BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2453 HEARING: 7/3/12
AUTHOR: Block & Harkey FISCAL: No
VERSION: 6/7/12 TAX LEVY: No
CONSULTANT: Miller
STATE BOARD OF EQUALIZAITON: ADMINSTRATION: PETITION FOR
REDETERMINATION
Extends the time period to file a petition of determination
with the BOE.
Background and Existing Law
Existing state law allows certain taxpayers against whom a
determination or deficiency assessment is made to petition
for a redetermination within 30 days after service of
notice. If a petition for redetermination is not filed
within the 30-day period, the determination becomes final,
due, and payable. If the taxpayer misses the filing
deadline, the only way he or she may appeal the liability
assessed is to pay the tax or fee in full and file a claim
for refund. However the BOE may, accept a late petition as
an administrative protest, whereby the Deputy Director
accepts the petition. This process applies to all the
programs the BOE administers including the sales and use
tax, motor vehicle fuels, cigarette and tobacco products,
alcoholic beverage laws, timber yield tax, diesel fuel law,
and fee collections.
The BOE administers and governs the rules and procedures
for appeals as well as the hearing process and procedures.
If the BOE determines that a taxpayer has underpaid taxes
or fees, the BOE issues a Notice of Determination (for most
tax programs) or a Notice of Deficiency Assessment.
Taxpayers against whom a determination is made may petition
for a redetermination within 30 days after service of
notice. If a petition for redetermination is not filed
within this 30-day period, the determination becomes final.
Moreover, if a taxpayer misses the filing deadline, the
only statutorily prescribed method for appealing the
liability is for the taxpayer to pay the tax in full and
AB 2453 -- 6/7/12 -- PageB
file a claim for refund.<1>
The BOE notes in its staff analysis that, before a
determination is even issued, the taxpayer is informed of
the 30-day deadline for filing a petition for
redetermination. Specifically, the BOE notes, "During the
exit conference, the auditor . . . explains the steps
involved in filing a timely petition. In addition, the
auditor provides the taxpayer with a copy of BOE
Publication 17, Appeals Procedures Sales and Use Taxes and
Special Taxes, which more fully explains the appeals
process." In addition, the notice of determination itself
informs the taxpayer of the 30-day deadline for filing a
petition for redetermination.
Proposed Law
Assembly Bill 2453 extends the limitation period for filing
a petition for determination from 30 days to 60 days from
the date that the notice of determination or notice of
deficiency assessment was mailed to the taxpayer against
which the notice was issued.
State Revenue Impact
According to the BOE, this bill may result in revenue
losses associated with cash flow (money would be slower to
come in with more time) and decreased penalties.
Comments
1. Purpose of the bill . This bill is sponsored by the
BOE, upon unanimous consent of all Members of the BOE, for
purposes of extending the deadline for filing a petition
for redetermination from 30 days to 60 days from the date
the notice of determination or notice of deficiency
assessment is issued. For some taxpayers, current law does
not allow ample time to develop and prepare their
petitions. Allowing for a longer period to file a petition
will enable taxpayers to better clarify and substantiate
-------------------------
<1>
In its staff analysis of this bill, the BOE notes that it
may, at its discretion, accept a late petition as an
"administrative protest."
AB 2453 -- 6/7/12 -- PageC
their position. In addition, the 60-day period is
consistent with the filing period utilized by the Franchise
Tax Board (FTB). To the extent that the time frame for
protesting an amount due is the same between the two major
tax agencies, the less confusion there might be where
someone could think that they have 60 days to protest a BOE
audit because that was the amount of time they had the last
time they had an FTB audit, and they fail to carefully read
the BOE notice.
2. Unnecessary . BOE regulation 5220 provides guidance on
the treatment of a late petition for redetermination as an
administrative protest. If a petition for redetermination
is filed after the expiration of the 30-day period, the
untimely petition may be treated as an administrative
protest when determined by the Deputy Director of the BOE.
If it is treated as an administrative protest, it is
reviewed in the same manner as timely protest with no
penalty for being late. Furthermore, taxpayers are
informed of the 30 day provision on the first day a notice
is mailed-will taxpayers be equally confused with 60 days?
The Committee may wish to consider amending the bill to
either delete this administrative provision to allow an
extension or not allow the time extension proposed by this
bill at all. Staff recommends the following restriction to
the administrative provision:
3. More for less ? In a recent decision City of Palmdale
v. State Board of Equalization , 2012 Cal.App. LEXIS 610,
the court stated:
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.
The Committee may wish to consider whether to grant
additional time and administrative flexibility to an agency
that received such a scathing review from an appellate
court.
Assembly Actions
AB 2453 -- 6/7/12 -- PageD
Assembly Revenue and Taxation: 8-0
Assembly Appropriations: 17-0
Assembly Floor: 70-0
Support and Opposition (6/28/12)
Support : State Board of Equalization (sponsor); BOE Member
George Runner; California Taxpayers Association.
Opposition :
Unknown.