tax revenues, that is,
a right to know the �BOE's] grounds for reallocating those
taxes." Id . at 15. (Emphasis in original.) The Court also
noted:
As recited in the judgment, the �BOE]: (1) failed to
understand that it must explain the basis of its
decisions; (2) paid little attention to its statutory
authority, or lack thereof, to apply regulations
retroactively; (3) appeared unconcerned with the
principles of due process; (4) was oblivious to the
inequities of considering an appeal filed eight years
after the Board Management decision; and (5) ignored the
requirements of the Administrative Procedure Act.
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<1> As a result, it would appear that this bill's publication
requirements may simply be declaratory of existing law.
AB 2323
Page D
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN: 0003886