BILL ANALYSIS �
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THIRD READING
Bill No: AB 2323
Author: Perea (D)
Amended: 5/25/12 in Assembly
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-4, 6/20/12
AYES: Wolk, DeSaulnier, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa, Yee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 47-19, 5/30/12 - See last page for vote
SUBJECT : Board of Equalization: administration:
opinions
SOURCE : Author
DIGEST : This bill requires the Board of Equalization
(BOE) to publish written formal, memorandum, and summary
opinions on its Web site within 120 days of its decision if
the amount in controversy exceeds $500,000. This bill does
not apply to items decided on its consent calendar.
ANALYSIS : The California Constitution establishes the
BOE as a five-member board composed of four members elected
by district, plus the State Controller. BOE values
property of statewide assessees and sets rules for County
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AB 2323
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Assessors; its initial function was to "equalize"
assessment practices between counties when it was created
in 1870. Currently, BOE administers sales and use taxes,
excise taxes, special taxes, and the state's fee programs.
Taxpayers may also appeal administrative determinations of
the Franchise Tax Board (FTB) on personal income and
corporation tax cases to the BOE. Taxpayers may appeal BOE
determinations in favor of FTB to Superior Court, but FTB
cannot likewise appeal BOE decisions in favor of the
taxpayer. Only BOE's property tax duties are enshrined in
the Constitution; all of its other powers are statutory.
This bill requires BOE to publish written formal,
memorandum, and summary opinions on its Web site within 120
days of its decision if the amount in controversy exceeds
$500,000. This bill does not apply to items decided on its
consent calendar.
Each opinion must include findings of fact, the legal
issue(s) presented, applicable law, analysis, disposition,
and the names of adopting board members. Board members may
submit dissenting opinions setting forth his/her rationale
for disagreeing with the opinion, or submit a concurring
opinion setting forth his/her rationale for agreeing with
the result if different from the rationale set forth in the
opinion. A formal or memorandum opinions may be cited as
precedent in any matter or proceeding before the board
unless it has been de-published, overruled, or superseded,
but a summary decisions cannot.
Comments
According to the Assembly Revenue and Taxation Committee
analysis, after testimony ends, BOE may vote to decide a
case, take the matter under submission and decide it later,
or continue the hearing to a later date. In many cases,
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 BOE. BOE
does, however, have the discretion to adopt:
1. "Formal Opinions," that contain the findings of fact and
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conclusions of law that form the basis of BOE's decision
on an appeal in writing, is intended to set precedent.
When issuing a formal decision, the BOE considers
whether it would:
A. Establish a new rule of law, apply an existing
rule to a set of facts significantly different from
those stated in published opinions, or modify or
repeal an existing rule.
B. Resolve or create an apparent conflict in the law.
C. Involve a legal issue of continuing public
interest.
D. Make a significant contribution to the law by
reviewing either the development of a common law rule
or the legislative or judicial history of a provision
of a constitution, statute, or other written law.
Generally, Formal Opinions are adopted only for
franchise and personal income tax appeals.
2. "Memorandum Opinions," which may be cited as precedent
in any matter or other proceeding before the BOE, unless
the opinion has been depublished, overruled, or
superseded, or
3. "Summary Decisions," similar to both Formal and
Memorandum Opinions, but may not be cited as precedent.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, the BOE
estimates it would incur increased staff costs of $479,000
to $572,000 in the first year, and ongoing costs of
approximately $383,000 to $476,000 annually (General Fund)
for 1.5 to two additional attorney personnel years (PYs)
and an additional 0.5 PY of court reporter costs (see staff
comments). These costs reflect the assumption that BOE
would publish an additional 30 to 35 decisions each year.
SUPPORT : (Verified 8/17/12)
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AFSCME
Board of Equalization Member Michelle Steele
California Republican Assembly
California Tax Reform Association
California Taxpayer Protection Committee
OPPOSITION : (Verified 8/17/12)
Board of Equalization Member George Runner
California Association of Certified Public Accountants
California Business Properties Association
California Chamber of Commerce
Price Waterhouse Cooper
ARGUMENTS IN SUPPORT : Proponents state that this bill is
necessary to cause the BOE to provide adequate guidance to
taxpayers about California's intricate tax rules and how
they are interpreted by the BOE and the FTB. As
California's tax laws have become more complicated and
strayed farther from conformity to federal tax rules,
taxpayers need critical tax advice now more than ever
before. By compelling the BOE to publish its decisions in
tax appeal cases where more than $500,000 is at stake, this
bill will ensure that more useful advice is available to
taxpayers. For the record, they are also in support of
publishing cases involving lesser amounts for the same
reasons.
ARGUMENTS IN OPPOSITION : Opponents argue that this bill
will be costly, cause unnecessary confusion, and lead to
unintended consequences. Opponents add that requiring the
BOE to issue more decisions would make them more difficult
to find on their Web site, and that this bill's $500,000
threshold is arbitrary. Opponents further note that this
bill will delay the BOE appeals process because it will
take longer for appeals to become final and that this bill
will not improve guidance to taxpayers because of the built
in administrative procedures to ensure transparency such as
minutes of minutes that BOE already uses. Finally, the
opposition notes that the BOE has already published over
4,000 precedential written decisions since it began
publishing decisions in 1930 and they are available on the
Web site.
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ASSEMBLY FLOOR : 47-19, 5/30/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Blumenfield,
Bonilla, Bradford, Brownley, Buchanan, Butler, Charles
Calderon, Campos, Carter, Chesbro, Dickinson, Eng, Feuer,
Fong, Fuentes, Furutani, Gatto, Gordon, Hall, Hayashi,
Roger Hern�ndez, Hill, Huber, Hueso, Huffman, Lara,
Bonnie Lowenthal, Mendoza, Monning, Nestande, Pan, Perea,
V. Manuel P�rez, Portantino, Skinner, Solorio, Swanson,
Torres, Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Cook, Donnelly, Beth Gaines, Garrick,
Gorell, Grove, Hagman, Harkey, Jeffries, Jones, Knight,
Logue, Mansoor, Miller, Morrell, Nielsen, Silva, Smyth
NO VOTE RECORDED: Bill Berryhill, Block, Cedillo, Conway,
Davis, Fletcher, Galgiani, Halderman, Ma, Mitchell,
Norby, Olsen, Valadao, Wagner
AGB:k 8/20/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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