AHEAD AND GET STARTED THEN. GOOD
MORNING AND WELCOME TO TODAY'S
HEARING OF THE ASSEMBLY
COMMITTEE. Þ. RIGHT. I THINK I
MUST FORGET TO DO THAT A LOT,
BECAUSE THAT WAS NOT A WELL,
GOOD MORNING AND WELCOME TO
TODAY'S MEETING OF THE ASSEMBLY
COMMITTEE ON REVENUE AND
TAXATION IN ORDER TO FACILITATE
THE GOAL, DO WE HAVE AN ISSUE
WITH IT? IS THE MICROPHONE NOT
ON? THERE YOU GO. CAN YOU HEAR
ME NOW, KNOWING THAT. HOW ABOUT
NOW? ALL RIGHT. OKAY. THAT'S
USUALLY EVERYTHING, RIGHT? YEAH.
OKAY. MY CONSULTANT HAS. YEAH.
HOW ABOUT NOW? ALL RIGHT. OH,
MAYBE I WASN'T SITTING CLOSE
ENOUGH. ALL RIGHT. IN ORDER TO
FACILITATE THE GOAL OF HEARING
AS MUCH FROM THE PUBLIC WITHIN
THE LIMITS OF OUR TIME, WE WILL
NOT PERMIT CONDUCT THAT DISRUPTS,
DISTURBS, OR OTHERWISE IMPEDES
THE ORDERLY CONDUCT OF
LEGISLATIVE PROCEEDINGS. WE WILL
NOT ACCEPT DISRUPTIVE BEHAVIOR
OR BEHAVIOR THAT INCITES OR
THREATENS VIOLENCE, EVEN VEILED
THREATS. THIS HEARING IS BEING
LIVE STREAMED ON THE ASSEMBLY'S
WEBSITE AND A RECORDING WILL BE
POSTED, SO HOPEFULLY THIS WILL
SERVE AS A RESOURCE THAT CAN BE
REFERRED TO IN THE FUTURE. I
KNOW SOME OF OUR COMMITTEE
MEMBERS WERE UNABLE TO JOIN US
IN PERSON AND THEY ARE WATCHING
ONLINE AS WELL AS OTHER
INTERESTED STAKEHOLDERS. BEFORE
WE START, I WOULD LIKE TO THANK
THE MEMBERS AND PANELISTS IN
ATTENDANCE TODAY. TODAY'S
OVERSIGHT HEARING IS FOCUSED ON
TAX ADMINISTRATION IN THE GOLDEN
STATE. SPECIFICALLY, WE WILL BE
FOCUSING ON TWO STATE ENTITIES
THAT WERE CREATED IN 2017 AS
PART OF THE TAXPAYER
TRANSPARENCY AND FAIRNESS ACT.
THE CALIFORNIA DEPARTMENT OF TAX
AND FEE ADMINISTRATION, AND THE
OFFICE OF TAX APPEALS, AS OUR
PANELISTS WILL EXPLAIN OVER THE
COURSE OF THE HEARING,
CALIFORNIA IS UNIQUE COMPARED TO
OTHER STATES BECAUSE WE HAVE
MULTIPLE STATE ENTITIES INVOLVED
IN TAX ADMINISTRATION. THIS CAN
MAKE NAVIGATING AN ALREADY
COMPLEX SUBJECT EVEN MORE
CONFUSING FOR TAXPAYERS. DESPITE
ROBUST DISAGREEMENTS ABOUT TAXES
IN GENERAL, THERE IS A BROAD
CONSENSUS REGARDING THE
PRINCIPLES THAT SHOULD GUIDE
SOUND TAX POLICY, AND I'VE TRIED
TO PRIORITIZE THEM DURING MY
TENURE AS CHAIR OF THIS
COMMITTEE. A FEW OF THESE
PRINCIPLES ARE AS FOLLOWS.
TRANSPARENCY AND CERTAINTY.
TAXPAYERS NEED TO KNOW WHAT
THEIR OBLIGATIONS ARE SO THEY
CAN PLAN ACCORDINGLY.
CONVENIENCE AND SECURITY
TAXPAYERS MUST BE ABLE TO
FULFILL THEIR OBLIGATIONS IN A
WAY THAT ISN'T OVERLY ONEROUS.
WHILE ENSURING THAT THEIR
INFORMATION IS PROTECTED AND
PRIVATE, AND FAIRNESS AND
ACCOUNTABILITY. TAXPAYERS MUST
BE CONFIDENT THAT THE RULES ARE
BEING APPLIED EVENLY TO SIMILAR
SIMILARLY SITUATED TAXPAYERS,
AND THAT OTHERS AREN'T RECEIVING
SPECIAL TREATMENT. THIS HEARING
WILL BE AN OPPORTUNITY FOR
MEMBERS OF THIS COMMITTEE AND
THE PUBLIC TO DEVELOP A DEEPER
UNDERSTANDING OF CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION AND THE OFFICE OF
TAX APPEALS AND THE HISTORY
LEADING UP TO THEIR CREATION OF
THE HEARING WILL CONSIST OF TWO
PANELS. THE FIRST PANEL WILL
FEATURE TWO EXPERTS FROM THE
LEGISLATIVE ANALYST'S OFFICE.
AND I'VE WHO I'VE ASKED TO
EXPLAIN SOME OF THE
CONSTITUTIONAL AND LEGISLATIVE
HISTORY OF TAX ADMINISTRATION IN
CALIFORNIA. THE SECOND PANEL
WILL FEATURE THE LEADERSHIP FROM
BOTH CDTFA AND OTA, WHO WILL
EXPLAIN THE ACCOMPLISHMENTS AND
CHALLENGES THEIR ORGANIZATIONS
HAVE FACED SINCE THEIR CREATION.
FINALLY, WE WILL CLOSE WITH AN
OPPORTUNITY FOR MEMBERS OF THE
PUBLIC TO MAKE PUBLIC COMMENTS.
WITH ALL THIS IN MIND, IF ANY OF
MY COLLEAGUES HAVE ANY
INTRODUCTORY REMARKS, YOU ARE
WELCOME TO SHARE THEM NOW. ALL
RIGHT. THANK YOU FOR THE FIRST
PANEL. WE WILL HAVE A Q&A
PORTION FOR THE ENTIRE PANEL AT
THE END. PANELISTS, AFTER YOU
FINISHED YOUR PRESENTATION,
PLEASE REMAIN SEATED. SO THAT
MEMBERS MAY ASK QUESTIONS. AND I
WOULD LIKE TO WELCOME FOR OUR
FIRST PANEL, SETH KIRSTEN FROM
THE LEGISLATIVE ANALYST'S OFFICE
TO PROVIDE A HISTORICAL OVERVIEW
OF THE TAX ADMINISTRATION IN
CALIFORNIA. MR. ALEX BENTZ WITH
THE LA Þ IS UNFORTUNATELY NOT
JOINING US TODAY DUE TO ILLNESS,
AND WE ARE WISHING HIM A SPEEDY
RECOVERY. MR. KIRSTEN, PLEASE
BEGIN WHEN YOU ARE READY. THANK
YOU. YES, I'M SETH KIRSTEN WITH
THE LEGISLATIVE ANALYST'S
OFFICE. I'LL PROVIDE SOME
HISTORICAL PERSPECTIVE ON HOW
THE STATE ENDED UP WITH ITS
CURRENT CONFIGURATION OF TAX
AGENCIES. ESSENTIALLY, THE
ORIGIN STORY OF THE TWO ENTITIES
THAT YOU'LL BE OVER, WHICH
YOU'LL BE CONDUCTING OVERSIGHT
TODAY. AND I'VE DISTRIBUTED A
HANDOUT TO ACCOMPANY MY
TESTIMONY. I BELIEVE A COPY ALSO
WILL BE APPEARING ON A MONITOR
NEARBY. SO NEXT SLIDE PLEASE.
I'LL START ON THE FIRST PAGE OF
THAT HANDOUT, WHICH HAS A LITTLE
FLOWCHART. I THINK MAYBE THERE
THAT MIGHT BE SOMEONE ELSE'S Ó
UP THERE. SO LET'S NOT NOT LOOK
AT THE MONITOR QUITE YET. I'LL
START ON THE FIRST PAGE OF THE
HANDOUT, WHICH HAS A LITTLE
FLOWCHART ILLUSTRATING. SO YOU
SHOULD LOOK SOMETHING LIKE THIS
RIGHT HERE. LITTLE FLOWCHART
ILLUSTRATING THE LANDSCAPE OF A
CALIFORNIA TAXES. THAT'S THE
ONE. YES. THANK YOU, MADAM
CHAIR. THE LANDSCAPE BEFORE THE
2017 CHANGES. SO AT THAT TIME
THE STATE'S TWO MAIN TAX
AGENCIES WERE THE FRANCHISE TAX
BOARD, KNOWN AS FTB AND THE
STATE BOARD OF EQUALIZATION,
KNOWN AS BOE. FTB ADMINISTERED
PERSONAL AND CORPORATE INCOME
TAXES, AND BOE ADMINISTERED THE
SALES AND USE TAX, AS WELL AS
DOZENS OF SMALLER TAX AND FEE
PROGRAMS, AND BOE ALSO HEARD
APPEALS FOR ALL STATE TAXES.
ALTHOUGH BOE WAS ESTABLISHED
INITIALLY UNDER THE STATE
CONSTITUTION, MOST OF THE DUTIES
THAT IT HAD GOING INTO 2017 WERE
ASSIGNED BY STATUTE. SO FOR
SIMPLICITY, I'LL JUST NOTE THAT
THIS FLOWCHART AND A SIMILAR ONE
LATER IN THE HANDOUT DO NOT
DEPICT THE VARIOUS OTHER STATE
AND LOCAL ENTITIES INVOLVED IN
THESE TAX PROGRAMS. AS THE CHAIR
MENTIONED EARLIER, THAT WOULD BE
AN EVEN MORE COMPLEX. SO NEXT
SLIDE PLEASE. TURNING TO THE
NEXT PAGE OF THE HANDOUT, I'LL
NOTE THAT VÚI HISTORICAL
STRUCTURE BLENDED TOGETHER SOME
OF THE DEFINING CHARACTERISTICS
OF LEGISLATIVE, EXECUTIVE, AND
JUDICIAL BRANCHES OF GOVERNMENT
UNDER A SINGLE ENTITY. AND SO
THOSE MULTIPLE ROLES
FUNDAMENTALLY CONFLICT WITH EACH
OTHER. IF YOU'RE ELECTED TO BE
AN ADVOCATE FOR A PARTICULAR
CONSTITUENCY OR A PARTICULAR
POINT OF VIEW, THAT'S GOING TO
FUNDAMENTALLY CONFLICT WITH THE
DUTY TO DELIVER IMPARTIAL
RULINGS ON TAX DISPUTES. IF YOU
HAVE REPRESENTATIVES ELECTED
FROM FOUR GEOGRAPHICALLY
DISTINCT DISTRICTS OVERSEEING
STATE TAX ADMINISTRATION THAT
FUNDAMENTALLY CONFLICTS WITH THE
DUTY TO CONDUCT THOSE
ADMINISTRATIVE ACTIVITIES IN A
UNIFORM, CONSISTENT FASHION
THROUGHOUT THE STATE. AND SO
THESE INHERENT ORGANIZATIONAL
CONFLICTS HAD BEEN CLEAR FOR
QUITE SOME TIME. FOR EXAMPLE,
OUR OFFICE'S ANALYSIS OF THE
1949 50 BUDGET BILL NOTED,
QUOTE, BECAUSE OF THE PERSONAL
FEELING OF RESPONSIBILITY FOR
THEIR DISTRICT, THE INDIVIDUAL
BOARD MEMBERS FREQUENTLY REQUIRE
CERTAIN DEVIATIONS FROM THE
ADOPTED POLICY OF THE BOARD.
NEXT SLIDE PLEASE. SO TURNING TO
THE NEXT PAGE OF THE HANDOUT,
I'LL JUST BRIEFLY SUMMARIZE SOME
FINDINGS FROM EVALUATIONS
CONDUCTED BY VARIOUS STATE
ENTITIES THAT ILLUSTRATE SOME OF
THE CONCRETE CONSEQUENCES OF
BOWIE'S ORIGINAL ORGANIZATIONAL
STRUCTURE. SO, FOR EXAMPLE, IN
THE 90S, THE LEGISLATURE
APPROVED 250 NEW AUDIT POSITIONS
FOR BOE, AND IN 1999, THE STATE
AUDITOR REPORTED THAT BOE HAD
REDIRECTED HALF OF THOSE
POSITIONS TO OTHER ACTIVITIES
ASIDE FROM DIRECT AUDITING
FUNCTIONS. AND SO IN RESPONSE TO
THAT, IN SUBSEQUENT BUDGET ACTS
ALL THE WAY TILL TILL NOW, THE
LINE ITEMS FOR THE TAX AGENCIES
HAVE INCLUDED BUDGET BILL
LANGUAGE CALLED PROVISION ONE,
WHICH EXPRESSLY PROHIBITS
REDIRECTING RESOURCES AWAY FROM
DIRECT AUDITING OR COLLECTIONS
ACTIVITIES. THEN, IN 2015, THE
STATE COMPTROLLER REPORTED THAT
PROBLEMS WITH BOWIE'S INTERNAL
ACCOUNTING AND ADMINISTRATIVE
CONTROLS HAD LED TO
MISALLOCATION OF SOME SALES TAX
REVENUES. IN MARCH 2017, THE
DEPARTMENT OF FINANCE FOUND THAT
INDIVIDUAL BOARD MEMBERS HAD
INTERVENED IN ADMINISTRATIVE
ACTIVITIES, RESULTING IN
INCONSISTENCIES IN OPERATIONS
AND ACTIVITIES CONTRARY TO STATE
LAW AND TO BUDGETARY AND
LEGISLATIVE DIRECTIVES,
INCLUDING THE AFOREMENTIONED
PROVISION ONE AND THEN LATER IN
2017, THE STATE PERSONNEL BOARD
PUBLISHED A REPORT DESCRIBING
SOME SERIOUS PROBLEMS WITH
BOWIE'S PERSONNEL POLICIES AND
HIRING PRACTICES. NEXT SLIDE
PLEASE. SO TURNING TO THE NEXT
PAGE OF THE HANDOUT. I'LL
DESCRIBE THE STATE'S RESPONSE TO
THESE INSTITUTIONAL PROBLEMS. IN
2017, THE LEGISLATURE PASSED AND
THE GOVERNOR SIGNED AB 102 AND
AB 131. AND SO THESE TWO LAWS
TRANSFERRED BOTH STATUTORY
RESPONSIBILITIES TO TWO NEW
ENTITIES THAT YOU'LL BE
DISCUSSING TODAY. THE DEPARTMENT
OF TAX AND FEE ADMINISTRATION,
KNOWN AS CDTFA AND THE OFFICE OF
TAX APPEALS, KNOWN AS OTAY BOE,
RETAINED ITS CONSTITUTIONAL
AUTHORITY OVER TAXES ON PROPERTY
INSURANCE AND ALCOHOLIC
BEVERAGES. NEXT SLIDE PLEASE. SO
TURNING TO THE FINAL PAGE OF THE
HANDOUT. WE HAVE ONE MORE
FLOWCHART. AND THAT DEPICTS THE
CURRENT STRUCTURE OF STATE TAX
ADMINISTRATION AND APPEALS. SO
THROUGH INTERAGENCY AGREEMENTS
AND CDTFA CARRIES OUT MANY
ADMINISTRATIVE TASKS FOR TAXES
ON HBO'S CONSTITUTIONALLY
AUTHORIZED INSURANCE AND
ALCOHOLIC BEVERAGE TAX PROGRAMS
ON BEHALF OF BOE. SO BOWIE'S TAX
ADMINISTRATION EFFORTS IN
PRACTICE ARE LARGELY FOCUSED ON
PROPERTY TAX PROGRAMS. OTA IS
RESPONSIBLE FOR HEARING MOST TAX
APPEAL CASES, INCLUDING INCOME
TAXES AND SALES TAXES, AND THESE
CASES ARE HEARD BY PANELS OF IN
GENERAL, THREE ADMINISTRATIVE
LAW JUDGES IN SACRAMENTO,
FRESNO, OR LOS ANGELES. THAT
CONCLUDES MY COMMENTS. AND I'D
BE HAPPY TO TAKE ANY QUESTIONS
THAT YOU HAVE. DO WE HAVE
QUESTIONS? MR. GIBSON? MR.
GIBSON, THANK YOU VERY MUCH. I
APPRECIATE WANT TO ALSO THANK
THE CHAIR FOR ONE CONVENING THIS
INFORMATIONAL HEARING AND
BRINGING US ALL TOGETHER TO LOOK
AT WHAT TRANSPIRED SINCE 2027,
2017, AFTER THE LEGISLATURE, AS
WELL AS THE GOVERNOR TOOK ACTION
TO REMOVE SOME AUTHORITY. RIGHT.
SO I'M CONCERNED ABOUT HOW
THINGS HAVE BEEN. YOU'VE TALKED
ABOUT THE PAST AND I APPRECIATE
YOUR ARTICULATION. I THINK THAT,
YOU KNOW, WE CERTAINLY KNOW WHAT
WE DID IN TERMS OF THE
AUTHORITY, BUT HOW ARE THINGS
GOING FORWARD NOW, WHEN YOU
MENTIONED THE THREE
ADMINISTRATIVE LAW JUDGES ARE DO
THE ADMINISTRATIVE LAW JUDGES
HEAR OR DO THEY EVEN COMMUNICATE
WITH TAXPAYERS LIKE TAXPAYERS
HAVE QUESTIONS? BECAUSE BEFORE
THEY WERE ABLE TO REACH OUT TO
THE BOARD MEMBERS THEMSELVES
BECAUSE THEY WERE A NATURAL
CONSTITUENTS. NOW IT'S CHANGED
SINCE 2017 AND IT'S BEEN
RESTRUCTURED. SO I'M JUST
CURIOUS, HOW IS THAT PROCESS NOW
WITH THE THREE ADMINISTRATIVE
LAW JUDGES, EVEN TAKING ANY
COMMENTS OR EVEN HEARING FROM
THE TAXPAYERS OR THE BUSINESSES
IN THE STATE, AS WELL AS IF YOU
CAN TALK ABOUT THE RATE OF
DENIAL, IF YOU WILL, IN TERMS OF
HOW MANY TIMES THAT THE SINCE
2017, THAT THE ACTUAL
ADMINISTRATIVE LAW JUDGES VOTED
IN FAVOR OR AGAINST THE
TAXPAYER? SURE. SO THANK YOU.
THANK YOU FOR THE QUESTION. MR.
GIBSON. SO THE TWO QUESTIONS, IT
SOUNDS LIKE SO ONE, I THINK OTA
WILL BE ON THE NEXT PANEL. I
THINK ABLE TO GO INTO A LOT MORE
DETAIL ABOUT THEIR PROCESS FOR
COMMUNICATING WITH TAXPAYERS.
BUT I CAN SORT OF MAYBE MAKE 1
OR 2 BROAD COMMENTS ON THAT.
RIGHT. BUT YOU. RIGHT. BUT YOU
TALKED ABOUT WHAT HAPPENED PRIOR
TO. SO I'M ASSUMING THAT YOU
WOULD HAVE SOME KNOWLEDGE OF
WHAT'S GOING ON NOW, SINCE YOU
TALKED ABOUT THE PAST A LITTLE
BIT A LITTLE A LITTLE BIT. YEAH.
SO I MEAN, I THINK WHAT I WOULD
SAY IS THE MORE FUNDAMENTAL
DIFFERENCE, I MEAN, SORT OF
BEFORE. SO THERE WERE
OPPORTUNITIES FOR TAXPAYERS TO
COMMUNICATE WITH BOE. NOW THERE
ARE OPPORTUNITIES FOR TAXPAYERS
TO MAKE THEIR CASE BEFORE A
PANEL OF THREE, IN GENERAL,
THREE ADMINISTRATIVE LAW JUDGES.
I THINK THERE ARE SOME
SITUATIONS IN WHICH IT COULD BE
A SMALLER PANEL POTENTIALLY. BUT
SO I'M SORRY, DID YOU SAY
THERE'S ANOTHER PANEL? I THINK
THERE WAS. I DON'T RECALL
EXACTLY. I THINK OTA WOULD BE
ABLE TO SPEAK TO THE DETAILS,
BUT I THINK THERE WAS A LAW
PASSED SUBSEQUENTLY THAT FOR
CERTAIN TYPES OF CASES, ALLOWED
TAXPAYERS TO ELECT TO BE TO HAVE
THEIR APPEALS HEARD THROUGH A
DIFFERENT PROCESS. BUT I WOULD
NEED TO LOOK INTO THAT PROBABLY.
I'M SURE OTA COULD SPEAK TO THAT
IN MORE DETAIL, BUT I THINK SORT
OF THE BASIC STANDARD SETUP IS,
IS THREE ADMINISTRATIVE LAW
JUDGES. BUT ANYWAY, TO YOUR TO
YOUR FIRST QUESTION, MR. GIBSON,
I THINK, YOU KNOW, REALLY THE
FUNDAMENTAL DIFFERENCE TO ME IS,
IS THAT THE PROCESS THROUGH
WHICH TAXPAYERS WHO ARE
APPEALING, YOU KNOW, THE PROCESS
THROUGH WHICH THEY COMMUNICATE
WITH THE FOLKS WHO ARE DECIDING
THE CASES IS MUCH MORE
STRUCTURED. I WOULD SAY ONE OF
THE CONCERNS, SORT OF WITH BOE
WAS SORT OF THE THERE WAS
WEREN'T A WHOLE LOT OF
GUARDRAILS AROUND WHAT IN SORT
OF JUDICIAL CONTEXTS OR IN THIS
CASE, QUASI JUDICIAL, ARE
REFERRED TO AS EX PARTE
COMMUNICATIONS. AND SO THE WITH
IN THE CASE OF OTA, I, MY
UNDERSTANDING IS THERE ARE SOME
PRETTY STRICT RULES GOVERNING
THE WAYS IN WHICH COMMUNICATIONS
OCCUR BETWEEN EITHER PARTY AND
THE APPEAL AND THE PANEL. THAT'S
THAT'S HEARING THEIR CASE. AND I
THINK THE INTENT OF THAT IS TO
ALLOW, ALLOW ALL SIDES OF THE
CASE TO HAVE ALL OF THE RELEVANT
INFORMATION. SO BEYOND THAT, I
THINK OTA MIGHT BE ABLE TO SPEAK
IN A BIT MORE DETAIL. OKAY.
THANK YOU. I BELIEVE THE OTHER
LET'S SEE THE OTHER QUESTION WAS
SORT OF THE RATE. I DON'T HAVE
NUMBERS ABOUT THE RATE AS FAR AS
WHICH SIDE TENDS TO PREVAIL. I
GUESS MY ONE MAYBE COMMENT ON
THAT IS I'M NOT SURE.
ULTIMATELY, YOU KNOW, AT LEAST
THE WAY WE VIEW THE JOB OF SORT
OF AN ENTITY WHO'S DETERMINING
THE OUTCOME OF TAX APPEALS,
WHETHER IT'S OTA, BOE OR WHOEVER
IS TO COME UP WITH A RULING THAT
SORT OF BEST REFLECTS THE FACTS
AND BEST REFLECTS THE LAW. AND
SO, YOU KNOW, THERE'S PROCESSES
BY THROUGH WHICH TAXPAYERS MIGHT
DECIDE TO APPEAL. AND IT'S NOT
REALLY CLEAR TO ME, SORT OF IN
ABSTRACT TERMS, YOU KNOW, WHAT
RATE WOULD BE THE CORRECT ONE,
EXCEPT THAT, YOU KNOW, WHICHEVER
ONE ENDS UP FOLLOWING THE FACTS
AND FOLLOWING THE LAW AS CLOSELY
AS AS POSSIBLE. SO I'M NOT SURE,
YOU KNOW, IF THE NUMBER WERE
20%, 80% OR WHATEVER THE CASE
MAY BE, THAT IT'S I THINK IT
WOULD TAKE SOME ADDITIONAL
INFORMATION OR ADDITIONAL
CONTEXT TO REALLY TRY TO
ASCERTAIN WHETHER THAT WAS
APPROPRIATE. I DON'T THINK HE
ANSWERED MY QUESTION, BUT OKAY.
THANK YOU. WHAT WE WERE REALLY
HOPING. IS THIS RIGHT NOW, I
DON'T KNOW, HAVE THINGS CHANGED?
IT WOULD APPEAR THEY HAVE. WE'RE
HOPING IN THIS HEARING, YOU
KNOW, THERE ARE JUST A FEW OF US
LEFT FROM FROM BACK IN 2017 WHEN
THIS DECISION WAS MADE. SO WE
WERE HOPING IN THIS HEARING TO
KIND OF DIG IN A LITTLE DEEPER
TO AS TO WHAT HAPPENED DURING
THAT TIME FRAME. SO CAN YOU TALK
ABOUT WHAT WAS DONE TO ENSURE A
SMOOTH TRANSITION FROM THE
DUTIES OF BOE TO CDTFA AND OTA,
AND WERE STAFF RETAINED AND
TRANSFERRED OVER TO THE NEW
ENTITIES? AND WHAT IN WHAT
NUMBERS IF SO. YEAH, SO I CAN I
DON'T HAVE NUMBERS ON THAT BUT I
CAN GIVE YOU JUST A BRIEF
OVERVIEW. SO THIS WAS SOMETHING
THAT WHEN THOSE LAWS WERE
PASSED, THERE WAS SOME STATUTORY
GUIDANCE ON THIS. SO THE
LEGISLATURE THROUGH THOSE LAWS
SORT OF HAD A PARTICULAR VISION
FOR SORT OF WHAT, HOW TO STRIKE
THAT, THAT BALANCE. AND IN
PARTICULAR THE FOR ALL OF THE
TAX AND FEE PROGRAMS THAT WERE
TRANSFERRED UNDER THOSE LAWS,
THEY THE LAWS ALSO TRANSFERRED
ALL OF THE CIVIL SERVICE STAFF
FROM BOE WHO WERE WORKING ON
THOSE PROGRAMS TO CDTFA. SO I
THINK THE INTENT THERE WAS TO
PROVIDE A SIGNIFICANT AMOUNT OF
CONTINUITY. OF COURSE, THERE ARE
SORT OF TRADE OFFS INVOLVED WITH
THAT, BUT I THINK THAT, YOU
KNOW, THAT'S THAT'S SORT OF ONE
REASONABLE CHOICE AND THAT'S
SORT OF WHAT, WHAT THOSE LAWS
DID YOU KNOW, WITH, WITH OTA,
THERE WAS NOTHING REALLY
ANALOGOUS IN THE STATUTE. IT WAS
SORT OF A LITTLE BIT OF MORE,
MORE A FLAVOR OF STARTING FROM
SCRATCH. I SUPPOSE. BUT HAVING
HAVING SAID THAT, QUITE A FEW OF
THE FOLKS WHO WORK AT OTA DO
HAVE SOME PRIOR WORK EXPERIENCE
AT BOE OR CDTFA, SO THERE'S SOME
SOME AMOUNT OF, YOU KNOW,
INSTITUTIONAL KNOWLEDGE. I THINK
THAT STILL PLAYS A ROLE THERE.
SO WHAT IN YOUR OPINION, WAS IT
A SMOOTH TRANSITION? I THERE
WEREN'T I? IT'S HARD TO SAY. I'M
NOT I'M NOT SURE I'M REALLY IN A
GREAT POSITION TO JUDGE THAT. IT
CERTAINLY WASN'T I WOULDN'T CALL
IT A ESPECIALLY CHAOTIC, YOU
KNOW, WHETHER IT WAS SMOOTH OR
ONLY SOMEWHAT SMOOTH. I'M NOT,
I'M NOT I'M NOT SURE. ALL RIGHT.
AND THEN IS THERE ANY OTHER
STATE THAT HAS AN ELECTED BODY
DECIDING TAX APPEALS? I'M NOT
AWARE OF ONE. WE HAVE SORT OF
DONE A COMPREHENSIVE REVIEW OF
ALL 50, BUT I CERTAINLY THERE'S
NOT ONE THAT WE'RE AWARE OF. AND
THEN HOW DOES THE CURRENT
LEADERSHIP STRUCTURE AT CDTFA
AND OTA COMPARE TO OTHER
CALIFORNIA AGENCIES? AND
DEPARTMENTS? YEAH. SO CDTFA IS
STRUCTURE IS VERY SIMILAR TO
MANY OTHER STATE DEPARTMENTS.
VOTERS ELECT THE GOVERNOR. THE
GOVERNOR APPOINTS THE SECRETARY
OF THE GOVERNMENT OPERATIONS
AGENCY WHO OVERSEES ABOUT A
DOZEN DEPARTMENTS, INCLUDING
CDTFA AND THEN THE GOVERNOR ALSO
APPOINTS THE DEPARTMENT DIRECTOR
AND SOME OF THE OTHER EXECUTIVE
STAFF. SO THAT'S PRETTY STANDARD
AS FAR AS STATE DEPARTMENTS GO.
OTA IS DIFFERENT. OTA HAS ALSO
HAS A DIRECTOR WHO'S APPOINTED
BY THE GOVERNOR. BUT UNLIKE A
TYPICAL DEPARTMENT, THAT
DIRECTOR, THERE'S NO AGENCY
SECRETARY OR SORT OF EQUIVALENT
PERSON THAT THAT THE DIRECTOR
REPORTS TO. AND I GUESS JUST IN
TERMS OF LEADERSHIP STRUCTURE,
THAT THE ONE OTHER THING I WOULD
NOTE ABOUT OTA IS SORT OF THE,
THE RELATIVELY NARROW STATUTORY
SCOPE OF THE DIRECTOR'S POWERS.
I THINK THE INTENT THERE IS SORT
OF TO PRESERVE THE INDEPENDENCE
OF THE, OF THE PANELS. SO THE
GOVERNMENT CODE EXPRESSLY
PROHIBITS THE DIRECTOR FROM
DIRECTING, OVERSEEING OR
OTHERWISE BEING INVOLVED IN THE
DECISION MAKING PROCESS OF THE
TAX APPEALS PANELS. ALL RIGHT.
AND THEN HAVE YOU DONE ANY
AUDITS OF K¾T? HAS THE
LEGISLATURE REQUESTED ANY AUDITS
OF CDTFA AND OTA? SO I'M NOT
AWARE OF ANY WITH OTA. I MEAN,
SINCE THE TRANSITION TO CDTFA,
THE STATE AUDITOR HAS HAS
PUBLISHED SEVERAL FINDINGS, ALL
OF WHICH PERTAIN TO PRACTICES
THAT BEGAN UNDER BOE AND
CONTINUED FOR VARIOUS PERIODS
UNDER CDTFA. SO I THINK THE ONES
WE'RE AWARE OF ARE THERE WAS A
PROBLEM WITH THE WAY THAT PAID
LEAVE WAS RECORDED ON SOME
EMPLOYEES TIME SHEETS. THERE WAS
A PROBLEM WITH THE WAY, OR AT
LEAST FROM THE AUDITOR'S
PERSPECTIVE, A PROBLEM WITH THE
WAY CDTFA ESTIMATED CIGARETTE
PRICES FOR THE PURPOSES OF
CALCULATING TOBACCO TAX RATES.
ANOTHER SORT OF IN THE AUDITORS
SORT OF TOBACCO TAX EVALUATION.
THEY ALSO TOOK ISSUE WITH THE
ADEQUACY OF THE DOCUMENTATION
THAT CDTFA AUDITORS REQUIRED FOR
TOBACCO DISTRIBUTORS TO DOCUMENT
TOBACCO DISTRIBUTORS, TAX
LIABILITIES AND AUDITS, AND THEN
SORT OF THE ONE, I THINK THE ONE
THAT MAYBE IS MOST NOTABLE TO
US, IS THERE WAS A STARTING
UNDER BOE AND THEN TO, I GUESS,
RECURRING AT ONE POINT OR EITHER
CONTINUING OR RECURRING AT SOME
POINT SINCE THE TRANSITION TO
CDTFA, THERE WAS A DEPARTMENT
ADMINISTRATOR WHO WAS ENGAGED IN
ACTIVITIES THAT WERE
INCOMPATIBLE WITH THEIR DUTIES,
INCLUDING PREPARING TAX RETURNS
FOR CLIENTS WHO HAD SELLERS
PERMITS WITH CDTFA. SO I THINK
THAT ONE I MEAN, ON THE WHOLE, I
WOULD SAY THE SCOPE AND NATURE
OF THAT COLLECTION OF FINDINGS
DOESN'T SUGGEST TO US THAT SORT
OF THE WIDESPREAD SYSTEMIC
PROBLEMS AT BOE HAVE PERSISTED
SINCE THE TRANSITION TO CDTFA.
BUT HAVING SAID THAT, I MEAN
THAT THAT LAST ONE, IT WAS JUST
ONE INDIVIDUAL. BUT I THINK THE
CONCERN THERE WOULD BE THAT IT
IS SORT OF STRONGLY REMINISCENT
OF THAT ORGANIZATIONAL CULTURE
THAT THE LEGISLATURE INTENDED TO
CHANGE. I THINK WHEN IT
ESTABLISHED CDTFA. AND SO IT'S I
WOULD TAKE IT KIND OF AS A
REMINDER THAT THE DEPARTMENT
NEEDS TO BE EXTREMELY VIGILANT
ABOUT THINGS OF THAT NATURE.
OKAY. AND THEN SINCE BOE
RESPONSIBILITIES HAVE BEEN
REDUCED, ARE ARE YOU SEEING THAT
THEY ARE FOCUSING MORE ON THE
ISSUES THAT ARE RELEVANT TO
THEIR REMAINING DUTIES? YEAH,
THAT ONE I THAT'S A VERY GOOD
QUESTION. I DON'T KNOW IF WE CAN
SPEAK TO THAT ONE VERY WELL. I
THINK THAT WOULD MAYBE BE A
QUESTION BEST DIRECTED TO BOE.
ALL RIGHT. AND SO ABOUT THE 2018
SUPREME COURT DECISION. THE
WAYFAIR DECISION, IT REPRESENTED
A MASSIVE SHIFT IN STATE LEVEL
TAX ADMINISTRATION. WHEN
CALIFORNIA PASSED AB 147, WHICH
SOUGHT TO CODIFY WAYFAIR, IT WAS
CDTFA RESPONSIBILITY TO
IMPLEMENT THESE SIGNIFICANT
CHANGES. SO HOW DOES HOW DID
THIS AFFECT CDTFA IN THE FIRST
FEW YEARS OF ITS EXISTENCE?
YEAH. SO I THINK SOME OF THE KEY
THINGS TO NOTE HERE GO BACK TO
AROUND 2011. AND AT THAT TIME,
THERE WAS A PERIOD OF PERENNIAL
BUDGET CHALLENGES AND ONE OF THE
I THINK THAT WAS A TIME WHEN THE
LEGISLATURE PASSED A COUPLE OF
LAWS THAT, FIRST OF ALL, WITHIN
THE EXISTING SORT OF
UNDERSTANDING OF THE COMMERCE
CLAUSE SORT OF WENT AS FAR AS
THEY COULD DO TO EXPAND SORT OF
USE TAX COLLECTION, BUT THEN
ALSO CONTAINED A PROVISION THAT
WAS SORT OF A DORMANT
REQUIREMENT FOR OUT OF STATE
RETAILERS TO COLLECT AND REMIT
USE TAX TO BASICALLY WHATEVER
EXTENT WOULD BE AUTHORIZED UNDER
FEDERAL LAW. SO THEN WHEN THE
SUPREME COURT ISSUED THAT
WAYFAIR RULING THAT YOU'RE
REFERENCING IN JUNE 2018 THAT
TRIGGERED THAT DORMANT STATUTORY
REQUIREMENT. AND SO AT THAT
POINT, GIVEN WHAT THE LAWS WERE
AT THAT POINT IN TIME, CDTFA HAD
A DUTY TO PUT THOSE INTO
PRACTICE. AND SO LATER IN 2018,
THEY ISSUED A NOTICE THAT
RETAILERS WHO MET CERTAIN
REQUIREMENTS WOULD NEED TO
REGISTER TO PAY USE TAX THE
FOLLOWING SPRING. AND THE TRICKY
THING THERE IS THAT THIS, THIS
COMBINATION OF STATE STATUTES
AND THE SUPREME COURT RULING, IT
DIDN'T DIDN'T REALLY PROVIDE
CRYSTAL CLEAR GUIDANCE ON
EXACTLY HOW TO IMPOSE THESE TAX
COLLECTION REQUIREMENTS OR SORT
OF WHAT WOULD MEET THE LEGAL
STANDARDS, EXACTLY THAT THE
SUPREME COURT WAS ESTABLISHING.
AND SO THAT'S WHEN THE
LEGISLATURE STEPPED IN AND
PASSED AB 147 THAT YOU
REFERENCED TO REALLY PROVIDE
THAT CLARIFICATION AND THAT
ADDITIONAL STRUCTURE IN SOME
AREAS THAT WERE PROBABLY A
LITTLE UNCLEAR COMING OUT OF THE
WAYFAIR DECISION. SO, YOU KNOW,
SO ONE NOTABLE THING HERE IS
THAT THROUGH THAT PROCESS, CDTFA
DID WHAT THE LAW DIRECTED IT TO
DO. FIRST, THE LAW SAID ONE
THING, AND THAT'S WHAT CDTFA
DID. AND THEN THE LEGISLATURE
MADE A POLICY DECISION TO
PROVIDE THIS ADDITIONAL
STRUCTURE CLARIFICATION, SORT OF
SET THINGS UP ACCORDING TO THE
LEGISLATURE'S VISION. AND THEN
CDTFA SUBSEQUENTLY DID THAT. AND
SO I GUESS YOUR QUESTION SORT OF
ONE OF ONE ASPECT OF IT IS IN A
COUNTERFACTUAL WORLD WHERE WE
HAD HAD BOE, WOULD BOE HAVE DONE
THE SAME THING? I MEAN, IT'S
REALLY HARD TO SAY. I WOULD SAY
THEIR TRACK RECORD DOESN'T
WOULDN'T NECESSARILY INSPIRE
CONFIDENCE, BUT IT'S JUST REALLY
HARD TO SAY, OKAY. ALL RIGHT.
THAT'S ALL MY QUESTIONS.
ASSEMBLY MEMBER TING, DO YOU
HAVE SOME MORE? OKAY. THANKS FOR
BEING HERE. I APPRECIATE YOUR
REPORT. I THINK IT YOU KNOW,
OMITTED A FEW THINGS. I DO WANT
TO GO BACK TO MY COLLEAGUE'S
ORIGINAL QUESTION AROUND THE
RESOLUTION ISSUE. JUST BECAUSE
THERE WAS A SOMETHING IN THE
STAFF REPORT REGARDING THE
RESOLUTION OF APPEALS UNDER AND
IT JUST WE'RE GOING TO GET TO
THE FUTURE PART. WE'RE JUST
GOING TO GO THROUGH THE PAST FOR
RIGHT NOW. THE NEXT PANEL IS
GOING TO TALK ABOUT THE CURRENT
STATUS. BUT JUST TO QUOTE FROM
THE STAFF REPORT REGARDING A
2010 BUREAU OF NATIONAL AFFAIRS
REPORT THAT SPECIFICALLY, THE
REPORT FOUND THAT IN CASES WITH
CONTRIBUTIONS, AMOUNT OF $250 OR
LESS, TAXPAYERS 130% OF THE
TIME, TAXPAYER WINNING RATE
INCREASED TO 53% WHEN
CONTRIBUTION AMOUNTS WERE
BETWEEN 250 AND 16,000, AND THEN
FINALLY TAXPAYERS PREVAILED AT A
CLIP OF 75% AND 88%. WHEN THE
CONTRIBUTED AMOUNTS WERE BETWEEN
16,000 AND 50,000 AND BETWEEN
50,000 AND 137,000. SO THAT'S
FROM OUR 2010 REPORT REGARDING
RESOLUTION. I ALSO GO BACK TO
STAND WITH MISTER KIRSTEIN'S
REPORT THAT ACTUALLY THE
PERCENTAGE OF RESOLUTION REALLY
DOESN'T MATTER. IT'S REALLY
WHETHER THE LAW WAS FOLLOWED
BEING BEING A FORMER COUNTY
ASSESSOR. MY FORMER JOB WAS NOT
TO LIKE A DISTRICT ATTORNEY,
HAVE A HIGH PERCENT OR A LOW
PERCENT. IT WAS TO FOLLOW THE
LAW. AND WHEN THE LAW WAS
FOLLOWED, I FELT COMPLETELY FINE
JUST GOING BACK TO OUR CHAIR'S
QUESTIONS. DO YOU KNOW, YOU
MENTIONED IN YOUR REPORT THE BOE
HISTORICALLY WAS AN
ADMINISTRATOR AND ARBITER AND AN
ADVOCATE IN LAY TERMS. THAT
WOULD BE THEY WERE JUDGE, JURY
AND SHERIFF. IS THAT A FAIR?
WELL, I MEAN, YOU I DON'T THINK
WE NEED TO PARSE THE
SPECIFICITIES, BUT I'M USING
NOMENCLATURE. I THAT'S A FAIR
WAY THAT ONE COULD THINK ABOUT
IT. I THINK IT MIGHT. OKAY. AND
THEN IN TERMS OF WHAT YOU DIDN'T
MENTION, ALSO THERE WAS A HUGE
BACKLOG AND SALES AND USE TAX
DISTRIBUTION DURING THIS TIME
PERIOD. DO YOU RECOLLECT THAT I
DON'T HAVE A VERY DETAILED
RECOLLECTION OF THAT. YEAH, I
DON'T KNOW. DID YOU ATTEND MANY
OF THE BUDGET HEARINGS DURING
THAT TIME? I DID, YES, MANY OF
THEM. I WAS THERE AT ALL OF THEM.
YOU MIGHT RECOLLECT WE HAD
NUMEROUS CITIES, COUNTIES, THE
ASSOCIATIONS COMPLAINED, THE
MILLIONS OF DOLLARS THAT WERE
OWED TO THEM BY THE STATE THAT
HAD NOT BEEN PROCESSED BECAUSE
THE AGENCY WAS DERELICT IN THEIR
DUTY. SO THAT WAS A SPECIFIC
ISSUE. I WISH YOUR REPORT HAD
MENTIONED THAT YOU MAY WANT TO
GO AMEND THAT. THE OTHER AREA, I
DON'T KNOW IF YOU RECOLLECT OR
NOT, WAS THE BACKLOG IN THE
APPEALS CASES. I HAVE SOMEWHAT
MORE OF A RECOLLECTION OF THAT
ONE. YES. DO YOU RECOLLECT
ROUGHLY THE LENGTH OF TIME IN
BACKLOG? NOT OFF THE TOP OF MY
HEAD? NO, OFF THE TOP OF MY
HEAD. IT WAS A FEW YEARS. SO
WHILE PEOPLE COULD TALK TO, YOU
KNOW, THE JUDGES AND THE JURIES,
THEY COULDN'T GET THEIR CASES
RESOLVED FOR YEARS. SO THAT WAS
ONE OF THE OTHER VERY
SIGNIFICANT ISSUES. YOUR REPORT
DID NOT MENTION OR HIGHLIGHT.
ALSO, I THINK WHAT OTHER WHAT
YOU ALSO DIDN'T MENTION WERE
THERE WERE A NUMBER OF ETHICAL
ISSUES THAT WERE REPORTED. DO
YOU RECOLLECT THAT? YEAH. WELL I
WOULD I CERTAINLY WOULD. THE
INTENT WAS NOT FOR THIS TO BE AN
EXHAUSTIVE LIST, BUT I WOULD, I
WOULD SAY IN OUR VIEW, SOME OF
THE THINGS WE KNOW DO CONSTITUTE
A TOP TEN LIST WOULD HAVE BEEN
GOOD. TOP TEN IF I COULD, IF I
COULD RATTLE THESE OFF THE TOP
OF MY HEAD WITHOUT MUCH
PREPARATION, I WOULD HAVE HOPED
THAT SOMEONE WHO WAS SUPPOSED TO
WRITE A REPORT WOULD HAVE
RATTLED THAT OFF AS WELL, AND
CERTAINLY WANTED TO KEEP THINGS
NOT TOO LENGTHY FOR THE HANDOUT.
YEAH, WELL, THERE'S YOUR YOUR
JOB, AS MY UNDERSTANDING IS TO
COMPILE INFORMATION AND TO
PROVIDE INFORMATION. AND I THINK
HAVING A, YOU KNOW, SORT OF
FAIRLY MAJOR OMISSIONS IS A
CONCERN. SO, YOU KNOW, AGAIN,
GOING BACK TO NUMEROUS ETHICAL
ISSUES WITHIN THE DEPARTMENT, I
THINK YOU KIND OF MENTIONED IT A
LITTLE BIT WHERE YOU HAD
INDIVIDUAL BOARD, AS YOU
MENTIONED FROM THE DEPARTMENT OF
FINANCE AUDIT, YOU HAD
INDIVIDUAL BOARD MEMBERS
INTERVENING IN ADMINISTRATIVE
ACTIVITIES. YOU HAD INDIVIDUAL
BOARD MEMBERS SET UP A SHADOW
CALL CENTER. DO YOU RECALL THAT?
YES. THAT WAS YOU KNOW, I'VE
NEVER HEARD OF AN OFF THE BOOKS
CALL CENTER, BUT THERE WAS AN
OFF THE BOOKS CALL CENTER FROM
THE AGENCY. I'M STILL LOOKING
FOR MY OFF THE BOOKS CALL
CENTER. I CAN'T QUITE FIND IT IN
SAN FRANCISCO, BUT I WOULD, YOU
KNOW, THAT WOULD BE HAVE
INTERESTING TO HAVE SET UP.
ALSO, DURING ONE OF THE
HEARINGS, ONE OF MY MOST
MEMORABLE MOMENTS CHAIRING
BUDGET COMMITTEE WAS WHEN THE
DIRECTOR OF THE AGENCY TOOK THE
FIFTH AMENDMENT BECAUSE HE
REFUSED TO ANSWER THE
LEGISLATURE'S QUESTIONS
REGARDING THE AGENCY. THAT WILL
GO DOWN IN ONE OF MY MEMORIES
WHEN I'M RETIRED IN A FEW WEEKS.
AND THEN IN TERMS OF STAFF
TRANSITION DURING THAT TIME
PERIOD, THERE WAS A FAIRLY
SIGNIFICANT AMOUNT OF STAFF
ANGST REGARDING HOW THE
DEPARTMENT WAS RUN. I'M SURE YOU
GOT STAFF APPROACHING YOU. I
CAN'T, I THINK I GOT LIKE AN
EMAIL EVERY DAY FROM DIFFERENT
STAFF PEOPLE REGARDING THE ANGST
OF HOW THEY WERE DISAGREEING
WITH HOW THE AGENCY WAS RUN AND
HOW THEY WERE JUST NOT IN FAVOR
OF HOW THINGS WERE BEING DONE.
SO I THINK, YOU KNOW, PART SO,
SO PART OF THE REASON THIS BILL
GOT GOT PRESENTED. AND THE BILL,
WHILE IT'S A BUDGET BILL, HAD MY
NAME ON IT, WAS AGAIN, THE
MILLIONS OF DOLLARS AT STAKE FOR
NOT JUST THE STATE, BUT FOR OUR
CITIES AND COUNTY GOVERNMENTS UP
AND DOWN THE STATE. AND ALSO THE
FACT THAT TAXPAYERS COULD NOT
GET THEIR APPEALS RESOLVED. SO
AGAIN, DO YOU KNOW OF ANY OTHER
TAX AGENCY IN THE ENTIRE COUNTRY
THAT IS AN ADMINISTRATOR AND
ARBITER AND AN ADVOCATE? THESE
ARE YOUR YOUR WORDS AT THE
STATEWIDE LEVEL? NO, I KNOW I'M
NOT. YEAH. AND SO NOW WOULD YOU
WOULD YOU FEEL IT'S FAIR TO
CHARACTERIZE THE AGENCY SINCE
THE ADMINISTRATION PART HAS BEEN,
YOU KNOW, 90% OF IT HAS BEEN
REMOVED AND THEY ARE NO LONGER
THE ARBITER THAT THEY ARE.
PRIMARILY THEY HAVE SOME
ADMINISTRATIVE DUTIES AND THEY
HAVE SOME ADVOCACY DUTIES. WELL,
THEY THEY MY UNDERSTANDING IS
THEY DO HAVE THEY DO
OCCASIONALLY HEAR AN APPEAL WITH
REGARD TO THEIR CONSTITUTIONAL
PROGRAMS, BUT THAT IT'S PRETTY
MINIMAL. DO YOU RECALL HOW MANY
APPEALS A YEAR THEY'RE HEARING?
OH, GOSH, I THINK I MIGHT NOT,
NOT EXACTLY, BUT I BELIEVE IT'S
A VERY SMALL NUMBER, A SMALL
NUMBER BEING MY RECOLLECTION IN
PAST HEARINGS, LIKE 20 UNDER, 20
UNDER. YEAH. THAT I IT SOUNDS A
LITTLE HIGH. I WAS THINKING A
SMALLER NUMBER OR SMALLER.
SMALLER THAN 20. THAT'S MY
RECORD. I'D HAVE TO GO BACK AND
LOOK AT THE NUMBERS. I THINK IT
SORT OF DEPENDS. I MEAN, IN
TERMS OF APPEALS ACTUALLY HEARD
BY THE BOARD, MY RECOLLECTION IS
IT'S FAR FEWER THAN THAT. BUT
THERE'S A WHOLE SORT OF THERE
ARE OTHER PARTS OF THE OF THE
PROCESS. I WOULD NEED TO GO BACK
AND CHECK THE NUMBERS. I DON'T
REALLY AND THEIR CONSTITUTIONAL
DUTY, WHICH I'M GREATLY FAMILIAR
WITH JUST BECAUSE I'M A FORMER
ASSESSOR, IS PRIMARILY AROUND
PROPERTY TAX ADMINISTRATION. AND
OF COURSE THEY DON'T DO THE
PROPERTY TAX ADMINISTRATION.
THEY JUST PROVIDE ADVICE ON IT.
THE ASSESS THE COUNTY ASSESSORS
ARE IN CHARGE OF PROPERTY TAX
ADMINISTRATION IS THAT SO? IT'S
I THEY SO ONE OF THEIR ROLES IS
THAT OVERSIGHT FUNCTION. I
BELIEVE THEY DO ALSO DO SOME
ASSESSMENTS FOR CERTAIN TYPES OF
PROPERTIES. OH THAT'S RIGHT THAT
ARE THAT ARE OUTSIDE THE SCOPE
OF COUNTY ASSESSOR. THAT'S
RIGHT. YEAH. THEY DO THE
UTILITIES AND THE RAILROADS
BECAUSE THE CREATION OF THE
AGENCY WAS DONE WHEN THE
RAILROADS CONTROLLED THE STATE.
AND I THINK PEOPLE WERE AFRAID
THAT THEY COULD NOT GET FAIR TAX
ADMINISTRATION OF THE RAILROADS
FROM THE LEGISLATURE. SO THEY
CREATED THIS AGENCY AS AN
INDEPENDENT AGENCY FOR THE
RAILROADS AND THE UTILITIES. IS
THAT IT'S MY UNDERSTANDING,
RIGHT. THAT'S THAT FAIR? OH, I'M
GETTING SOMETHING. OKAY, SO
YOU'RE SAYING, OKAY, I SEE SO
YOU'RE SAYING THIS IS JUST FROM
THE STAFF REPORT? OUR OUR STAFF
REPORT REGARDING
ASSEMBLYMEMBER'S BILL, NOTING
THAT THE BOE'S THIS IS JUST ON
PAGE THREE, NOTING THAT THE BOE
PUBLISHED FORMAL OPINIONS
DROPPED FROM AN AVERAGE OF ONE
61.5IN THE 80S TO AN AVERAGE OF
3.2 DECISIONS IN THE FIRST
DECADE. SO THAT WOULD BE THE
THAT GIVES YOU A SENSE OF THE
CHANGE. SO, SO IN IN TERMS OF I
THINK, YOU KNOW, I THINK YOUR
REPORT DOES DOES A GOOD JOB OF
DEMONSTRATING THAT THIS WAS AN
ISSUE THAT HAD BEEN GOING BACK
FOR DECADES. YOU KNOW, YOU QUOTE
ON PAGE TWO, THE AND THE LOUSE,
THIS IS THE LOUSE ANALYSIS OF
THE BUDGET BILL OR THIS IS YEAH,
THIS IS THE THIS IS FROM 1940.
THAT'S NOT A TYPO. RIGHT. 1949
50. THAT WAS NOT A TYPO. THAT
WASN'T MY POOR EYESIGHT. RIGHT.
SO THAT THAT SO THIS JUST
HIGHLIGHTS THE FACT THAT THIS
ISSUE WAS NOT SOMETHING THAT
CAME ABOUT IN 2017. THIS HAD
BEEN GOING ON FOR DECADES. I
THINK IN FACT, THE SAC BEE
HEADLINE WAS SOMETHING TO THE
EFFECT OF LIKE THAT, THAT IT
TOOK 90 YEARS TO GO DO THIS. AND
THIS HAS BEEN GOING ON FOR QUITE
A WHILE. MY RECOLLECTION OF THAT
HEADLINE. SO, SO I THINK AGAIN
AND ONE OF THE ISSUES THAT YOU
HAD HIGHLIGHTED, THAT HAPPENED
IN 1999 WITH THE 250 AUDIT
POSITIONS FROM THE BOE AND
REDIRECTED THAT THAT THE BOE
REDIRECTED HALF OF THESE
POSITIONS TO OTHER ACTIVITIES.
THAT WASN'T JUST IN 1999 THAT
THAT HAPPENED DURING OUR BUDGET
HEARINGS IN 2016 AS WELL, WHERE
THE BOARD COULD NOT ARTICULATE
HOW MANY FTES THEY HAD, HOW MANY
OPEN FTES THEY HAD, WHAT THEY
WERE DOING WITH ALL THE OPEN
FTES. SO THIS WAS NOT SOMETHING
THAT JUST HAPPENED IN 1999. SO I
APPRECIATE YOU HIGHLIGHTING IT,
BUT I THINK IF YOU HAD, YOU
KNOW, AND AGAIN, YOU CAN'T BE
HIGHLIGHTING EVERY SINGLE ISSUE,
IT WOULD IT WOULD PROBABLY STATE
THAT THIS WAS A CONTINUING
ORGANIZATIONAL PRACTICE. DOES
THAT SOUND WELL. YEAH. SO THIS I
MEAN I THINK THERE WERE
DIFFERENT PARTS WHEN WE SORT OF
SPOKE MORE GENERALLY VERSUS
PROVIDING CONCRETE EXAMPLES. AND
I THINK THE, THE, THE 2017
DEPARTMENT OF FINANCE OCA
EVALUATION SPOKE TO THAT TO A
SIGNIFICANT EXTENT. I MEAN,
THERE SORT OF WAS THE I THINK
ONE THING THAT WAS ONGOING AND
THAT THAT WASN'T REALLY A SECRET
WAS SORT OF THIS NOTION OF
ROTATING OR BORROWING STAFF SORT
OF AMONG THE BOARD MEMBERS WHO
WHO ORIGINALLY WERE INTENDED TO
BE SORT OF PART OF THE AGENCY
AND NOT PART OF THE BOARD
MEMBERS OFFICE. SO THERE WERE A
VARIETY OF ISSUES OF THAT
NATURE. WELL, I THINK THE WAY
THAT YOU WHAT YOU QUOTED, WHICH
IS A VERY POLITE WAY OF SAYING
THEY WEREN'T FOLLOWING THE LAW
ACTIVITIES CONTRARY TO STATE LAW
AND BUDGETARY AND LEGISLATIVE
DIRECTIVES. YES, THAT'S A POLITE
WAY OF SAYING THEY WEREN'T
FOLLOWING THE LAW, I SUPPOSE. SO,
YEAH, I'M TRYING TO THINK OF
ANYTHING. I'M LOOKING TO SEE IF
ANYTHING I'VE LEFT OUT. JUST
GOING DOWN. THIS HAS BEEN A FUN
WALK DOWN MEMORY LANE FOR ME.
BUT BUT BUT AGAIN, I THINK JUST
TO RESTATE THIS ACTION WASN'T
TAKEN LIGHTLY. IT WASN'T DONE
BECAUSE OF SOMETHING THAT
HAPPENED OVER A ONE YEAR PERIOD.
IT WAS A DECADES LONG. AND AGAIN,
IT'S NOT TO POINT TO ANY
INDIVIDUALS AT THAT. IT HAD
NOTHING TO DO WITH ANY OF THE
INDIVIDUALS WHO WERE BOARD
MEMBERS AT THAT TIME. FRANKLY,
IT'S A IT'S AN ORGANIZATIONAL
STRUCTURE WHICH YOU HIGHLIGHT
FROM THE BEGINNING IN TERMS OF
IT'S VERY DIFFICULT FOR AN
AGENCY. I DON'T KNOW ANY OTHER
AGENCY IN THE STATE THAT IS SET
UP THIS WAY, THAT YOU ARE BOTH
THE ADMINISTRATOR, THE ARBITER
AND THE ADVOCATE OF THE AGENCY,
AND IT HAS AUTOMATICALLY THE WAY
IT WAS SET UP, INTERNAL
CONFLICTS OF INTEREST WITHIN
ITSELF. AND NONE OF THOSE, NONE
OF THOSE DUTIES WERE FIRED
FIREWALLED OFF FROM ONE ANOTHER.
AND SO IT'S VERY DIFFICULT FOR
YOU TO ADMINISTER AND THEN FOR
YOU TO ARBITRATE BECAUSE IF YOU
ADMINISTER SOMETHING, IT'S VERY
DIFFICULT FOR YOU TO SAY THAT
YOU'RE WRONG OR THAT YOU DID
SOMETHING INCORRECTLY. AND IT'S
EVEN MORE DIFFICULT TO BE THE
ADVOCATE OF THAT. AND SO AGAIN,
I THINK WHEN THIS ACTION WAS
TAKEN, IT WAS TO MAKE SURE THAT
THOSE DUTIES WERE CLEAR. CLEARLY
SEPARATED. IT'S ALSO A REASON
WHY WE DIDN'T HAVE CDTFA ALSO
HEAR APPEALS. THAT'S WHERE IT'S
A COMPLETELY SEPARATE OFFICE OF
TAXPAYER APPEALS. I WILL BE
INTERESTED TO HEAR ABOUT THE
NUMBER OF CASES OTA HEARS, AS
WELL AS HOW QUICKLY THEY SORT OF
ADJUDICATE AND ALSO TO THE TO
THE FAIRNESS, WHETHER THEY'RE
FOLLOWING THE LAW OR NOT. SO I
DON'T KNOW IF THERE'S ANYTHING
IN MY COMMENTS THAT YOU WOULD
FIND CONTRARY TO YOUR
RECOLLECTION OR ANYTHING YOU
FEEL LIKE I LEFT OUT. THAT WAS
FAIRLY SIGNIFICANT. NO, NOTHING
TO ADD. GREAT. THANK YOU,
ASSEMBLY MEMBER GIBSON. THANK
YOU VERY MUCH. I APPRECIATE MY
COLLEAGUE, MR. TÍNH, WALKING US
DOWN THE PATH, AND CERTAINLY THE
PAST IS THERE, MAKING SURE THAT
WE DON'T REPEAT IT. RIGHT. AND
AGAIN, FROM MY LENS IS MAKING
SURE IN 2017, WITH CHANGES THE
LEGISLATURE MADE, DID. AND HOW
ARE WE DOING NOW? HOW ARE THE
SMALL BUSINESSES IN THE STATE OF
CALIFORNIA FARING UNDER THIS NEW
RULE? AND I THINK THIS PROVIDES
THIS INFORMATIONAL HEARING,
PROVIDES CHECKS AND BALANCES,
BECAUSE SINCE 2017, WE HAVEN'T
HAD SUCH A CONVERSATION IN THIS
PARTICULAR SPACE. BUT I WANT TO
ALSO TALK ABOUT, IN TERMS OF THE
PAST FOR THE PURPOSE OF THE BOE.
IT'S MY UNDERSTANDING THAT THE
BOE WAS CREATED TO MAKE SURE
THAT TAXPAYERS HAVE SOMEONE THEY
CAN ELECT. THEY CAN UNELECT THAT
THAT COULD BE ACCOUNTABLE TO, IN
FACT, THE TAXPAYERS OF THE STATE
OF CALIFORNIA. AND SO, YES, THE
BOARD OF EQUALIZATION HAS A VERY
UNIQUE DISPOSITION THAN OTHER
BOARDS, BUT IT ALSO HAS A VERY
STRONG PURPOSE FOR IT, WHERE
TAXPAYERS, TAXPAYERS, TAXPAYERS
HAVE THE ABILITY TO ONE MEET AND
VOTE FOR THEIR ELECTED
REPRESENTATIVE ON THIS
PARTICULAR BOARD. AND SO WE
DON'T HAVE THAT NOW. BUT I WANT
TO ASK YOU A QUESTION. IS IT NOT
TRUE THAT CDTFA ATTEMPTED TO
MAKE A MAJOR CHANGE IN THEIR
AUDIT MANUAL THAT IS NOW BEING
THAT'S CONTRARY NOW IS BEING
CHALLENGED BY A PENDING COURT
DECISION? I DIDN'T SEE IT IN
YOUR ANALYSIS. SO MY
UNDERSTANDING IS THERE IS SOME I
AM I'M AWARE OF SOMETHING ALONG
THOSE LINES. SO YOU ARE AWARE OF
IT, BUT IT WAS NOT BROUGHT OUT
IN YOUR ANALYSIS. CAN YOU
ELABORATE TO YOUR UNDERSTANDING
WHAT THAT COURT PENDING DECISION
IS? I'M NOT I'M AWARE THAT THERE
IS SOME TYPE OF LITIGATION I
HAVEN'T BEEN TRACKING. SORT OF.
BUT IS ANYONE IN YOUR OFFICE? I
MEAN, YOU ARE THE, YOU KNOW,
LEGISLATIVE ANALYST'S OFFICE.
AND SO WE YOU CHARGE WITH
RESPONSIBILITY. AND THAT WAS
OMITTED FROM YOUR REPORT. AND
CERTAINLY THIS WAS GERMANE TO
THIS HEARING TO TALK ABOUT A
COURT DECISION THAT IS PENDING
REGARDING WHETHER OR NOT WE MADE
A MISTAKE OR DIDN'T MAKE A
MISTAKE REGARDING 2017. I'M NOT
SURE I UNDERSTAND THE QUESTION.
THE QUESTION IS, DO YOU KNOW
ABOUT A PENDING LITIGATION
THAT'S BEFORE THE COURTS? I'M
AWARE OF IT. CAN YOU ELABORATE
ON THAT, PLEASE? I'M NOT SURE I
HAVE MUCH TO ADD AT THIS POINT.
THE LEGISLATIVE ANALYST DOESN'T
HAVE INFORMATION REGARDING THIS.
I MEAN, WOULDN'T THIS BE PART OF
YOUR REPORT TO THIS BODY? I WAS
NOT MY UNDERSTANDING THAT THAT
WAS PART OF THE SCOPE OF MY
TESTIMONY TODAY. I'M NOT. WELL,
DID WELL, WAS IT? WELL, I'M NOT
SURE THAT WHO PROVIDED THE
FRAMEWORK THIS IS I IT SEEMED
LIKE TO ME THIS WOULD BE FALLING
UNDER THE SCOPE. AND WE'RE
TALKING ABOUT A NEW A NEW
DYNAMIC THAT WE MADE IN 2017.
CERTAINLY WE WANT TO KNOW THE
GOOD, THE BAD AND THE UGLY, THE
GOOD, THE BAD AND THE UGLY IN
OUR LEGISLATIVE ANALYSIS REPORT
TO THIS BODY. WELL, AND SO IT
SEEMED LIKE YOU WOULD BE
PREPARED TO HAVE THAT KIND OF
DISCUSSION IF, IN FACT, A MEMBER
BRINGS A QUESTION BEFORE YOU
TODAY IS THERE ANYONE YOU CAN
REPORT TO ON YOUR STAFF THAT CAN
ELABORATE ON THAT? BEFORE I ASK
THE NEXT PANEL TO COME UP AND
SPEAK TO, IT SEEMS LIKE AN
APPROPRIATE QUESTION FOR THE
NEXT PANEL. I MEAN, WHETHER WE
THINK IT'S APPROPRIATE FOR YOU,
SIR, I PEOPLE SUE PEOPLE OVER
THINGS ALL THE TIME. IT SEEMS A
LITTLE EARLY TO JUDGE WHETHER
IT'S GOOD, BAD, UGLY OR. YEAH,
BUT YOU CAN TALK. BUT IF YOU HAD
INFORMATION, YOU COULD TALK TO
WHAT GAVE RISE TO IT. THAT'S ALL
I'M TRYING TO UNDERSTAND. SO
YEAH, THAT'S NOT SOMETHING WE'VE
LOOKED AT IN A, IN A, IN A
DETAIL AT THIS TIME. THANK YOU
VERY MUCH. I HAVE NO FURTHER
QUESTIONS. ALL RIGHT. THAT WAS A
VERY GOOD THANK YOU. THANK YOU
AND APPRECIATE YOUR TIME. I
DON'T KNOW IF WE'LL BE CALLING
YOU BACK UP FOR ADDITIONAL
QUESTIONS OR NOT, BUT APPRECIATE
THE BACKGROUND AND NOW WE ARE
GOING TO MOVE ON TO OUR NEXT
PANEL WITH THE LEADERSHIP FROM
CDTFA AND OTA. AND THIS TIME,
AFTER CDTFA SPEAKS, WE'LL ASK
QUESTIONS AND THEN AFTER OTA. SO
WE WON'T WAIT FOR. WE WON'T WAIT
FOR BOTH OF THEM TO FINISH. GOOD
MORNING. GOOD MORNING. SO FROM
WE HAVE NICOLAS MADURO FROM
CDTFA AND MARIANNE BèC FROM OTA.
WELL THANK YOU AND GOOD MORNING.
I'M NICK MADURO, I'M THE
DIRECTOR OF THE CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION. WE'VE GOT A
PRESENTATION. I DON'T KNOW IF
IT'S GOING TO SHOW UP ON SCREEN
OR IF YOU ALL HAVE THE PRINTED
VERSION, BUT WE HAVE THE PRINTED
VERSION. OKAY. SO ANYWAY, I
THANK YOU. CHAIR IRWIN VICE
CHAIR, MEMBERS OF THE COMMITTEE,
ASSEMBLY MEMBER TING FOR JOINING
TODAY. I'M I'M HAPPY TO BE HERE
TO ANSWER ANY QUESTIONS YOU MAY
HAVE ABOUT CDTFA. AS YOU KNOW BY
NOW, CDTFA WAS CREATED IN 2017.
IN JULY OF 2017, I'VE BEEN THE
DIRECTOR SINCE JULY OF 2017, AND
I WOULD LIKE TO GO THROUGH SOME
OF WHAT WE'VE BEEN UP TO OVER
THE COURSE OF THE LAST SEVEN
PLUS YEARS. SOME OF THE
ACCOMPLISHMENTS, AS WELL AS SOME
OF THE CHALLENGES WE FACE AS A
DEPARTMENT. IF WE GO TO THE NEXT
SLIDE, CDTFA NOW ADMINISTERS 42
DIFFERENT TAX AND FEE PROGRAMS
ON BEHALF OF THE STATE OF
CALIFORNIA, ITS VARIOUS CITIES
AND COUNTIES, AND SPECIAL TAXING
JURISDICTIONS. AMONG THE NEW
PROGRAMS THAT WE HAVE STOOD UP
OVER THE PAST SEVEN YEARS ARE
THE CANNABIS TAXES, E-CIGARETTES,
LITHIUM EXTRACTION, EMBEDDED
BATTERIES, SINGLE USE PLASTICS
IS COMING UP. WE JUST STARTED.
WE'LL GET OUR FIRST RETURNS THIS
MONTH ON THE FIREARMS AND
AMMUNITION EXCISE TAX THAT WE
ADMINISTER. I'D LIKE TO JUST
POINT OUT AT THE TOP, WE SIMPLY
ADMINISTER THESE PROGRAMS ON
BEHALF OF THE STATE. YOU ALL ARE
THE POLICY MAKERS, AND WE DO OUR
BEST TO IMPLEMENT THE LAW AS THE
LEGISLATURE AND AS APPROVED BY
THE GOVERNOR, AS YOU ALL DECIDE.
THAT IS OUR ROLE. I'M NEITHER I
NOR ANY OF MY COLLEAGUES AT THE
DEPARTMENT IS MAKING THE LAW ON
BEHALF OF THE STATE OF
CALIFORNIA. WE ARE TRYING OUR
BEST TO FOLLOW THE LAW AS
WRITTEN. IF WE COULD GO TO THE
NEXT SLIDE HERE TO GIVE YOU A
SENSE OF THE SCOPE OF WHAT WE
ARE DOING NOW, WE CURRENTLY HAVE
ABOUT 1.34 MILLION ACTIVE
TAXPAYER ACCOUNTS. ABOUT A
MILLION OF THOSE ARE IN THE
SALES AND USE TAX AND 340,000
ACROSS THE VARIOUS SPECIAL TAX
AND FEE PROGRAMS. THE TEAM
CURRENTLY PROCESSES ALMOST 3
MILLION RETURNS ANNUALLY. WE,
THE ACCOUNTING. AND THERE WAS
SOME MENTION OF SOME OF THE
AUDIT FINDINGS EARLIER. THE
ACCOUNTING AT THE DEPARTMENT IS
INCREDIBLE. IT IS VERY COMPLEX
WITH FUNDS GOING TO 40
DIFFERENT, 46 DIFFERENT STATE
ACCOUNTS. WE ALSO EACH MONTH
FUND EVERY CITY, EVERY COUNTY,
AS WELL AS OVER 400 SPECIAL
TAXING JURISDICTIONS ACROSS THE
STATE. AND THE TEAM JUST DOES A
FANTASTIC JOB. I WILL POINT OUT
THAT THIS YEAR, WHEN THE
DEPARTMENT WAS CREATED, WE HAD,
AS ASSEMBLYMEMBER TING POINTED
OUT, WE HAD QUITE A FEW AUDIT
FINDINGS ACROSS VARIOUS. PARTS
OF THE DEPARTMENT. THIS YEAR, I
BELIEVE WE WERE THE ONLY
FINANCIAL DEPARTMENT WITH A
CLEAN AUDIT FROM THE STATE. I'M
REALLY PROUD OF WHAT THE TEAM
HAS DONE TO CLEAR AUDIT FINDINGS
OVER THE YEARS, AND I'D BE HAPPY
TO ANSWER ANY QUESTIONS RELATED
TO THAT. WE'VE GOT NOW ABOUT
3800 TEAM MEMBERS WORKING AT
CDTFA. IF YOU LOOK AT THE WE TRY
AND JUDGE OUR EFFECTIVENESS BY
THE HOW MUCH IT COSTS US TO
COLLECT $100 WORTH OF REVENUE,
IT NOW COSTS THE STATE ABOUT
$0.66 TO COLLECT $100 OF REVENUE
AT CDTFA. THAT'S DOWN BY OVER
28% SINCE THE DEPARTMENT WAS
CREATED. WE ARE TRYING OUR BEST
TO OPERATE AS EFFICIENTLY AS
POSSIBLE ON BEHALF OF THE STATE.
NOBODY WANTS TO PAY TAXES IN
ORDER TO HAVE THE MONEY JUST
SPENT COLLECTING TAXES. SO WE
RECOGNIZE THAT AND THE TEAM
WORKS VERY HARD TO BE AS
EFFICIENT AND EFFECTIVE AS
POSSIBLE. IF YOU LOOK AT THE
NEXT SLIDE IN THE CDTFA
OVERVIEW, YOU'LL SEE OUR NETWORK
OF OFFICES AROUND THE STATE. WE
HAVE WE ALSO HAVE THREE OUT OF
STATE OFFICES IN HOUSTON,
CHICAGO AND NEW YORK THAT FOCUS
ON AUDITING OUT OF STATE
TAXPAYERS. THESE ARE SOME OF THE
LARGEST TAX AUDITS THAT WE DO.
OUT OF THOSE OFFICES. WE HAVE
BEEN FOCUSED AS WELL ON
CONSOLIDATING AND REDUCING
OFFICE SPACE, PARTICULARLY AS
THE TEAM IS NOW WORKING HYBRID
BY AND LARGE, WE'VE SHED ALMOST
75,000FT² OF OFFICE SPACE. WE TO
SAVE ABOUT $7.5 MILLION EACH
YEAR IN RENT. WE ARE CONTINUING
TO LOOK AT WAYS TO SAVE ON
OFFICE SPACE AROUND THE STATE
ARE, YOU KNOW, WE'VE GOT TWO
CONSIDERATIONS THERE. ONE IS OUR
TEAM MEMBERS AND HAVING THEM BE
CLOSE ENOUGH TO GET TO AN OFFICE
TO WORK. AND THEN TAXPAYERS
OBVIOUSLY MAKING SURE THAT THEY
HAVE A PLACE TO GET SERVICE. I
WILL SAY OUR FOOT TRAFFIC IN OUR
OFFICES IS DOWN ABOUT 60%. OUR
TAXPAYER FOOT FOOT TRAFFIC SINCE
PRE-COVID, LIKE AS TECHNOLOGY
ADVANCES, LIKE IN EVERYTHING
ELSE, PEOPLE ARE LOOKING FOR
OTHER WAYS TO GET SERVICES. AND
I'LL TALK A BIT ABOUT THE
CHALLENGES OF THAT LATER, BUT
WE'RE FOCUSED ON PROVIDING
SERVICES AND WAYS THAT TAXPAYERS
WANT TO RECEIVE SERVICES. AND
LESS AND LESS. WE'RE SEEING THAT
THAT'S IN PERSON, BUT WE BUT WE
STILL ARE COMMITTED TO PROVIDING
THAT TO THE EXTENT WE CAN. IF
YOU GO TO THE NEXT SLIDE, IT'S
GOT A LITTLE BIT OF A BACKGROUND
ON THE SALES AND USE TAX TO GIVE
YOU A SENSE OF THE SCOPE AND
WHERE THE MONEY IS GOING. LAST
FISCAL YEAR, WE COLLECTED ALMOST
$80 BILLION IN SALES AND USE
TAX. NOW THAT INCLUDES ALL THREE
SALES AND USE TAX PROGRAMS. THE
STATE PORTION, AS WELL AS THE
BRADLEY BURNS UNIFORM, STATE AND
LOCAL SALES TAX, AS WELL AS OUR
DISTRICT TAX OR TRANSACTIONS AND
USE TAX PROGRAMS. YOU CAN SEE
THERE THAT BRADLEY BURNS WAS
ABOUT 11.8 BILLION. THAT'S THE
ONE. AND A QUARTER PERCENT THAT
GOES TO THE LOCALS. AND THEN THE
SPECIAL DISTRICT TAXES WERE
ABOUT 14.4 BILLION. WE'RE SEEING
THOSE SPECIAL DISTRICT TAXES
INCREASE OVER THE YEARS AS MORE
AND MORE JURISDICTIONS PASS
BALLOT MEASURES TO RAISE THEIR
RAISE OR IMPOSE IN CASE THEY
DON'T HAVE THEM. DISTRICT TAXES
AT THE LOCAL LEVEL, AS THAT'S
ONE OF THE FEW WAYS THAT LOCALS
CAN RAISE REVENUE IN THE STATE
OF CALIFORNIA. AS I MENTIONED
EARLIER EACH MONTH WE FUND 423
SPECIAL TAXING JURISDICTIONS.
ALL THE COUNTIES, AS WELL AS 483
LOCAL JURISDICTIONS. THIS NEXT
SLIDE BRIEFLY GIVES YOU A SENSE
OF THE SPECIAL TAX AND FEE
PROGRAMS. LAST FISCAL YEAR, THAT
WAS ABOUT $17 BILLION IN
REVENUE, THE LARGEST OF THOSE BY
FAR ARE FUEL TAX PROGRAMS.
ALCOHOL AND TOBACCO ARE ABOUT
1.8, AND THEN CANNABIS IS ABOUT
700 MILLION. LAST YEAR, WITH
ABOUT 5.3 BILLION, THE BALANCE
BEING ACROSS THE OTHER PROGRAMS.
THIS NEXT SLIDE BRIEFLY GOES
THROUGH SOME OF THE NEW PROGRAMS
THAT I'D MENTIONED EARLIER. I
WILL MENTION THAT IN ADDITION TO
THESE ACTUAL NEW TAX AND FEE
PROGRAMS, WE DO, WE'VE HAD A LOT
OF WORK POST WAYFAIR ON MAKING
SURE THAT ECONOMIC NEXUS AND THE
MARKETPLACE FACILITATOR ACT ARE
ADMINISTERED IN ACCORDANCE WITH
THE LEGISLATURE'S WISHES. WE
ALSO WILL NOW BE ADMINISTERING
AB 2854 TO KEEP AN EYE ON
REVENUE SHARING AGREEMENTS AND
KEEP A STATE LOG OF THOSE
AGREEMENTS, WHICH I THINK WILL
PROVE USEFUL TO US, AS WELL AS
TO THE PUBLIC, TO HAVE MORE
VISIBILITY INTO THOSE. AND I'M
HAPPY TO ANSWER ANY OF ANY
QUESTIONS ABOUT ANY OF THESE NEW
PROGRAMS. CANNABIS TAXES IS A
WHOLE WE COULD HAVE A WHOLE
DISCUSSION JUST ABOUT THE
DIFFICULTIES WE'VE ENCOUNTERED
OVER THE PAST SIX YEARS ON
CANNABIS TAXES, BUT THE TEAM HAS
REALLY DONE, I THINK, A
SPECTACULAR JOB, AND I REALLY
WANT TO RECOGNIZE THEIR EFFORTS,
PARTICULARLY IN SOUTHERN
CALIFORNIA, WHERE THERE HAS BEEN
AND REMAINS SIGNIFICANT
NONCOMPLIANCE IN THE CANNABIS
INDUSTRY. TURNING TO THE NEXT
SLIDE. WE HAVE BEEN VERY FOCUSED
ON PROVIDING THE BEST TAXPAYER
SERVICE THAT WE CAN. I'D LIKE TO
GO THROUGH A FEW OF THE
STATISTICS. OUR CALL CENTER LAST
YEAR, OUR CALL CENTER ANSWERED
ABOUT 619,000 CALLS. THE AVERAGE
WAIT TIME WAS 2.5 MINUTES. WHEN
THE DEPARTMENT STARTED, THE
AVERAGE WAIT TIME WAS FIVE
MINUTES. EVEN FIVE MINUTES IS
PRETTY DARN GOOD FOR A TAX
DEPARTMENT. 2.5 MINUTES IS
REALLY SPECTACULAR. THE TEAM
THERE DOES A GREAT JOB ON REFUND
PROCESSING. IT BECAME CLEAR TO
ME WHEN THE DEPARTMENT WAS
STARTED THAT FIRST CHRISTMAS
THAT I WAS THE DIRECTOR. I GOT A
CALL FROM A TAXPAYER WHO WAS
FRANTIC ABOUT THEIR REFUND
BECAUSE THEY WERE THAT WAS THEIR
MONEY THEY WERE GOING TO BE
USING TO BUY GIFTS FOR THEIR
FAMILY. I LOOKED INTO IT AND
LET'S JUST SAY THAT THE REFUND
PROCESSING TIMES WERE SUBOPTIMAL.
WHEN THE DEPARTMENT WAS STARTED,
ABOUT 57% OF REFUNDS WERE
PROCESSED WITHIN 60 DAYS. THE
REMAINDER TOOK LONGER, OFTEN
MUCH LONGER. NOW WE PROCESS TWO
THIRDS OF THE REFUNDS WITHIN TEN
DAYS. WE PROCESS MORE THAN 90%
WITHIN 60 DAYS. PRETTY MUCH THE
ONLY ONES THAT TAKE MORE THAN 60
DAYS ARE ONES THAT WE SEND OUT
TO AUDIT TO MAKE SURE THAT THE
REFUNDS ARE ACTUALLY DUE. IN
TERMS OF AUDITS, WE HAVE REDUCED
THE AGED AUDIT ASSIGNMENTS BY
24%. THOSE ARE AUDITS THAT I
THINK ARE OVER 13 MONTHS IS
WHAT'S CONSIDERED AN AGED AUDIT.
I BELIEVE. I ALSO WOULD SAY THAT
IN TERMS OF DISAGREED AUDITS,
THAT'S ONE OF THE THINGS WE LOOK
AT IN TERMS OF TAXPAYER SERVICE.
WE'RE PROUD OF THE FACT THAT
MOST TAXPAYERS ACTUALLY AGREE
WITH THE AUDITS, DESPITE THE
FACT THAT THEY'RE FOUND TO HAVE
SOME TAX LIABILITY IN THE OLD
DAYS. I THINK THE PRE CDTFA THE
NUMBER OF AGREED AUDITS, THE
PERCENTAGE WAS ABOUT 80%. I
THINK SINCE CDTFA HAS BEEN
CREATED, WE'RE AT ABOUT 78%. I
THINK THE DELTA THERE IS LARGELY
DRIVEN BY TWO FACTORS. ONE,
CANNABIS AUDITS. WE'RE SEEING
SUBSTANTIAL DISAGREEMENTS ON
SOME CANNABIS AUDITS WHERE THE
LIABILITIES CAN BE VERY LARGE.
AND THE NONCOMPLIANCE, AS I
MENTIONED EARLIER, CAN BE VERY
LARGE. THE OTHER THING THAT'S I
BELIEVE, IS PRECIPITATING THAT
SLIGHT DROP IS AN UNREMITTED TAX
COLLECTED PENALTY THAT THE
LEGISLATURE IMPOSED OF 40%,
WHICH IS ACTUALLY LARGER THAN
OUR 25% FRAUD PENALTY. AND
STRANGE SITUATION FOR STATE LAW.
IT'S SOMETHING WE WOULD LOVE TO
FIX AT SOME POINT, BUT THAT IS
DRIVING THAT AS WELL. IN TERMS
OF PAYMENT PLANS, WE'VE MADE IT
MUCH EASIER FOR TAXPAYERS WHO
CANNOT MANAGE THEIR TAX
LIABILITY TO ENTER INTO PAYMENT
ARRANGEMENTS WHERE THEY CAN TAKE
TIME 2 OR 3 YEARS, SOMETIMES
LONGER, ALTHOUGH WE NOW AUTO
APPROVE AND THIS IS ALL DRIVEN
BY DATA, IT USED TO BE IN THE
OLD DAYS, THE OLD DAYS. I'M
SOUND LIKE WILFORD BRIMLEY OR
SOMETHING HERE. IT USED TO BE
THAT. THE APERTURE FOR GETTING A
PAYMENT PLAN WAS VERY NARROW,
AND YOU NEEDED TO SHOW THINGS
LIKE THAT. YOU'D GONE OUT TO A
BANK AND BEEN DENIED A LOAN. THE
DEPARTMENT WANTED YOU TO GET A
LOAN IN ORDER TO PAY THE STATE
BACK. IT TURNS OUT WHEN YOU LOOK
AT THE DATA THAT THAT'S NOT
REALLY NEEDED, THAT PEOPLE WHO
WANT TO ENTER PAYMENT PLANS ARE,
BY AND LARGE, PRETTY GOOD FOR
KEEPING CURRENT ON THOSE, AND
THAT WE HAVE A SYSTEM THAT CAN
KEEP THEM CURRENT. SO WE'VE
WE'VE BROADENED THE APERTURE.
THERE'S CURRENTLY NOT A THERE
ARE TIME LIMITS. THERE'S NO
DOLLAR LIMIT ON THE PAYMENT
PLANS AS LONG AS PEOPLE ENTER
INTO THEM AND STAY CURRENT, THEY
PAY INTEREST. AND SO THE STATE
IS MADE WHOLE AND TAXPAYERS HAVE
AN EASIER TIME TO COMPLY AND CAN
MANAGE THEIR CASH FLOW. YOU
KNOW, OUR OUR GOAL IS NOT TO TRY
TO PUT ANYBODY OUT OF BUSINESS
IF WE CAN, OTHER THAN SOME VERY
NON-COMPLIANT TAXPAYERS, WHICH
IS A WHOLE OTHER STORY. IF WE
COULD TURN TO THE NEXT SLIDE
HERE, APPEALS. ASSEMBLYMEMBER
TING MENTIONED THIS. WE'VE
REDUCED THE TIME TO RESOLVE
APPEALS BY MORE THAN A THIRD
SINCE THE DEPARTMENT WAS CREATED.
THE BACKLOG, I BELIEVE, USED TO
OR THE NUMBER OF APPEALS IN OUR
SYSTEM USED TO BE ABOUT 4000.
WE'VE CUT THAT IN HALF TO ABOUT
2000 BY TRYING TO CLEAN OUT ANY
BACKLOGS, OFFERS AND COMPROMISE.
THIS IS A PROJECT OR PROGRAM
UNDER STATE LAW BY WHICH
TAXPAYERS WHO ARE BASICALLY
CANNOT MEET THEIR TAX
OBLIGATIONS CAN MAKE SOME
PAYMENT. WHATEVER THEY CAN CAN
PAY AND RESOLVE THEIR TAX
LIABILITIES. THOSE USED TO TAKE
ABOUT 9 TO 12 MONTHS. THEY
CURRENTLY TAKE ABOUT 30 DAYS.
PETITIONS FOR REDISTRIBUTION.
NOW THIS IS SORT OF AN APPEAL OF
LOCAL TAX ISSUES. WHEN THE
DEPARTMENT WAS FOUNDED, WE HAD
CASES DATING BACK INTO, AS MY
KIDS CALL IT, THE 1900S. WE HAD
CASES DATING BACK TO 1998. WE
CURRENTLY OUR OLDEST CASES.
WE'VE GOT THREE CASES THAT DATE
BACK TO 2022. THE TEAM THERE HAS
REALLY DONE A SPECTACULAR,
SPECTACULAR JOB. AND ONE MORE
TAX PAYER SERVICE ITEM I'D LIKE
TO FOCUS ON, AND THIS WAS DONE
WITH THE LEGISLATURE'S ACTION IS
TO ALLOW US TO PROVIDE MUCH
EASIER TAXPAYER RELIEF FOR
DISASTER VICTIMS. IT USED TO BE
THAT EVEN IF YOU WERE IN A
NATURAL DISASTER, THAT YOU
NEEDED TO REQUEST SOME EXTENSION
FROM US. SOMETIMES I BELIEVE
WITH THE WET SIGNATURE, YOU
NEEDED TO ATTEST UNDER PENALTY
OF PERJURY, THAT YOU'D BEEN A
VICTIM OF THE DISASTER. YOU
KNOW, IF YOU'RE WE RECOGNIZE AND
I'M GLAD YOU ALL RECOGNIZE, THAT
IF YOUR TOWN HAS BEEN SUBJECT TO
A GIANT NATURAL DISASTER OR
WILDFIRE THAT PROBABLY FILING
FOR AN EXTENSION OF YOUR SALES
AND USE TAX RETURN IS NOT YOUR
TOP PRIORITY. AND SO NOW WE CAN
DO THAT AUTOMATICALLY. LASTLY,
ON TAXPAYER SERVICE, OUR WE DO
HAVE A TAXPAYER RIGHTS ADVOCATE
OFFICE CREATED BY STATUTE. THE
OFFICE REPORTS DIRECTLY TO ME.
THEY HANDLE ISSUES THAT ARE
RAISED TO THEM BY TAXPAYERS AS
WELL AS ANY ISSUES RAISED BY THE
MEMBERS OF THE LEGISLATURE. LAST
FISCAL YEAR, THERE WERE 52
LEGISLATIVE INQUIRIES TO THE TRA
AND ABOUT 438 DIRECT TAXPAYER
INQUIRIES. I WOULD SAY THAT, YOU
KNOW, AGAIN, WE HAVE 1.34
MILLION TAXPAYERS. I THINK, YOU
KNOW, WHILE I, I THINK THAT'S A
PRETTY SMALL PERCENTAGE AND WE
DO OUR BEST TO RESOLVE ANY OF
THOSE, THE TRA GETS BACK, WE
KEEP A LOG OF WHEN THE INQUIRIES
COME IN AND WHEN THEY'RE
RESPONDED TO, THE RESPONSE IS
LESS THAN ONE DAY. PUBLIC INPUT
AND FEEDBACK. WE HAVE LOTS OF
PUBLIC INPUT AND FEEDBACK. WE
HAVE INTERESTED PARTIES,
MEETINGS THROUGH OUR REGULATORY
PROCESS. WE'VE RECENTLY STARTED
HAVING REGULATORY WORKSHOPS TO
TRY TO HAVE A BIT MORE OF A FREE
DISCUSSION BECAUSE THE
INTERESTED PARTIES MEETINGS
BECAME VERY SORT OF BOGGED DOWN.
AND SO THOSE HAVE BEEN WORKING
WELL. WE HAVE AN ANNUAL TAXPAYER
BILL OF RIGHTS HEARING, WHICH
OUR TRA, OUR TAXPAYER RIGHTS
ADVOCATE, JUST HOSTED. WE HAVE A
CANNABIS TAX ADVISORY COMMITTEE.
WE HAVE A TAX ADVISORY COMMITTEE
AND PRACTITIONER GROUP THAT
MEETS BOTH OF THOSE MEET TWICE A
YEAR. WE PUT OUT TAXPAYER
SURVEYS TO SEE HOW WE'RE DOING.
WE INVITE TAXPAYERS TO JOIN US
FOR USER TESTING ON OUR SYSTEMS
SO THAT WE CAN TRY TO MAKE
SYSTEMS THAT PEOPLE CAN ACTUALLY
USE. WE ALSO HAVE TAX AND FEE
EDUCATION EVENTS AROUND THE
STATE. LAST FISCAL YEAR, WE HAD
ABOUT 450 OF THEM. WE'VE ALSO
REALLY FOCUSED ON TRYING TO
CREATE MORE VIDEO CONTENT FOR
PEOPLE BECAUSE THAT'S IN IN
SPANISH AND ENGLISH AND OTHER
LANGUAGES, BECAUSE IT'S MUCH
EASIER FOR PEOPLE TO ACCESS THAT
JUST BRIEFLY. AND I DON'T WANT
TO TAKE TOO MUCH OF YOUR TIME.
WE'VE BEEN LEVERAGING TECHNOLOGY
IN ORDER TO TRY TO PROVIDE
SERVICES BETTER AND MORE
EFFECTIVELY AND EFFICIENTLY. WE
DID IMPLEMENT A NEW COMPUTER
SYSTEM THAT FINAL STATE
ACCEPTANCE WAS IN 2021. IT'S
CALLED CROSS. WE'VE AUTOMATED A
LOT OF OUR DELINQUENCY PROCESSES
TO CLEAR OUT SOME OF THE
UNDERBRUSH TO. WE USED TO HAVE
PEOPLE BASICALLY DOING A LOT OF
WORK TO TRY TO GET PEOPLE TO
FILE RETURNS WHERE THEY OWED NO
TAX DOLLARS. IT REALLY DIDN'T
MAKE SENSE TO SPEND HUNDREDS OF
DOLLARS TO GET $0. AS THE STATE
OF CALIFORNIA. SO NOW WE'VE
AUTOMATED A LOT OF THAT SO THAT
WE CAN HAVE OUR COLLECTORS FOCUS
ON LARGER DOLLAR COLLECTION
ACCOUNTS. THIS NEXT THING, THE
RETURN ANALYTICS PILOT PROJECT.
WE'RE TRYING TO USE DATA TO
BETTER RUN OUR SYSTEMS. IT HAS
DUAL BENEFIT. IT GETS TO THE
TAXPAYERS SOONER SO THAT THEY
DON'T RUN UP HUGE LIABILITIES.
AND IT ALSO MAKES THE STATE
QUITE A BIT OF IT INCREASES
COMPLIANCE AND MAKES THE STATE
MONEY. OUR DOLLAR RETURN PER
HOUR ON OUR AUDIT PROGRAM IS
ABOUT $924. AN HOUR, WHICH IS
WHICH IS GOOD BECAUSE THE STATE
DOES NOT PAY AUDITORS 900
ANYWHERE NEAR $924 AN HOUR. THE
RETURN ON OUR DATA ANALYTICS
PROJECT IS ABOUT $29,000 AN HOUR.
AS YOU CAN IMAGINE, WE'RE
LOOKING TO EXPAND THE PROGRAM TO
GAIN EVEN MORE EFFICIENCIES. WE
ALSO HAVE SET UP AN INTERACTIVE
DATA VISUALIZATION TOOL, WHICH I
WOULD ENCOURAGE YOU IF YOU
HAVEN'T LOOKED AT IT ON OUR
WEBSITE, IT'S ON OUR HOMEPAGE.
IT'S REALLY A GREAT TOOL. IT CAN
GIVE LOCALS, CAN GIVE YOU A
SENSE BY CITY, BY COUNTY BY
QUARTER, WHAT THE TAX REVENUE
IS, WHAT KIND OF INDUSTRIES IT'S
COMING FROM IN YOUR AREA. THAT
WAS THE TEAM DID A FANTASTIC JOB
PUTTING THAT TOGETHER AND WON A
PRIZE FROM THE FEDERATION OF TAX
ADMINISTRATORS. LOOKING AHEAD,
AND HERE'S WHERE WE GET SOME OF
THE CHALLENGES AND I'D LIKE TO
ADD A COUPLE TO THESE LISTS THAT
I'LL ACTUALLY START WITH. ONE IS
LOCAL TAX ALLOCATIONS. AS I
MENTIONED EARLIER, WE ADMINISTER
TWO SALES AND USE TAX PROGRAMS
PROGRAMS FOR THE STATE. THE
BRADLEY BURNS ALLOCATION ISSUES.
IT'S BEEN A CHALLENGE FOR YEARS.
AND IT REMAINS A CHALLENGE TO
MAKE SURE THAT WE THAT TAXPAYERS
ALLOCATE THE TAX PROPERLY. WE DO
HAVE A VERY SMALL HANDFUL OF
TAXPAYERS THAT WE BELIEVE ARE
ALLOCATING IMPROPERLY. AND WE'VE
ARE CONTINUING TO MAKE EFFORTS
TO TRY TO MAKE SURE THAT THE TAX
GOES TO THE RIGHT PLACE. I'M
HAPPY TO ANSWER ANY QUESTIONS
ABOUT THAT. IT'S A REALLY
COMPLICATED TOPIC, AND I KNOW
YOU'RE INTERESTED IN IT. AND YOU
HAD A FIELD HEARING ON THAT.
ALSO, TECHNOLOGY TRANSFER
AGREEMENTS I WOULD MENTION,
WHICH ISN'T ON THIS SLIDE, BUT
IS AGAIN A COMPLICATED TAX ISSUE
UNDER CALIFORNIA LAW DATING BACK
TO 1993. THAT HAS NEVER REALLY
BEEN FULLY IMPLEMENTED. IT'S
VERY DIFFICULT TO TRY TO
NAVIGATE. IT BASICALLY TRIES TO
TAX THE INTELLECTUAL PROPERTY
AND THE TAXABLE, TANGIBLE
PROPERTY SEPARATELY OR NOT TAX
THE INTELLECTUAL PROPERTY, BUT
ONLY TAX THE TANGIBLE PERSONAL
PROPERTY. WE'VE HAD A COUPLE OF
VERY GOOD WORKSHOPS RECENTLY.
WE'VE GOT ANOTHER ONE. I
BELIEVE, COMING UP IN DECEMBER.
WE'RE TRYING TO FIND SOME
SOLUTION AND GET A REGULATORY
REGULATION SO THAT WE CAN WORK
THROUGH. WE'VE GOT A LOT OF
PENDING REFUND CLAIMS ON THAT.
AS I MENTIONED, WE'VE
IMPLEMENTED NEW TAX PROGRAMS.
WE'RE TRYING TO THE TEAM IS
BUILDING A GUIDED PATH RETURN,
WHICH WOULD BASICALLY BE SORT OF
LIKE A TURBO TAX RETURN FOR
SALES AND USE TAX FOR SMALL
BUSINESSES SO THAT THEY CAN MORE
EASILY FILE AND COMPLY. AS I
MENTIONED, WE'RE ALWAYS LOOKING
TO HARNESS DATA TO BE MORE
EFFECTIVE. WE'RE TRYING TO
ENGAGE TAXPAYERS WHERE THEY ARE.
I MEAN, HOW MANY OF US I WE
PROBABLY ALL USED TO GO TO THE
BANK QUITE A BIT. I CAN'T TELL
YOU THE LAST TIME I WAS IN A
BANK. IT'S SIMILAR TO OUR
TAXPAYERS. YOU KNOW, WE'RE
TRYING TO ALLOW THEM TO GET
THEIR SERVICE AT HOME OR ON
THEIR PHONES AS EASILY AS
POSSIBLE. WE DO HAVE SOME HIRING
CHALLENGES. I WILL SAY IT'S A
IT'S A REAL CHALLENGE,
PARTICULARLY IN AUDIT WHERE WE
HAVE TO HIRE AN ACCOUNTANT.
WE'RE LOOKING FOR ACCOUNTING
GRADS. THERE ARE FEWER
ACCOUNTING GRADS. THEY'RE BEING
HIRED BY PRIVATE INDUSTRY AT
HIGHER PAY THAN WE CAN PAY. THE
IRS IS HIRING THOUSANDS OF
AUDITORS FROM ALL. ALL THE
STATES ARE FEELING THE SQUEEZE
AND THEY'RE OFFERING QUITE A BIT
MORE MONEY THAN WE PAY THE
CITIES PAY MORE, THE COUNTIES
PAY MORE. SO THAT IS A REAL
CHALLENGE TO TRY TO FIGURE OUT
HOW WE CONTINUE TO FIND THE
PROFESSIONALS NEEDED TO DO SOME
OF THESE VERY COMPLICATED AUDITS.
AND WITH THAT, I THINK I WILL
ANSWER ANY QUESTIONS THAT YOU
MAY HAVE. SORRY TO TAKE SO LONG,
BUT A LOT'S HAPPENED OVER SEVEN
YEARS AND WELL APPRECIATE THAT.
AND AGAIN, THIS IS A VERY
VALUABLE TO GO THROUGH THIS
INFORMATION. I JUST A COUPLE OF
REAL QUICK CLARIFICATIONS BEFORE
WE GO TO MY COLLEAGUES WHO I'M
SURE HAVE PLENTY OF QUESTIONS,
AND THEN WE'LL TALK ABOUT
CUPERTINO AFTER I HAVE A HAPPY
TO ANSWER QUESTIONS ON THAT. SO,
YOU KNOW, IT LOOKS LIKE YOU HAVE
REALLY INCREASED YOUR
EFFICIENCIES AND TIMELINES. IS
THIS ALL BECAUSE OF TECHNOLOGY,
OR HAVE YOU BEEN ABLE TO HIRE
ADDITIONAL PEOPLE? WE HAVE FEWER
PEOPLE, ACTUALLY. IT'S AND IT'S
NOT JUST TECHNOLOGY. TECHNOLOGY
IS A TOOL, BUT IT'S ALSO JUST
PROCESS IMPROVEMENTS. I MEAN, WE
HAD A LOT OF THERE ARE LOTS OF
THINGS SMALL AND LARGE, AND
WE'RE LOOKING TO TAKE, YOU KNOW,
TAKE THE FIELD ONE YARD AT A
TIME. WE JUST TO GIVE YOU SOME
EXAMPLES, WHEN WE STARTED, WE
HAD A LOT OF INFORMATION.
OFFICERS. YOU KNOW, THE
DEPARTMENT WAS NOT NECESSARILY
STAFFED IN ORDER TO DO THE TAX
ADMINISTRATION WORK THAT THAT
CDTFA IS TASKED WITH AT LEAST.
AND SO WE'VE PUT THE POSITIONS
WHERE THEY'RE NEEDED RATHER THAN
ON I MEAN, IF I NEVER SHOW UP IN
THE NEWSPAPER, THAT'S A
FANTASTIC AS FAR AS I'M
CONCERNED. BUT IT'S ALSO PROCESS
IMPROVEMENTS. AS I MENTIONED, WE
HAD A LOT OF PEOPLE WORKING ON
THINGS THAT PRODUCED ZERO TAX
REVENUE, OR WE WOULD DO THINGS
THAT, YOU KNOW, WE SPEND $300 IN
ORDER TO GET AN INCREMENTAL $15,
WHICH IS ACTUALLY LOSING THE
STATE $285. AND SO I THINK USING
DATA IS A BIG PART OF IT. AND
JUST USING SOME SORT OF
EFFICIENCY TOOLS. BUT TECHNOLOGY
PLAYS A ROLE IN THAT. OKAY. AND
THEN THE YOU HAVE THAT, THAT TRA
RESPONDED TO 52 LEGISLATIVE
INQUIRIES AND 438 TAXPAYER
INQUIRIES. SO COULD YOU EXPLAIN
THAT A LITTLE BIT MORE? WHAT
LIKE HOW DOES SOMEBODY WHAT IS A
LEGISLATIVE INQUIRY. SO THOSE
ARE FROM IF FROM AN ASSEMBLY OR
SENATE OFFICE, IF, IF AN OFFICE
GETS A TAXPAYER CONCERN THEN THE
YOUR STAFF MAY REACH OUT TO US
AND SAY, HEY, WE'VE GOT A
CONSTITUENT WHO IS HAVING AN
ISSUE WITH X, Y OR Z ISSUE AND
THEN THE TAXPAYER RIGHTS
ADVOCATE OFFICE WILL TAKE THAT
ON AS A CASE AND TRY TO AND WORK
TO RESOLVE IT. OKAY. AND THEN
WHAT'S THE FOLLOW UP AND THE
OTHER. YEAH, THE, THE 400, THOSE
ARE THE ONES WHO DIRECTLY REACH
OUT TO US TO THE TAXPAYER RIGHTS
ADVOCATE OFFICE, WHICH IS
PROMINENTLY POSITIONED ON OUR
WEBSITE AND, AND ASK FOR HELP.
AND WHAT IS THE RESPONSE THAT
THAT THESE TAXPAYERS GET FROM
YOU? WELL, SO THE TIMING
RESPONSE IS, YOU KNOW, AGAIN, WE
GET BACK TO PEOPLE IN LESS THAN
A DAY. THE ACTUAL RESPONSE WILL
VARY. I MEAN, SOME OF THE CASES
ARE, YOU KNOW, VERY COMPLEX AND
MAY TAKE A LITTLE TIME, SOME,
YOU KNOW, TO ASSEMBLYMEMBER
TING'S POINT EARLIER, SOME
PEOPLE HAVE VERY VALID CLAIMS
AND WE RESOLVE THOSE. SOME
PEOPLE JUST DON'T LIKE PAYING
TAXES. AND IT'S, YOU KNOW, WE
THE LAW IS WHAT IT IS. AND IF
PEOPLE Ó THEN THEN THEY Ó. BUT
IT DOES MAKE SURE THAT THE TRA
WILL TAKE A SECOND AND A THIRD
LOOK TO MAKE SURE THAT ANY
LIABILITIES, ANY COLLECTION
ACTIVITY THAT WE'RE ACTUALLY
FOLLOWING, THAT THE TEAM IS
ACTUALLY FOLLOWING THE LAW, BUT
THEY GET BUT THE TAXPAYERS GET A
WRITTEN FOLLOW UP OR THEY GET
WRITTEN FOLLOW UP, THEY GET
CALLS. I MEAN, THEY WORK
TOGETHER. IT'S LIKE A CASE
MANAGEMENT SYSTEM INTERNALLY. SO
THEY GET AN ADVOCATE INSIDE WHO
WILL WALK THEM THROUGH THE
PROCESS. BECAUSE YOU KNOW, THESE
TAX PROGRAMS ARE CONFUSING. I
MEAN, THEY'RE CONFUSING TO I
MEAN, YOU YOU ALL ARE EVEN ON
THE REVENUE AND TAXATION
COMMITTEE. IT'S, YOU KNOW, IT'S
AND YOU KNOW, DAVID'S BEEN DOING
THIS FOR A LOT OF YEARS. THERE
ARE A LOT OF TAX PROGRAMS AND A
LOT OF PROVISIONS. AND IT'S
CONFUSING AND IT'S AND WE
RECOGNIZE IT'S CONFUSING FOR
TAXPAYERS TOO. SO WE WANT TO
MAKE SURE WE HELP THEM. ALL
RIGHT. I JUST WANTED TO CLARIFY
THOSE TWO THINGS. THANK YOU.
QUESTIONS. ASSEMBLY MEMBER TING,
YOU MENTIONED THAT YOU HAVE
FEWER PEOPLE. YOU MENTIONED ON
SLIDE TWO ABOUT 3800. HOW MANY
PEOPLE DID YOU START WITH? WE
STARTED WITH ABOUT. THERE WERE
ABOUT 4800 PIS, I BELIEVE, AND
WE HAD PROBABLY 4000 OR SO
ACTUALLY ON STAFF AS MY
RECOLLECTION WHEN WE STARTED, IS
THAT ONE OF THE MAJOR REASONS
THAT YOUR YOUR COST PER $100
COLLECTED IS 20% LOWER. YES.
GREAT. SO YOU MENTIONED ON SLIDE
FOUR THE MONEY FOR SALES AND USE
TAXES. YOU COLLECTED ABOUT 80
MILLION. 80 BILLION WITH A B.
HOW MUCH OF THAT IS GOES TO
LOCAL GOVERNMENT. SO. OH I'M
SORRY YOU BREAK IT OUT HERE. SO
THIS IS THE LOCAL GOVERNMENT.
BREAK IT OUT. SO THE BRADLEY
BURNS AND THE SPECIAL DISTRICT
ARE THE TWO THAT GO DIRECTLY TO
LOCAL GOVERNMENTS. AND THEN
PARTS OF THE STATE PORTION AS
WELL. BECAUSE OF REALIGNMENT AND
OTHER FACTORS, ALSO GO TO LOCAL
GOVERNMENT. OKAY. BUT BUT JUST
GOING TO THAT SLIDE THE STATE
PORTION IS ABOUT 34. AND THE
REST MOST OF THE REST SEEMS LIKE
IT'S GOING TO LOCAL GOVERNMENT.
IS THAT RIGHT. BUT THE BUT THE
TOP FOR THE STATE GENERAL FUND,
THE LOCAL REVENUE 2011 LOCAL
PUBLIC SAFETY AND LOCAL REVENUE
FUND, THOSE ARE ALL STATE
ADMINISTERED. THOSE ARE ALL OUT
OF THE 6%. GOT IT. BUT BUT THE
BUT THE SECOND THIRD LOCAL
REVENUE LOCAL PUBLIC SAFETY
LOCAL REVENUE FUND THAT ALL
GOES. THAT'S MONEY YOU COLLECT
THAT GOES BACK TO LOCAL
GOVERNMENT. THAT'S RIGHT. RIGHT.
SO AGAIN, THE ISSUE THAT WE HAD
I BROUGHT UP EARLIER WHEN THE
AGENCY OR THE DEPARTMENT WAS NOT
COLLECTING THAT MONEY, YOU KNOW,
MORE THAN HALF OF THAT WAS OWED
TO LOCAL GOVERNMENT. THAT'S
RIGHT. OKAY. SO. LET'S SEE. JUST
GOING TO SLIDE EIGHT. YOU HAD
MENTIONED. YOU HAD MENTIONED
THAT YOU HAD THAT PETITIONS FOR
REDISTRIBUTION. YOU HAD CASES
GOING ALL THE WAY TO 1998. SO
HOW LONG DID THAT TAKE FOR YOU
TO SORT OF CLEAR THAT BACKLOG?
BECAUSE OBVIOUSLY THAT BACKLOG
WASN'T CREATED OVERNIGHT. IT
TOOK US, GOSH, I SHOULD KNOW, I
HAD WEEKLY MEETINGS FOR PROBABLY
3 OR 4 YEARS TO CLEAR THE
BACKLOG. YEAH, BUT BUT NOW
YOU'RE SAYING AT THIS POINT YOU
HAD ONLY A FEW AGED CASES.
THAT'S RIGHT. WE HAVE THE OLDEST
CASES NOW ARE 2022, AND WE'VE
GOT THREE OF THOSE. AND THEY'RE
COMPLICATED. I MEAN THEY'RE
BEING WORKED. IT'S JUST TAX
ISSUES ARE DIFFICULT. GOT IT.
AND YOU MENTIONED ON THE SAME
SLIDE THAT YOU REDUCE THE TIME
TO RESOLVE APPEALS BY MORE THAN
ONE THIRD. HOW MUCH WAS IT
BEFORE AND HOW MUCH IS IT NOW.
LET ME SEE. I PROBABLY GOT THAT.
LET ME I MIGHT HAVE TO. LET'S
SEE WHAT WE'VE GOT HERE. IF I
COULD GET THAT TO YOU, I'LL
CHECK WITH THE TEAM. AND, AND
THEN ON THE FOLLOWING SLIDE YOU
TALK ABOUT SORT OF THE TAXPAYER
RIGHTS ADVOCATES AND YOU KNOW
WHETHER OR NOT TAXPAYERS. SO IF
I'M A TAXPAYER, I HAVE A
QUESTION. WHAT ARE THE COMMON
WAYS THAT I WOULD REACH OUT TO
YOU? YOU MENTIONED THE CALL
CENTER. WHAT ARE SOME OF THE
OTHER WAYS SO THEY CAN CALL THE
CALL CENTER. THEY CAN CALL OR
VISIT ONE OF OUR LOCAL OFFICES.
THEY CAN CALL CONTACT THE
TAXPAYER RIGHTS ADVOCATE OFFICE,
EITHER DIRECTLY OR THROUGH THEIR
ELECTED REPRESENTATIVES. IS THAT
USUALLY I GET EMAILS MYSELF. I
RESPOND IMMEDIATELY. THAT'S ONE
OF THE JOYS OF MY JOB TO
SURPRISE PEOPLE WHEN THEY EMAIL
ME AND THEY HEAR BACK IN A
MINUTE FROM THE DIRECTOR OF THE
DEPARTMENT THAT WE'RE ON IT, AND
LET US TAKE A LOOK AND DO MOST
PEOPLE GO DIRECTLY TO THE AGENCY
OR THEY GO STRAIGHT TO THE
TAXPAYER RIGHTS ADVOCATE? WELL,
THE TAXPAYER RIGHTS OFFICE IS
PART OF THE DEPARTMENT. SO BUT I
THINK MOST PEOPLE
OVERWHELMINGLY, YOU KNOW, GO TO
I WOULD GUESS MOST PEOPLE GO TO
THEIR EITHER CALL THE CALL
CENTER AND WE GET A, YOU KNOW, A
LOT OF CALLS THERE OR THEY CALL
THEIR LOCAL OFFICE OR STOP IN,
YOU KNOW, I, I WILL SAY I'M, I'M
ONE OF THE PLEASANT SURPRISES OF
THIS JOB, WHICH I NEVER WOULD
HAVE THOUGHT DIRECTING A TAX
AGENCY. I GET MORE COMPLIMENTS
FROM TAXPAYERS ON TEAM MEMBER
SERVICE THAN I GET COMPLAINTS.
WE HAVE TO REVISIT HOW YOU'RE
ADJUDICATING SOME OF THESE
ISSUES THEN. SO THAT WAS A JOKE.
SO IN TERMS OF INVOLVEMENT ON
SORT OF TAXPAYER ISSUES, HOW,
YOU KNOW, HOW WOULD YOU SAY THE
TAXPAYER RIGHTS ADVOCATE CAN,
YOU KNOW, OBVIOUSLY THEY'RE PART
OF THE DEPARTMENT, BUT THEY ALSO
THERE TO BE A TAXPAYER ADVOCATE.
SO HOW DO YOU MANAGE AND ENSURE
THAT THEY'RE INDEPENDENT? WELL,
I MEAN, AGAIN, THEY REPORT
DIRECTLY TO MY OFFICE. WE HAVE A
FANTASTIC TAXPAYER RIGHT
ADVOCATE CURRENTLY, CLAUDETTE
YANG. SHE AND HER TEAM DO A
GREAT JOB. THEIR SOLE FUNCTION
IS TO TRY TO RESOLVE THESE
ISSUES. I MEAN, WE WOULD LIKE TO
RESOLVE AS MANY TAX ISSUES
WITHOUT GOING TO APPEALS AND
GOING TO COURT AS POSSIBLE. IT'S
YOU KNOW, WE'RE OPERATING ON A
NUMBERS GAME TO TRY TO DRIVE THE
REVENUE FOR THE STATE OF
CALIFORNIA AND GETTING CAUGHT UP
OVER I MEAN, WE HAD RECENTLY YOU
KNOW, YOU HAVE WHEN YOU'VE GOT
3800 PEOPLE, YOU'RE GOING TO
HAVE SOME PEOPLE WHO ARE MAYBE A
LITTLE OVERZEALOUS SOMETIMES AND
OR, YOU KNOW, MIGHT GET CAUGHT
UP IN VERY SMALL DOLLAR. I MEAN,
WE RECENTLY HAD SOMEBODY REACH
OUT AND SAY, WELL, I AGREE WITH
THE WHOLE LIABILITY, BUT I DON'T
AGREE WITH THIS. $18 IN INTEREST
BECAUSE I TRIED TO LOG IN TO THE
SYSTEM AND IT DIDN'T SEND ME THE
TEXT MESSAGE THAT I WAS
EXPECTING IN ORDER TO BE ABLE TO
LOG IN. AND SO I SHOULDN'T HAVE
TO PAY THE INTEREST. NOW,
UNFORTUNATELY, IN AN IDEAL
WORLD, THE TEAM MEMBERS,
IMMEDIATELY UPON HEARING THAT
WOULD HAVE SAID I AGREE, NO
PROBLEM. YOU GET SOME PEOPLE WHO
ARE A LITTLE OVERZEALOUS THAT
THE TRA TEAM TOOK A LOOK. IT WAS
RESOLVED VERY QUICKLY. WE HAD
ANOTHER CASE COME UP RECENTLY
WHERE THEY SOMEBODY HAD HAD A
VENDOR COMPENSATION ISSUE AS A
CANNABIS DEALER. UNDER
CALIFORNIA LAW, THEY'RE ALLOWED
SOME EQUITY DEALERS OR RETAILERS
ARE ALLOWED VENDORS COMP THEY
HAD AN ISSUE. IT WAS RESOLVED
OVERWHELMINGLY. THESE ISSUES GET
RESOLVED FAVORABLY FOR THE
TAXPAYER. GOT IT. SO JUST GOING
BACK TO SALES AND USE TAX FOR
ONE QUICK SECOND, BECAUSE I
BROUGHT IT UP IN MY EARLIER
COMMENT, IS THERE ANY BACKLOG TO
THE THAT WE OWE MONEY TO THE
LOCAL GOVERNMENT, COUNTY,
CITIES, SPECIAL DISTRICTS? NO.
AND IN FACT WE'VE REALLY I
DIDN'T THERE'S SO MANY DETAILS
THAT YOU CAN'T GET INTO. AND
EVEN THOUGH I TOOK MORE TIME
THAN I SHOULD HAVE, YOU KNOW,
WE'RE NOW MUCH MORE ACCURATE IN
TERMS OF THE MONTH WE SEND OUT
EVERY MONTH TO EVERY LOCALITY,
AN AMOUNT OF MONEY. IT USED TO
BE WE WOULD HOLD SOME OF THAT
BACK. YEAH. AND NOW WE DON'T DO
THAT. WE'RE MUCH MORE ACCURATE
THAN WE USED TO BE IN GETTING
MAKING SURE EVERYBODY GETS THE
RIGHT AMOUNT OF MONEY. GOT IT.
AND BECAUSE OF THE STAFF ISSUES
THAT WERE HIGHLIGHTED, YOU KNOW,
THE LAO BROUGHT UP IN THE STATE
PERSONNEL BOARD'S REPORT AND
THAT WAS NOT THE ONLY REPORT.
CAL, CAL, H.R. DOES THE HIRING
IS THAT STILL THE CASE? THEY
DON'T KNOW. WE HAVE OUR HIRING
DELEGATION BACK. WE GOT IT BACK
AFTER A YEAR. THERE HAVEN'T BEEN
ISSUES. WE HAVE OUR STATE
PERSONNEL BOARD AUDIT AS EVERY
THREE YEARS, I BELIEVE WE
HAVEN'T HAD ANY BIG ISSUES. YOU
KNOW, MR. KERSTEIN MENTIONED ONE
AUDIT FINDING. WE HAD ONE. I, I
DON'T EVEN KNOW. IT WAS PART OF
A MUCH BIGGER STATE AUDIT. WE
HAD ONE TEAM MEMBER WHO WAS
REPRESENTING SOME PEOPLE WHO HAD
PERMITS FROM US. THERE WAS
DISCIPLINARY ACTION TAKEN
IMMEDIATELY. I MEAN, IN MY MIND,
THAT IS NOT A IF YOU'RE GOING TO
TRY AND RUN AN ORGANIZATION THIS
SIZE, YOU'RE GOING TO HAVE SOME
BAD ACTORS. AND THAT WAS ONE.
AND WE DEALT WITH IT VERY
QUICKLY. GREAT. OKAY. THANK YOU.
ALL RIGHT. ASSEMBLY MEMBER
GIBSON, THANK YOU VERY MUCH.
IT'S GREAT SEEING YOU. THANK YOU
VERY MUCH FOR BEING HERE. CAN
YOU DESCRIBE FOR ME? CAN YOU
JUST DESCRIBE FOR ME WHAT THE
APPEAL. LET ME GO TO MY NOTES.
YOU PROVIDED A LOT OF
INFORMATION. I JUST WANT TO
PIGGYBACK ON JUST TO GET FURTHER
CLARIFICATION. HOW DO YOU
COMPARE? YOU TALKED ABOUT ON
PAGE TWO, THE RETURN PROCESS.
MORE THAN $2.9 MILLION IN RETURN
ANNUALLY. WHAT WAS IT PRIOR TO
2.9 MILLION RETURNS? RETURNS
COMPARED TO BEFORE THE CHANGE
TOOK PLACE? I'M GUESSING IT'S
RELATIVE. I DON'T KNOW EXACTLY.
I'M GUESSING IT'S RELATIVELY
STABLE. I BET WE HAVE PROBABLY
ABOUT THE SAME NUMBER OF
TAXPAYERS. THE REASON WHY THE
TAXPAYER NUMBER AND THE RETURN
NUMBER, I MEAN, YOU KNOW, SALES
AND USE TAX, YOU TYPICALLY FILE
FOR QUARTERLY, BUT THE SMALLER
TAXPAYERS, WHICH ARE
OVERWHELMINGLY, YOU KNOW, WE
HAVE A LOT OF SMALLER TAXPAYERS
WHO FILE ONCE A YEAR. SO I'M
GUESSING IT'S PRETTY SIMILAR.
OKAY, JUST TO PIGGYBACK ON MR.
TING'S QUESTION REGARDING ON
YOUR ON STILL ON PAGE TWO TEAM
MEMBERS APPROXIMATELY 38. SO
IT'S 200 YOU SAID YOU HAD YOU
HAD PRIOR TO FOUR 4000. WE
PROBABLY HAD ABOUT I THINK WE
HAD ABOUT 4000 WHEN WE STARTED.
WE HAD ABOUT 4800 PIES, BUT
ABOUT 4000 ACTUAL ON ON STAFF. I
MEAN, YOU ALWAYS HAVE SOME
VACANCY AND CHURN, BUT. RIGHT.
BUT ALSO ON ONE OF THE SLIDES
YOU TALKED ABOUT HIRING
CHALLENGES. YES. CAN YOU GO INTO
DETAIL? WELL, SO THAT'S BEEN A
REAL CHALLENGE. YOU KNOW,
PARTICULARLY ON AUDIT, BUT ALSO
ON THE COLLECTION FRONT. YOU
KNOW, ON ON AUDIT, WE'RE HIRING
ACCOUNTING GRADUATES FOR OUR
AUDIT AUDITOR POSITIONS. AND,
AND THE STATE PAY ON FOR
AUDITORS HAS JUST NOT KEPT UP
CANDIDLY AND SO WE'RE BASICALLY
THOSE GRADUATES CAN GET HIGHER
PAYING JOBS WITH CITIES COUNTIES
PRIVATE INDUSTRY OR THE IRS. AND
SO WE'RE JUST NOT THE EMPLOYER
OF CHOICE. BUT I WILL SAY OUR HR
TEAM HAS REALLY DONE A GREAT
JOB. I MEAN, WE NOW HAVE ONE DAY
HIRING EVENTS WHERE YOU CAN SHOW
UP AND, YOU KNOW, BY THE TIME
YOU LEAVE THAT DAY, YOU CAN HAVE
A CONDITIONAL JOB. THE EMPLOYEE
IS REPRESENTED BY SEIU. WHICH
1000 LOCAL 1000. OKAY. SO THESE
WOULD BE 1000 SEIU, LOCAL 1000
EMPLOYEES. AND SO AGAIN, FROM
THE 4000 TO THE 3800, YOU HAVE.
SO THERE'S ABOUT 200 PEOPLE OR
VACANCIES. WOULD YOU SAY THAT?
YES, WE HAVE EVEN MORE VACANCIES
THAN THAT, ALTHOUGH WE'RE NOW,
YOU KNOW, IN A, IN A BUDGET
DRILL WITH GIVEN THE BUDGET
SITUATION WHERE WE'RE DID THOSE
200 PEOPLE LIKE I MEAN THOSE ARE
THOSE ARE THROUGH ATTRITION.
WHAT. YEAH THROUGH NUTRITION
ATTRITION. YEAH. WE HAVEN'T WE
CERTAINLY HAVEN'T LAID ANYBODY
OFF. WE'VE YOU KNOW, WE'RE
DESPERATELY TRYING TO KEEP AND
UPSKILL AND TRAIN THE PEOPLE WE
HAVE THE TRANSITION OF 2017. WAS
THERE PEOPLE WHO LEFT THE AGENCY
AS A RESULT, OR DO YOU MAINTAIN
EVERYONE THROUGH THE TRANSITION?
NO, WE MAINTAINED EVERYONE.
THERE WAS ONE CEA THAT WAS LET
GO AND THAT WAS IT. I DON'T
THINK, OR MAYBE TWO OVER TIME,
BUT THAT WAS IT. WE KEPT
EVERYBODY. WE'VE REPURPOSED
PEOPLE AS NEEDED AND KEPT
EVERYBODY ON BOARD. GREAT. ON
PAGE FOUR, IN THE TALKED ABOUT
THE TAX SALES COLLECTION AND USE
TAX REVENUE TOTALING $79.6
MILLION. WHAT WAS IT PRIOR TO?
WAS THAT IS THIS THE HIGHEST?
YES, THAT'S THE HIGHEST. I MEAN,
THE PRIOR YEAR MAY HAVE BEEN
SLIGHTLY HIGHER IN IN 2016. SO
2016, 2017. SO THIS IS PRE CDTFA
THE TOTAL REVENUE WAS. SO THIS
INCLUDES ALL TAX AND FEE
PROGRAMS NOT JUST SALES AND USE
WAS 64.3 BILLION. SO THE
REVENUES INCREASED BY ABOUT 50%.
GOOD. CAN YOU PLEASE DESCRIBE
FOR ME THE APPEAL PROCESS.
RIGHT. SO WHEN A TAXPAYER HAS A
DISPUTE, CAN YOU ILLUSTRATE STEP
BY STEP WHAT THE PROCESS IS.
SURE. SO IF A TAXPAYER HAS A
DISPUTE ON ON AUDIT FOR
INSTANCE, LET'S TAKE AN AUDIT.
THAT'S WHERE TYPICALLY THESE
ARISE. IF A TAXPAYER HAS AN
AUDIT ISSUE THE FIRST STEP IS
TO, YOU KNOW, TRY TO RESOLVE
THAT WITH THE AUDITOR. AND THEN
YOU CAN TRY TO RESOLVE IT WITH
THE AUDIT SUPERVISOR OR THE IS
THE AUDITOR THE SAME PERSON
THAT'S ACTUALLY HAS AUDIT A
BUSINESS. YEAH. YES. SO WE TRY
AND RESOLVE IT AT THE, YOU KNOW,
AT THE LOWEST LEVEL POSSIBLE.
AND BY AND LARGE, AS I MENTIONED
BEFORE, YOU KNOW, ALMOST 80% OF
AUDITS ARE AGREED AUDITS. SO THE
TAXPAYER AGREES WITH THE
ULTIMATE FINDING OF THE AUDITOR.
BUT BUT I'M SORRY, WHAT WAS THE
PERCENT YOU SAID THE TAXPAYER
AGREE WITH? 78% IS OUR OUR
AGREEMENT FROM OVER K¾T FOR LIFE
LIFESPAN. I DON'T KNOW, I'M
SORRY I MISUNDERSTOOD YOU. CAN
YOU REPEAT THAT, PLEASE? 78% IS.
SO SINCE CDTFA WAS STARTED,
ABOUT 78% OF AUDITS THE AUDIT
THE BUSINESS BEING AUDITED
AGREES WITH THE AUDIT FINDING
REALLY. OKAY INTERESTING. OKAY.
SO ANYWAY, SO THEN YOU CAN MEET
WITH THE AUDIT SUPERVISOR OR
THEN YOU TALK WITH THE AUDIT
PRINCIPAL AT THE OFFICE. SO EACH
OFFICE WE HAVE TEAMS OF
AUDITORS. THERE'S A GENERALLY A
SUPERVISING TAX AUDITOR WHO
OVERSEES A TEAM OF 8 TO 10
AUDITORS. THEN THERE'S AN AUDIT
PRINCIPAL WHO RUNS THE AUDIT
PROGRAM AT AN OFFICE. AND THEN
THERE'S AN OFFICE ADMINISTRATOR.
IF YOU IF THE ISSUE CAN'T GET
RESOLVED, THEY'RE AT THE LOCAL
AREA, THEN YOU CAN FILE A
PETITION. AND THOSE PETITIONS
COME TO SACRAMENTO TO
HEADQUARTERS, WHERE THE
PETITIONS TEAM TAKES ANOTHER
LOOK AT THAT, AND THEN THEY WILL,
DEPENDING ON WHAT THE PETITION
ALLEGES, THEY WILL SOMETIMES
REFER THAT BACK TO THE PRINCIPAL
AUDITOR AND SAY, TAKE A LOOK AT
THIS AGAIN AT THE LOCAL LEVEL.
IF IT'S AGAIN NOT RESOLVED, THEN
IT COMES INTO OUR SYSTEM. WE DO
HAVE AN INTERNAL APPEALS PROCESS
WHICH IS COMPLETELY INDEPENDENT.
IT'S PART OF OUR LEGAL TEAM.
THIS WAS THE SAME STRUCTURE THAT
THE BOE HAD. AND THEY HAVE
APPEALS HEARINGS INTERNALLY
WHERE THEY, YOU KNOW, BOTH SIDES
PRESENT AND THOSE CAN HAPPEN IN
PERSON OR VIRTUALLY. NOW IN THE
NEW WORLD. AND THEN THEY MAKE A
DETERMINATION ON THE APPEAL. IF
IT FINDS IF THE TAXPAYER IS NOT
IS STILL NOT SATISFIED AT THAT
POINT, THE CASE WOULD THEY CAN
APPEAL TO THE OFFICE OF TAX
APPEALS. SO THE PROCESS YOU
DESCRIBED, HOW LONG DOES THAT
TAKE? THAT SEEMS LIKE A LONG
TIME. IT DOESN'T I DON'T KNOW, I
MEAN, TO ASSEMBLYMEMBERS I CAN
GET YOU THE EXACT TIME TIME
FRAME. IT DEPENDS. I MEAN,
THERE'S PRETTY THERE'S SOME VERY
VARIABILITY DEPENDING ON HOW
COMPLICATED THE CASE IS,
DEPENDING ON HOW SOME TAXPAYERS
CANDIDLY WOULD LIKE FOR THE
APPEAL PROCESS TO BE LONGER
BECAUSE IT KEEPS THEIR LIABILITY
FROM BECOMING FINAL. AND SOME
TAXPAYERS WOULD LIKE IT DONE AS
QUICKLY AS POSSIBLE. ARE YOU
DOING THAT BY DESIGN? NO, WE
WOULD LIKE I WOULD LIKE TO GET
THEM DONE ALL IMMEDIATELY IF IT
WERE UP TO ME. BUT IT'S. BUT YOU
SAID THE TAXPAYER WOULD LIKE TO
YOU KNOW, SOME TAXPAYERS WOULD
LIKE TO BECAUSE THEY DON'T WANT
THEIR LIABILITY TO BECOME FINAL
AND HAVE TO PAY UNTIL IT'S
FINAL. BUT THAT'S, THAT'S
PRESUMING THAT THEY THINK THAT
THEY'RE AT FAULT AND THAT'S WHY
THEY'RE GOING THROUGH THIS
APPEAL PROCESS TO TRY TO
INDICATE THAT THEY'RE NOT AT
FAULT. THERE WAS AN ERROR THAT
WAS MADE. SO I'M NOT
UNDERSTANDING. I THERE ARE
THERE'S A WIDE VARIETY OF
TAXPAYERS AND CIRCUMSTANCES AND
AUDITS. THERE ARE IS THERE
INTEREST BEING ACCUMULATED WHILE
GOING THROUGH THIS LONG PROCESS?
YES. INTEREST ACCRUES THAT THE
THAT THE TAXPAYER WOULD HAVE TO
PAY GOING THROUGH THIS PROCESS?
YES. YOU DON'T KNOW HOW LONG IT
TAKES IT. IS IT IS AGAIN, WE'VE
CUT THE TIME THAT IT DOES TAKE.
BUT WHAT IS THE TIME, SIR? WELL
THAT'S I CAN GET THAT FOR YOU.
AND I'D BE MORE THAN HAPPY TO
PROVIDE IT TO THE COMMITTEE. BUT
I DON'T HAVE IT WITH ME IN MY,
IN MY EYE. AND MAYBE WHILE
MIRIAM'S TALKING, I CAN LET ME
GO TO THE NEXT. LET ME GO TO THE
NEXT QUESTION. IF I MAY. SO ONCE
THE TAXPAYER APPEALS IT CAN YOU
STOP THERE? DESCRIBE AT THAT
PARTICULAR POINT IN TIME WHEN
YOU GUYS COULD NOT RESOLVE IT
THROUGH THE PROCESS THAT YOU
JUST DESCRIBED? PLEASE
ARTICULATE FOR ME IN THIS BODY,
WHEN THEY ARE AT AN APPEAL AND
WHO GOVERNS OVER THAT APPEAL,
THAT'S BEEN BROUGHT TO THE
ATTENTION OF THIS DEPARTMENT. SO
THE APPEAL IS HEARD BY AN
ATTORNEY, THE INTERNAL APPEAL.
CAN YOU DESCRIBE TWO? YOU
DESCRIBED TWO APPEALS, ONE
INTERNAL AND THEN THE OTHER THAT
HAS THE ADJUDICATED AUTHORITY.
WELL, THEY'RE THE ONES. SO THE
OTA IS THE EXTERNAL ADJUDICATOR.
AND INDEPENDENT. WE DO HAVE AN
APPEALS SECTION THAT IS PART OF
OUR LEGAL DIVISION WHERE LAWYERS
DO HEAR APPEALS. THEY ARE
TOTALLY INDEPENDENT. I DON'T
HAVE ANYTHING TO DO WITH THOSE.
AND THEY MAKE A DETERMINATION.
AGAIN, OUR GOAL IS TO TRY TO
RESOLVE ALL OF THESE MATTERS
BEFORE THEY. SO LET'S TALK ABOUT
THAT PIECE THAT YOU TRY TO
RESOLVE IT BEFORE IT GETS TO THE
OTHER PROCESS OF THE
ADMINISTRATIVE LAW JUDGES. SO
WITHIN YOUR AUTHORITY AND WHEN
YOU HAVE THAT SECOND APPEAL
PROCESS, THAT'S THAT IS IN FACT
IN YOUR AUTHORITY, DESCRIBE
THAT. SO WHAT IF IN FACT,
BECAUSE WHAT I'M HEARING IS THAT
AN APPEAL PROCESS IS MADE IN A
TAXPAYER IS APPEALING A PROCESS.
AND YOU HAVE A SEPARATE ONE
INTERNALLY AND WITHIN THAT
INTERNAL PROCESS, I'M TRYING TO
UNDERSTAND IF YOU FIND IN FAVOR
OF THAT TAXPAYER, WHAT THEN? DO
YOU PULL SOMETHING BACK? DO YOU
REISSUE? DO YOU MODIFY? WHAT IS
THE DECISION PROCESS AND DO YOU
HAVE THAT AUTHORITY? IF IT'S THE
SAME, THIS PROCESS HAS NOT BEEN
CHANGED OTHER THAN TO BE MADE
FASTER SINCE THE BOE DAYS. IT IS.
AND I KNOW YOU. YOU WORKED AT
THE BOE SO IT'S THE SAME
PROCEDURE THAT YOU MAY BE
FAMILIAR WITH. THE IF THE IF THE
DECISION IS MADE IN THE
TAXPAYER'S FAVOR, THEN THE
LIABILITY IS ADJUSTED OR
ELIMINATED IN ORDER TO BE IN
ACCORDANCE WITH THAT. CAN YOU
TALK ABOUT HOW MANY HOW MANY
CASES THAT YOU FOUND, THAT ONE
YOU FOUND IN FAVOR OF THE
TAXPAYER IN THAT PROCESS YOU
JUST DESCRIBED? I CAN GET YOU
THAT NUMBER. I'D BE MORE THAN
HAPPY TO. YOU DON'T HAVE YOU
CAN'T POINT TO ANYBODY IN THE
AUDIENCE THAT CAN GIVE THAT
INFORMATION. NO, I CAN'T, BUT I
CAN. I CAN GET YOU THE
INFORMATION. OKAY, OKAY. SO
DESCRIBE THE PROCESS THAT'S NOW
SET BEFORE US TODAY. YOU TALKED
ABOUT YOUR INTERNAL PROCESS. OR
MAYBE I'LL WAIT FOR THE OFFICE
OF TAX APPEALS TO TALK ABOUT
THAT. BUT MAYBE I WILL. BUT LET
ME ASK THIS OTHER QUESTION WITH
RESPECT TO WHAT IS THE GROWTH IN
POSITIONS OF K¾T FOR SINCE
YOU'VE TAKEN OVER? WE'RE SMALLER
THAN WE USED TO BE. SO THERE'S
NO THERE HASN'T BEEN GROWTH IN
POSITIONS. WE'VE, YOU KNOW, AND
WE'VE TRIED WHEREVER POSSIBLE.
AND WE CONTINUE TO TRY TO ABSORB
COSTS, INCLUDING FOR NEW
LEGISLATIVE MANDATES. I MEAN,
WHETHER IT'S 2854 WHERE THE IDEA
WAS WE'LL TAKE IT, WHETHER IT'S
THE FUEL PRICING MATTER, THAT
WE'VE NOW ISSUED AN ANNUAL
REPORT ON, WE'VE DONE THAT
WITHOUT ANY ADDITIONAL FUNDING.
SOME E-CIGARETTE YOU KNOW, WE DO
OCCASIONALLY HAVE BCC, BUT EVEN
THERE IT'S LARGELY AROUND
DESTRUCTION. I MEAN, WE NEED TO
PAY FOR TOXIC WASTE, DESTRUCTION
OF SOME VAPING. IT DOESN'T HAVE
TO DO WITH PERSONNEL. WE'RE
TRYING TO LIVE WITHIN OUR MEANS
AND BE EFFICIENT. SO WE'RE WE'RE
SMALLER. CAN YOU TALK ABOUT THE
APPEAL THAT THE CASE THAT'S
PENDING THE COURT DECISION? I
SPOKE TO THE LEGISLATIVE ANALYST
A FEW MOMENTS AGO ABOUT THAT
PARTICULAR CASE REGARDING THE
AUDIT MANUAL. SO THE AUDIT
MANUAL, THERE'S NO THERE'S NO
CASE THERE ON THE AUDIT. THERE
ISN'T A LEGAL CASE ON THE AUDIT
MANUAL. WE SO THERE WAS NO
REGULATION THAT WAS BEING
CHANGED. SO WE MADE A CHANGE TO
THE AUDIT MANUAL WHICH WE
BELIEVED WAS APPROPRIATE. IT'S
ACTUALLY STATISTICALLY SOUND. SO
IT'S BASED ON OUR STATISTICAL
SAMPLING METHOD. SO IF YOU'RE
AUDITING A VERY LARGE RETAILER
FOR INSTANCE, IT'S BASICALLY
IMPOSSIBLE TO GO THROUGH EVERY
SALE THAT LET'S JUST FOR THE
SAKE THAT A LARGE ONLINE
RETAILER MAY HAVE MADE. SO WHAT
WE DO IS WE HAVE WHAT ARE CALLED
COMPUTER AUDIT SPECIALISTS, AND
WE TAKE MILLIONS OF TRANSACTIONS
AND THEY TAKE A STATISTICAL
SAMPLING OF THOSE AND TRY TO
DETERMINE ERRORS. AND THEN THE
PERCENTAGE OF ERROR IS APPLIED
ACROSS THE AUDIT. WORKING WITH
STATISTICIANS, OUR TEAM. REVISED
THE AUDIT MANUAL UNDER WHOSE
AUTHORITY AND UNDER THE
DEPARTMENT'S AUTHORITY UNDER THE
AUDIT YOU KNOW, TO HAVE ITS
AUDIT MANUAL THE OFFICE. AND SO
THERE WASN'T SO THERE WAS A
THERE WAS THERE WAS A THERE WAS
A CHALLENGE TO THE OFFICE
ADMINISTRATOR. SO THERE WAS A
CHALLENGE TO THE OFFICE OF
ADMINISTRATIVE LAW THAT SAID IT
WAS AN UNDERGROUND REGULATION.
OKAY. WE THEN WITHDREW THE
CHANGE AND WE'RE EVALUATING THE
SITUATION AND WHETHER OR NOT WE
SHOULD GO FORWARD WITH A FULL
REGULATORY ISSUE. IT'S THE I
DON'T THINK THERE'S ANY QUESTION
FROM A STATISTICAL POINT OF VIEW
THAT THE PROPOSED CHANGE IS MORE
STATISTICALLY VALID THAN WHAT
EXISTS. BUT WE'RE FINE. WE'RE
FINE. THAT'S THAT'S NOT THAT'S
NOT MY ARGUMENT. MY ARGUMENT. MY
CONCERN IS THAT THEY FOUND THAT
YOU DIDN'T HAVE THE AUTHORITY.
AND THAT IS IT TRUE THAT IT'S
BEING APPEALED IN COURT? IS
THERE A COURT, IS THERE A COURT
CASE WITH RESPECT TO THIS? NO,
THERE IS NOT. OKAY. THANK YOU
VERY MUCH FOR THAT. I APPRECIATE
THAT YOU MADE MENTION THAT THE
OLDEST CASE, THE OLDEST CASE,
UNRESOLVED TAX AUDIT APPEALS IN
THE K¾T F F A WAS 2022. THAT'S
FOR PETITION FOR REDISTRIBUTION.
THOSE ARE THE THOSE ARE THE
LOCAL TAX WHERE ONE JURISDICTION
CHALLENGES THE ALLOCATION OF
LOCAL TAX TO ANOTHER
JURISDICTION. SO WHAT IS THE
OLDEST CASE THAT YOU HAVE THE
OLDEST CASE AT ALL? I, I DON'T
KNOW I KNOW WE'VE GOT I MEAN WE
HAVE TWO CASES THAT ARE AT OTA
OR VERY YOU KNOW THAT I'M AWARE
OF THAT ARE DATE BACK TO WE HAVE
TWO LOCAL TAX CASES IN THAT
PROCESS. ONE, THE PETITION DATES
TO 2008. ONE THE PETITION DATES
TO 2010, WHICH IS PART OF WHY
I'M HAPPY TO, YOU KNOW, IF YOU
HAVE QUESTIONS ABOUT THE
CUPERTINO ISSUE, IT'S PART OF
WHAT INFORMS OUR DECISION ON
THAT TO TRY TO NOT HAVE A 16
YEAR PROCESS, TO TRY TO RESOLVE
IT, BUT ANYWAY, SO I DON'T KNOW
WHAT OUR OLDEST CASE IS IN
GENERAL, WE'VE GOT CASES ALL
THROUGHOUT THE SYSTEM AND SOME
IN COURT. AND, MR. MEDEIROS, DO
YOU HAVE A YOU HAD AN ANSWER FOR
ONE OF THE ASSEMBLY MEMBER
GIBSON'S QUESTIONS? JUST NOW, MY
ATTENTION IS TOO SHORT. SO MR.
PIMCO'S, I DON'T I DON'T KNOW
THAT THAT'S THE I'D RATHER MAKE
SURE WE GET THE RIGHT
INFORMATION. MY LAST FINAL
QUESTION, SIR. THE DEPARTMENT.
TELL ME, WHO DO YOU REPORT TO? I
REPORT TO THE SECRETARY OF
GOVERNMENT OPERATIONS AND
ULTIMATELY TO THE GOVERNOR. I'M
APPOINTED BY THE GOVERNOR AND.
SO THERE'S NO SO NO ELECTED BODY.
WELL, THE GOVERNOR IS ELECTED,
BUT THE BOARD, NO ELECTED BOARD.
NO ELECTED BOARD. GOT IT. OKAY.
THAT'S ALL FOR NOW. THANK YOU
VERY MUCH. ALL RIGHT. THANK YOU.
AND BEFORE YOU GO, LET'S TALK A
LITTLE BIT ABOUT CUPERTINO. SO
IT WAS HIGHLIGHTED THAT YOU HAD
REACHED AN AGREEMENT WITH THE
ALLOCATIONS OF THE BRADLEY BURNS
SALES AND USE. AND, YOU KNOW,
LAST YEAR OBVIOUSLY WE'VE
REFERRED TO IT A FEW TIMES. WE
HAD VERY IN-DEPTH DISCUSSIONS
ABOUT THESE TAX REBATE
AGREEMENTS AND APPRECIATE ALL
THE WORK YOU DID, MAKING SURE
THAT THERE WAS NOT A BIG COST TO
THIS TRANSPARENCY, WHICH WE
THINK, OF COURSE, IS A REALLY
GREAT THING. SO WHAT CAN YOU
TELL US ABOUT THIS AGREEMENT?
SURE. SO I'M A LITTLE
CONSTRAINED, BUT NOT AS YOU
KNOW, I MY REAL CONSTRAINT IS
THAT I CAN'T DISCUSS SPECIFIC
DOLLAR FIGURES. THAT COULD BE
TRACED BACK TO A SINGLE
TAXPAYER. SO BECAUSE OF TAX
CONFIDENTIALITY RULES UNDER
CALIFORNIA LAW. BUT WHAT I CAN
TELL YOU IS THIS, THAT, YOU
KNOW, STARTING ALMOST FOUR YEARS
AGO NOW, AS AS WE'VE DISCUSSED,
THE DEPARTMENT MADE A REAL
EFFORT TO TRY TO SEE IF LOCAL
TAX WAS BEING MISALLOCATED. AND
SO WE SENT OUT. WE LOOKED AT,
YOU KNOW, SLIGHTLY OVER 200
LARGE RETAILERS, LARGELY ONLINE
RETAILERS WHO HAVE. IN SOME
CASES, WE'RE AWARE OF SOME CASES
OF WHERE PEOPLE MAY MISALLOCATE
THEIR LOCAL TAXES. AS PART OF
THAT, WE DID FIND FOR RETAILERS
THAT WE BELIEVED WERE
MISALLOCATING WHO DID NOT. THEN
CORRECT. WE FOUND MORE, BUT
OTHERS CORRECTED THEIR RETURNS
BECAUSE IT DOESN'T INVOLVE FOR
THE RETAILER OUTSIDE OF A REBATE
AGREEMENT. IT DOESN'T INVOLVE
ANY MORE OR LESS TAX FOR THEM.
AND SO ONE OF THOSE WAS LOCATED
IN THE CITY OF CUPERTINO. AND WE
HAVE BEEN WORKING WITH THE CITY
TO TRY TO RESOLVE THE MATTER. IT
IS A SUBSTANTIAL AMOUNT OF
MONEY. IT'S NOT AN IDEAL
CIRCUMSTANCE. IT'S NOT AN IDEAL
RESOLUTION. FROM MY PERSPECTIVE.
BUT GIVEN THE ALTERNATIVES, IT
IS A DECENT OUTCOME, I BELIEVE,
FOR THE STATE AND FOR ALL THE
CITIES AND COUNTIES, THE REVENUE
WILL START FLOWING PROPERLY
IMMEDIATELY AND THE REVENUE THAT
WILL FLOW PROPERLY IS ORDERS OF
MAGNITUDE LARGER THAN THE
REVENUE THAT WAS MISALLOCATED.
AND THAT THAT WE BELIEVE WAS
MISALLOCATED. CUPERTINO STILL
BELIEVES THAT IT WAS ALLOCATED
PROPERLY. AND SO THAT'S YOU
KNOW, WHERE WE ARE. WE WOULD
LIKE TO CLEAR THE UNDERBRUSH OF
THESE FEW CASES. YOU KNOW, THERE
THERE ARE SIX OF THESE, TWO OF
WHICH DATE BACK TO THE BOE DAYS,
ONE FROM 2008, ONE FROM 2010.
WHICH IS WHY I'M FAMILIAR WITH
THOSE DATES, BECAUSE WE DO HAVE
TWO PETITION CASES DATING BACK
THAT FAR. AND, YOU KNOW, IF WE
DID NOT RESOLVE THIS IN THIS
WAY, IT'S IT COULD HAVE BEEN AN
EXTRA TEN YEARS JUST TO GET THE
DOLLARS FLOWING WHERE THEY
SHOULD GO. AND SO, SO BUT THERE
HAVE BEEN SOME QUESTIONS AS TO
WHY YOU SETTLED WITH THE AGENCY
AS OPPOSED TO THE TAXPAYER.
WELL, SO THIS IS THE TAXPAYER IS
NOT THIS IS JUST ABOUT THE
ALLOCATION OF LOCAL TAX. AND
THIS IS THE TAXPAYER DOESN'T
HAVE STANDING. THEY'RE NOT
AGAIN, IT DOESN'T IMPACT THEIR
TAX LIABILITY. IT DOESN'T IMPACT
ANYONE'S TAX LIABILITY. IT'S
JUST WHERE THE TAX IS ALLOCATED
UNDER BRADLEY BURNS. AND SO
UNDER STATE LAW THAT IS A SYSTEM
BY WHICH TYPICALLY ONE
JURISDICTION CHALLENGES ANOTHER
JURISDICTION. WHAT WE HAVE DONE
IN RECENT YEARS AS PART OF THIS
EFFORT IS TO TRY TO IDENTIFY
THOSE MISALLOCATIONS OURSELVES,
BOTH SO THAT WE CAN IDENTIFY
THEM SOONER, BUT ALSO BECAUSE IF
THEY'RE IDENTIFIED BY THE
CONSULTANTS, A LARGE SHARE OF
THAT TAX FLOWS TO THE
CONSULTANTS RATHER THAN TO THE
CITIES. AND SO OUR INTEREST IS
AND I THINK THE STATE'S INTEREST
IS IN US TRYING TO IDENTIFY
THOSE. SO THAT'S THAT'S HOW THE
SYSTEM WORKS UNDER STATE LAW. SO
JUST TO CLARIFY, IT WAS YOU THAT
IDENTIFIED IT. NO OTHER NONE OF
THE OTHER AGENCIES,
JURISDICTIONS THAT COMPLAINED
ABOUT IT. AND SO BECAUSE SOME OF
THE BECAUSE THE DETAILS ARE
BEING KEPT CONFIDENTIAL, DOES
THIS IMPACT ANY OTHER BRADLEY
BURNS DISPUTES RIGHT NOW, THE
OUTCOME OF ANY OF THESE OTHER
DISPUTES? NO, I MEAN IT THE SAME
OUTSIDE COUNSEL THAT REPRESENTS
CUPERTINO REPRESENTS ANOTHER ONE
OF THE JURISDICTIONS THAT HAS A
MATTER AT ISSUE. THERE IS AN
ISSUE IN COURT WITH THE CITY OF
SAN BRUNO, BUT IT DOESN'T. I
MEAN, I'M UNFORTUNATELY, I'D
LIKE TO RESOLVE ALL OF THEM AND
GET US ON A CLEARER PATH. ALL
RIGHT. WELL, I REALLY APPRECIATE
YOU BEING HERE AND. OH, MR.
GIBSON, WILL YOU FINISH? I AM, I
AM, I'M DONE WITH MY CUPERTINO
QUESTION. GREAT. I JUST HAVE ONE
MORE QUESTION BECAUSE I THINK
THE MEMBER TALKED ABOUT THE
BRADLEY BURNS TAX. THE LAW
PERMITS THE BRADLEY BURNS TAX
SHARING AGREEMENT THAT HAS LONG
STANDING HISTORY IN THE STATES
AND IS SUPPORTED BY, OF COURSE,
OUR GOVERNOR. HAVE YOU CHANGED
ANY OF THE STANDARDS BY WHICH
THESE AGREEMENTS ARE REVIEWED BY
YOUR DEPARTMENT? BECAUSE I'M
SPECIFICALLY INTERESTED IN THE
GENUINE PHYSICAL HUMAN
INTERACTION THAT I BELIEVE THAT
YOU WANT TO CHANGE. SO CAN YOU
ELABORATE? SO ON THAT FOR SURE.
WELL, SO THOSE ARE MAYBE TWO
DIFFERENT THINGS. SO LET ME TAKE
THEM SEPARATELY. ONE IS ON THE
REVENUE SHARING AGREEMENTS WHICH
WE HAVE. WE'RE COMPLETELY
AGNOSTIC ON REVENUE SHARING. IT
IS CURRENTLY ALLOWED UNDER STATE
LAW. IF WE DISTRIBUTE THE MONEY
TO THE LOCALITIES, IF THEY'RE IF
THEY CHOOSE TO SHARE IT WITH THE
TAXPAYER, THAT'S CURRENTLY
ALLOWED. AND WE'RE FINE WITH
THAT. WHAT WE'RE NOT FINE WITH
IS TAXPAYERS ALLOCATING REVENUE
TO JURISDICTIONS WHERE IT
DOESN'T BELONG. THAT'S PART OF
OUR JOB THAT WE WORK ON BEHALF
OF THE CITIES AND COUNTIES TO
MAKE SURE THAT THEY GET THEIR
PROPER AMOUNT OF REVENUE. NOW,
THE SECOND PIECE OF YOUR
QUESTION IS, IS SEPARATE FROM
THAT REVENUE SHARING AGREEMENT,
WHICH IS THIS GENUINE HUMAN
INTERACTION, WHICH IS A STANDARD
THAT DATES BACK TO THE BOE DAYS.
THIS HAS NOTHING TO DO WITH
CDTFA. IT DATES BACK, I BELIEVE,
ABOUT 2006 THROUGH BOE DECISIONS.
IF ANYTHING, WE'VE THERE IS
CURRENTLY SOME LITIGATION ON
THIS, SO I SHOULD BE SOMEWHAT
CIRCUMSPECT IN MY REMARKS. BUT
IT DATES BACK PREDATES CDTFA. WE
HAVE TRIED TO BE, YOU KNOW, USE
PLAIN ENGLISH IN A TAXPAYER
GUIDE SO THAT PEOPLE CAN
UNDERSTAND WHAT OUR WHAT THE TAX
RULES ARE. BUT THE STANDARDS
HAVE NOT CHANGED ONE BIT. YOU
MADE YOU SAID PLAIN ENGLISH. YOU
KNOW THAT NOT EVERYBODY SPEAKS
ENGLISH. SO LET ME JUST GO TO MY
NEXT QUESTION. YOU TALKED ABOUT
RESPONDING TO 52 LEGISLATIVE
INQUIRIES AND THOSE ARE
GENERATED BY LEGISLATIVE OFFICES.
BUT IT'S MY UNDERSTANDING THAT
THE BOE MEMBERS HAVE RECEIVED
CALLS FROM TAXPAYERS, AND THEY
HAVE ALSO TRIED TO CALL THE
OFFICE TO GET THE KIND OF
RESPONSE SO THEY CAN RESPOND TO
AND I THINK I'VE GOT THOSE
NUMBERS. I THINK IT'S MAYBE
MAYBE THEY'RE AN ADDITIONAL 18
OR SOMETHING THAT CAME FROM THE
BOE. BUT I WE DEAL WITH THE BOE
ALL OF THE TIME. I HAVE GREAT
RELATIONSHIP WITH THE EXECUTIVE
DIRECTOR, THE PREVIOUS EXECUTIVE
DIRECTOR, BECAUSE WE DO YOU
KNOW, WE TRY TO HELP THEM. WE DO
ALL THE ADMINISTRATIVE BACK
OFFICE WORK FOR BOE, AS WELL AS
ADMINISTERING THE ALCOHOLIC
BEVERAGE TAX AND THE INSURANCE
TAX FOR THEM AND WHERE THEY DO
HEAR FROM TAXPAYERS, JUST AS I
MEAN, WE GET SOME. IT IS NOT
UNUSUAL FOR ME TO GET A TEXT
FROM THE STATE TREASURER, WHO'S
A FORMER BOE MEMBER, SAYING,
HEY, I TALKED TO SOMEBODY WHO
HAS A TAX ISSUE, AND WE'LL
FOLLOW UP ON THOSE IMMEDIATELY.
AS WELL. BUT WOULD IT SURPRISE
YOU? I MEAN, BASED ON WHAT YOU
JUST SAID AND I'M GLAD THEY HAVE
YOUR PERSONAL CELL NUMBER WHERE
THEY CAN TEXT YOU, BUT WOULD IT
SURPRISE YOU THAT BOARD MEMBERS
WHO YOU TALKED ABOUT THE
RELATIONSHIP CAN'T EVEN GET A
RESPONSE BACK FROM YOUR
DEPARTMENT WITH RESPECT TO AN
INQUIRY THAT A TAXPAYER MADE? I,
I WOULD BE VERY SURPRISED. AND
IN FACT, I KNOW THIS ISSUE CAME
UP EARLIER AND EVEN BLOOMBERG
REPORTED, TRIED TO TRY TO FIND
SOMEBODY THAT DIDN'T RESPOND
AND, AND VERY DOGGED BLOOMBERG
REPORTER COULDN'T FIND ANYBODY
WHO MAYBE THEY SHOULD TALK TO
THE BOARD MEMBER WHO TOLD ME
ABOUT IT. I'D BE MORE THAN HAPPY
TO. I HAVE I HAVE TALKED TO THE
ONE BOE MEMBER I CALLED
SPECIFICALLY. I THINK, WHO WHOSE
DISTRICT OVERLAPS WITH YOURS AND
ASKED WHO I WANT TO KNOW. SO I
CAN FIX THE PROBLEM. AND THERE
WASN'T A RESPONSE OR SO ANYWAY.
BUT I'M I'M I'M DETERMINED. I'M
I'M DEDICATED AND THE DEPARTMENT
IS DEDICATED TO TRY TO RESPOND
TO EVERYBODY'S CONCERNS AS WELL
AS WE CAN AND TRY TO ADMINISTER
THE TAXES AS FAIRLY AND
EFFICIENTLY AS WE CAN. THAT IS
MY COMMITMENT TO YOU AND ARE WE
PERFECT? ABSOLUTELY NOT. BUT
WE'RE GIVING IT OUR VERY MUCH. I
APPRECIATE YOUR RESPONSE. ALL
RIGHT. THANK YOU. AND THEN YOU
ARE EXCUSED. BUT IF YOU DON'T
MIND WAITING AROUND UNTIL I'D BE
HAPPY TO, JUST IN CASE THERE'S
ADDITIONAL QUESTIONS FOR THE
ENTIRE PANEL. AND NOW WE ARE
HEARING FROM OUR FINAL PANELIST
FROM, MIRIAM BOUAZIZ. YES.
WONDERFUL. I'VE JUST MADE THE
GOOD MORNING CUT OFF. SO GOOD
MORNING, CHAIR. OH, THAT'S
RIGHT, COMMITTEE MEMBERS AND
ASSEMBLY MEMBER TANG, THANK YOU
FOR JOINING. MY NAME IS MIRIAM
BOUAZIZ AND I'M THE DIRECTOR OF
THE CALIFORNIA OFFICE OF TAX
APPEALS AS OF OCTOBER 1ST OF I'VE BEEN WITH
THE DEPARTMENT SINCE 2018. AND
CONGRATULATIONS. THANK YOU FOR
THE OPPORTUNITY TO APPEAR BEFORE
YOU AND HIGHLIGHT HOW OTT HAS
DEVELOPED SINCE THE PASSAGE OF
THE TAXPAYER TRANSPARENCY AND
FAIRNESS ACT OF 2017. CURRENTLY,
OTA HAS 119 PIS, INCLUDING NINE
VACANT POSITIONS. WHEN WE OPENED
OUR DOORS, WE WERE TRANSFERRED
33 EMPLOYEES FROM THE BOARD OF
EQUALIZATION AND WERE ALLOCATED
89 POSITIONS IN THE HEARINGS
DIVISION. THERE ARE 2926 PANEL
MEMBERS, THREE OF WHICH ARE
HEARING OFFICERS WHO HAVE AN
AUDIT OR CPA BACKGROUND, AND 23
ADMINISTRATIVE LAW JUDGES. WE
HAVE THREE OFFICES IN THE STATE
OF CALIFORNIA, ONE IN FRESNO,
ONE IN CERRITOS, WHICH IS IN LOS
ANGELES COUNTY, AND OUR
HEADQUARTERS IS IN SACRAMENTO.
FRESNO IS ONLY UTILIZED ON
HEARING DAYS. THE OFFICE OF TAX
APPEALS HAS A SINGLE STATUTORY
PURPOSE TO PROVIDE AN IMPARTIAL
AND ACCESSIBLE FORUM FOR THE
RESOLUTION OF STATE TAX DISPUTES
BETWEEN CALIFORNIA TAX PAYERS
AND THE STATE'S TAX AGENCIES.
HISTORICALLY, THE BOARD OF
EQUALIZATION RECEIVED AN AVERAGE
OF 120 APPEALS A MONTH, WITH AN
INVENTORY AT ANY GIVEN TIME OF
1200 APPEALS. OTA HAS RECEIVED
AN AVERAGE OF 217 APPEALS. A
MONTH IN THIS LAST FISCAL YEAR
ALONE. THIS IS UP FROM OUR
INITIAL FULL FISCAL YEAR, WHERE
WE AVERAGED 126 APPEALS A MONTH,
AND OUR CURRENT INVENTORY IS
1686. EACH CASE IS DECIDED BY A
PANEL OF TAX EXPERTS. THE
DEFAULT IS THREE PANEL MEMBERS.
BUT WE DO HAVE A SMALL CASE
PROGRAM WITH ONE PANEL MEMBER
THAT CAN MAKE THAT DECISION THAT
TAXPAYERS MAY OPT INTO. THE
PANELS ARE ASSIGNED AT RANDOM,
BUT EXPERTISE, SCHEDULING AND
INDIVIDUAL CASELOAD ARE TAKEN
INTO CONSIDERATION WHEN
ASSIGNING CASES. THE OFFICE OF
TAX APPEALS HAS A TAXPAYER
DRIVEN PROCESS. TAXPAYER HAS A
CHOICE OF REPRESENTATION. THEY
HAVE A CHOICE OF WHETHER OR NOT
IT'S ON THE WRITTEN RECORD, OR
IF THEY WANT TO ENGAGE IN AN
ORAL HEARING. THEY CAN ALSO
CHOOSE THEIR ORAL HEARING
LOCATION. TAXPAYERS MAY ALSO
REASONABLY EXTEND DEADLINES FOR
SUBMISSIONS AS NEEDED. WE HAVE
IN-PERSON HEARINGS AT ALL THREE
OF OUR OFFICES, AND WE ALSO
PROVIDE A VIRTUAL HEARING
OPTION. AND WE HAVE HEARINGS
EVERY SINGLE MONTH AS NEEDED.
THE MAJORITY OF APPEALS ARE
DECIDED ON THE WRITTEN RECORD.
PRIOR TO THE PANDEMIC, WE DID
NOT HAVE A VIRTUAL OPTION. IN
2022, THOUGH WE PIVOTED QUICKLY
TO ENSURE TAXPAYERS WHO OPTED TO
HAVE AN ORAL HEARING WERE ABLE
TO RECEIVE ONE. AND NOW VIRTUAL
HEARINGS ARE OUR MOST POPULAR
OPTION, FOLLOWED BY LOS ANGELES
AND SACRAMENTO. TAXPAYERS HAVE
ACCESS TO INTERPRETERS
THROUGHOUT THE PROCESS. AT ORAL
HEARING, AND THE FINAL OPINION
IS TRANSLATED UPON REQUEST. WE
ARE REQUIRED BY STATUTE TO ISSUE
A WRITTEN OPINION IN EVERY
SINGLE APPEAL. SO THE AVERAGE
TIME IT TAKES TO CLOSE A CASE IS
211 DAYS. THE AVERAGE TIMELINE
FROM SUBMISSION OF AN APPEAL TO
POSTING OF AN APPEAL IS 15
MONTHS, AND THE PLURALITY OF
CASES ARE POSTED WITHIN NINE
MONTHS, SO NOT EVERY CASE GOES
THROUGH OUR FULL PROCESS. THAT'S
WHY THERE ARE DIFFERENT
TIMELINES. TO DATE, OTA HAS
ISSUED APPROXIMATELY 2800
OPINIONS. OTA PUBLISHES
APPROXIMATELY 414 OPINIONS A
YEAR ON AVERAGE. ISSUING AND
POSTING WRITTEN OPINIONS
PROVIDES CLARITY TO TAXPAYERS
AND GUIDANCE TO POLICYMAKERS.
ALL OPINIONS ARE POSTED ON OUR
WEBSITE MONTHLY. WE ALSO POST
ALL OF THE HEARING VIDEOS AND A
TRANSCRIPT FOR EVERY ORAL
HEARING THAT WE HAVE. THIS
ALLOWS TAXPAYERS, ESPECIALLY
THOSE WHO ARE SELF-REPRESENTED,
TO EASILY SEARCH OPINIONS ON THE
SAME ISSUE. WATCH A HEARING TO
FAMILIARIZE THEMSELVES WITH THE
PROCESS OR GO THROUGH THE
TRANSCRIPT. IF NEEDED. HAVING
WRITTEN GUIDANCE IS NOT ONLY
BENEFICIAL TO TAXPAYERS, BUT IT
ALSO HAS HELPED INFORM
POLICYMAKERS. I HAVE TWO NOTABLE
EXAMPLES. FIRST IS THE PASSAGE
OF THE CALIFORNIA FIRST TIME
ABATEMENT PROGRAM, AND THE
SECOND IS THE FRANCHISE TAX
BOARD. CHANGING POLICY ON THE
IMPLEMENTATION OF THE CALIFORNIA
EARNED INCOME TAX CREDIT TO
PROVIDE ELIGIBILITY FOR
INDIVIDUALS WHO EARN IHSS INCOME.
IF TAXPAYERS HAVE A QUESTION
ABOUT THE PROCESS, WE DO HAVE AN
OMBUDSPERSON TO HELP GUIDE THEM
THROUGH OR REFER THEM TO
RESOURCES AT OTHER STATE
AGENCIES. ALL OF OUR CALLS ARE
ANSWERED BY A LIVE PERSON OR
CALLS ARE RETURNED WITHIN TWO
DAYS. 55% OF THE INQUIRIES THAT
WE RECEIVE THAT WE RECEIVE ARE
RELATED TO APPEALS. AT OTA, AND
THE REMAINING ARE REFERRED TO
THE APPROPRIATE DEPARTMENT. AS
NICK ALLUDED TO, THERE ARE
SEVERAL DEPARTMENTS THAT ENGAGE
IN THE ADMINISTRATION OF TAX IN
THE STATE OF CALIFORNIA, SO IT
CAN BE VERY CONFUSING FOR
TAXPAYERS. SO WE LIKE TO DO WARM
HANDOFFS WHEN WE CAN TO THE
OTHER DEPARTMENTS, IF THEY'VE
CALLED US BY MISTAKE, OUR
OMBUDSPERSON PERSONALLY RESPONDS
TO ABOUT 150 CONTACTS A MONTH,
INCLUDING PHONE CALLS AND EMAIL.
BEYOND THE OMBUDSPERSON, OTA HAS
DEVELOPED A ONE PAGE APPEAL FORM
THAT IS EASY TO FILL OUT AND
PROVIDES US WITH ALL THE
NECESSARY INFORMATION TO FILE AN
APPEAL. BOTH THE FRANCHISE TAX
BOARD AND THE CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION INCLUDE THE
APPEAL FORM WITH EVERY
JURISDICTIONAL NOTICE THEY SEND
OUT TO TAXPAYERS. SO WE'RE VERY
GRATEFUL TO BOTH DEPARTMENTS
THAT HAVE PARTNERED WITH US TO
HELP PROVIDE ACCESS TO THE
APPEALS PROCESS. IT ALSO MAKES
IT LESS CONFUSING BECAUSE IT'S
ONLY SENT OUT WITH
JURISDICTIONAL DOCUMENTS THAT
ARE APPROPRIATE FOR APPEAL. AT
THE OFFICE OF TAX APPEALS, THE
OFFICE OF TAX APPEALS HAS A
SALESFORCE CLOUD BASED CASE
MANAGEMENT SYSTEM. IT TRACKS
VARIOUS DATA POINTS IN A SEMI
CUSTOMIZABLE. WE COLLECT OVER 50
DATA POINTS AND ARE ABLE TO
CREATE CUSTOMIZED DASHBOARDS AND
GRAPHS. WE MAKE THE DATA
AVAILABLE FOR PRESENTATIONS, OUR
ADVISORY COMMITTEE MEETINGS, AND
THE PRESS. WE HAVE DEMOED THE
SYSTEM FOR OTHER STATE AGENCIES
AND TAX APPEALS DEPARTMENTS. IN
OTHER STATES. WE ALSO ENGAGED IN
USER TESTING WHEN WE MAKE
UPGRADES TO OUR SYSTEM, AND WHEN
WE LAUNCHED OUR PORTAL IN 2022,
WE LAUNCHED IOTA, OUR ONLINE
APPEALS PORTAL. WE PROVIDE A
GUIDED PATH FOR TAXPAYERS SO
THAT THEY CAN FILL OUT AND GET
ALL THE INFORMATION NEEDED FOR
THEM TO FILE AN APPEAL. IT
ALLOWS TAXPAYERS,
REPRESENTATIVES AND TAX AGENCIES
TO FILE AN APPEAL. SEE THE
STATUS, THE DETAILS OF THEIR
APPEAL WITH INSTANTANEOUS
UPDATES, THEY CAN ASK QUESTIONS.
THEY CAN DOWNLOAD CASE FILES AND
MANAGE MULTIPLE APPEALS.
REPRESENTATIVES CAN MANAGE
MULTIPLE APPEALS FROM ONE
SCREEN, AS CAN TAXPAYERS. THE
PORTAL WAS BUILT WITH FEEDBACK
FROM BOTH PRIVATE AND PUBLIC
SECTORS, AND OTA HAS UPDATED THE
PORTAL WITH NEW FEATURES OR
RESOURCES. WHEN STAKEHOLDERS
HAVE REQUESTED US TO DO SO. WE
LOVE THAT ALLOWS FOR
INSTANTANEOUS COMMUNICATION. THE
MAIL DELAY SOMETIMES CAN BE HARD
FOR TAXPAYERS WHEN THEY RECEIVE
SOMETHING LATE, AND IT ALSO
EXPEDITES THE HEARING PROCESS
BECAUSE THERE IS AN INSTANT
EXCHANGE OF INFORMATION. SO
EVERYONE CAN RESPOND THEN MUCH
MORE QUICKLY. AS A NEW AGENCY
OTA, ONE OF OUR CHALLENGES WAS
WE HAD TO GET OUT THERE AND LET
PEOPLE KNOW WE EXISTED. SO WE
ENGAGE WITH STAKEHOLDERS,
LEVERAGE RELATIONSHIP AND
LEVERAGE RELATIONSHIPS TO
IMPROVE THE TAXPAYER EXPERIENCE.
OTA HAS AN ENGAGED ADVISORY
COMMITTEE WITH A BROAD RANGE OF
MEMBERS, INCLUDING MEMBERS FROM
THE ASSEMBLY, SENATE, CDTFA, FTB,
PRIVATE PRACTITIONERS FROM LAW
FIRMS, AS WELL AS ACCOUNTING
FIRMS. THE GROUP MEETS REGULARLY
TO DISCUSS OTA POLICIES AND
PROCEDURES, HAS INFLUENCED OUR
PROGRAMS, AND HAS HELPED TO
DEVELOP ALL OF OUR PROCEDURES.
WE HAVE ALSO GONE THROUGH
SUBSTANTIVE, LARGE REGULATORY
CHANGES THREE TIMES IN LESS THAN
SEVEN YEARS, WE'VE HAD NUMEROUS
INFORMAL AND FORMAL ECPMS AND
MADE CHANGES IN RESPONSE TO THE
VALUABLE FEEDBACK WE HAVE
RECEIVED FROM THE TAXPAYER
COMMUNITY. WE HAVE ALSO
IMPLEMENTED STATUTORY CHANGES.
FIRST IS THE SMALL CASE PROGRAM
I ALLUDED TO EARLIER, ALLOWING
ONE ALJ OR NON-ATTORNEY TAX
EXPERT TO SERVE AS THE PANEL AND
MAKE THE DECISION. A ONE CAVEAT
IS THAT THOSE CASES ARE NOT
ELIGIBLE TO BE PRECEDENTIAL.
THEY CANNOT HAVE PRECEDENTIAL
STATUS IF THEY ARE DECIDED BY
ONE INDIVIDUAL. AND THE SECOND
IS ALLOWING NON-ATTORNEY TAX
EXPERTS TO SERVE ON PANELS. THE
SMALL CASE PROGRAM ALSO ALLOWS
TAXPAYERS TO OPT IN TO AN
EXPEDITED PROCESS WHERE THEIR
APPEAL IS THEN DECIDED ON A
SHORTER TIMELINE. AS OF 2022,
NON-ATTORNEY TAX EXPERTS HAVE
SERVED ON PANELS AND THE
HEARINGS DIVISION CURRENTLY HAS
THREE NON-ATTORNEY TAX EXPERTS.
WHEN WE RECEIVE THAT INITIAL
TRANSFER, ALSO FROM THE BOARD OF
EQUALIZATION, AUDITORS WERE ALSO
TRANSFERRED ALONG WITH ATTORNEY
STAFF AS WELL AS SUPPORT STAFF.
SO WE HAVE HAD NON-ATTORNEY
EXPERTS SINCE THE START OF THE
OFFICE OF TAX APPEALS, JUST NOT
SERVING ON ACTUAL PANELS. OTA
HAS ALSO PARTNERED WITH THE
CALIFORNIA LAWYERS ASSOCIATION
TO CREATE AN AWARD WINNING PRO
BONO PROGRAM, CLA PROVIDES FREE,
LIMITED SCOPE LEGAL ADVICE FOR
APPEALS BEFORE THE OTA. THIS
INITIATIVE HELPS TAXPAYERS
NAVIGATE THE SUBSTANTIVE AND
PROCEDURAL ASPECTS OF TAX LAW
ESSENTIAL FOR THEIR APPEALS. IT
IS DESIGNED TO ASSIST THOSE WHO
CANNOT AFFORD AN ATTORNEY, OTA
INFORMS ELIGIBLE TAXPAYERS OF
THIS OPPORTUNITY AND DIRECTS
THEM TO CONTACT THE CALIFORNIA
LAWYERS ASSOCIATION DIRECTLY TO
SCHEDULE AN APPOINTMENT WITH
VOLUNTEER ATTORNEYS. OVER HALF
OF THE TAXPAYERS THAT HAVE TAKEN
ADVANTAGE OF THE PROGRAM HAVE
HAD THEIR APPEAL RESOLVED BEFORE
THE HEARING. DUE TO A WITHDRAWAL
BY THE TAX DEPARTMENT OR TAX
AGENCY. EARLY RESOLUTION IS
ALWAYS THE GOAL, SO WE'RE HAPPY
THE PROGRAM HAS PROVIDED
REPRESENTATION AT NO COST. THAT
SAVE RESOURCES AND TIME FOR BOTH
THE TAXPAYER AND THE STATE. JUST
AS DIRECTOR MADURO STATED, ONE
OF OUR LARGEST CHALLENGES HAS
BEEN HIRING, ESPECIALLY SINCE WE
HAD SUCH A TRUNCATED TIMELINE TO
HIRE A LARGE AMOUNT OF
INDIVIDUALS. AND BECAUSE WE HAVE
SUCH A LARGE AMOUNT OF OUR
DEPARTMENT IS STAFFED BY HIGHLY
SKILLED TAX ATTORNEYS COMPETING
WITH PRIVATE WHEN THE SALARIES
ARE NOT IN THE SAME REALM, EVEN
HAS BEEN CHALLENGING. WE'VE HAD
MANY PEOPLE INTERVIEW AND WE'VE
MADE OFFERS AND THEN THEY'VE
DECLINED. WHEN THEY'VE SEEN WHAT
THE SALARY IS GOING TO BE. SO
THAT IS OUR LARGEST CHALLENGE IS
TO KEEP OURSELVES STAFFED. AND
AS WE ALSO COMPETE WITH THE
OTHER TAX AGENCIES FOR THAT
TALENT. SO I WELCOME ANY
QUESTIONS FOR THE COMMITTEE.
THANK YOU FOR ALLOWING ME TO BE
HERE. THANK YOU VERY MUCH. SO TO
SERVE ON A REGULAR OTA PANEL,
WHAT ARE THE WHAT ARE THE WHAT'S
THE TYPE OF EXPERTISE THEN? SO
IN STATUTORILY YOU HAVE TO HAVE
FIVE YEARS OF TAX EXPERIENCE
ALREADY PRIOR. SO YOU COULDN'T
COME IN AS A NEW ATTORNEY OR A
NEW AUDITOR. BUT GENERALLY DUE
TO THE LEVEL OF CLASSIFICATIONS
THAT WE UTILIZE, MOST PEOPLE
HAVE DECADES OF EXPERIENCE PRIOR
TO COMING ON EACH OF OUR
ADMINISTRATIVE LAW JUDGES AND
OUR AUDITORS, BECAUSE WE
GENERALLY HIRE DUE TO THE
COMPLEXITY OF OUR CASES, SENIOR
ADMINISTRATIVE LAW JUDGES, AS
WELL AS BUSINESS TAX SPECIALIST,
LUZ RIVAS AND PROGRAM SPECIALIST
THREES. SO OUR AVERAGE PERSON
BUT THE MINIMUM IS FIVE YEARS OF
EXPERIENCE TO JOIN OKAY. AND
THEN DOES OTA HAVE THE AUTHORITY
TO INVALIDATE REGULATIONS
PROMULGATED BY ANOTHER STATE
AGENCY OR DEPARTMENT. WE DO NOT
BELIEVE WE DO. WE ACTUALLY WENT
THROUGH INTERESTED PARTIES
MEETING WHERE WE WERE GOING TO
PLACE THAT IN OUR REGULATIONS,
STATING WE DIDN'T BELIEVE WE HAD
THAT AUTHORITY. STAKEHOLDERS DID
REACH OUT TO US AND TELL US THAT
THEY DID NOT AGREE WITH THAT
ASSERTION. SO THEN WE WENT TO
THE AG'S OFFICE AND WE ARE
AWAITING AN OPINION FROM THEM OF
WHETHER OR NOT WE HAVE THAT
AUTHORITY. WE ARE ONE OF THE
OLDEST REQUESTS RIGHT NOW ON THE
WEBSITE, SO WE'RE HOPING WE GET
THAT SOON SO THAT WE CAN SHARE
IT WITH EVERYONE. ALL RIGHT, MR.
GIBSON, THANK YOU VERY MUCH.
IT'S GREAT SEEING YOU AGAIN.
THANK YOU. THANK YOU VERY MUCH
FOR YOUR PRESENTATION. I JUST
HAVE MAYBE 1 OR 2 QUESTIONS FOR
CLARIFICATION. YOUR
ADMINISTRATIVE LAW JUDGES, WHAT
IS THE DENIAL RATE? OH, WE DO
NOT TRACK THE DENIAL OF WIN LOSS
RATIO. IF PEOPLE HAVE ASKED, WE
DID DISTRIBUTE AN ARTICLE THAT
WAS WRITTEN BY BLOOMBERG WHERE
THERE WAS A COUNT DONE EARLY ON
IN OTA'S EXISTENCE. I BELIEVE
FROM LOOKING IT OVER, I READ
THAT IT WAS PRETTY SIMILAR TO
THE BOARD OF EQUALIZATION WIN
LOSS RATIO, WITH US SLIGHTLY
HAVING A SLIGHTLY HIGHER WIN
RATIO, BUT WE DON'T TRACK THAT.
OUR GOAL IS TO BE LEGALLY
CORRECT. OKAY, MY LAST QUESTION
BECAUSE AGAIN, I APPRECIATE YOUR
PRESENTATION. SO ONCE A TAXPAYER
IS DENIED, WHAT WHAT IS THE
RECOURSE FROM THE TAXPAYERS.
WHAT HAPPENS AFTER THAT DENIAL
FROM THE ADMINISTRATIVE LAW
JUDGES ON THEIR PARTICULAR CASE.
CAN YOU ILLUMINATE FOR ME WHAT
THAT PROCESS LOOKED LIKE? SO WE
HAVE A PETITION FOR REHEARING
PROCESS. SO FOLLOWING THEM,
RECEIVING THEIR OPINION WHERE
THEY DID NOT PREVAIL, THEY CAN
FILE A PETITION FOR REHEARING
AND HAVE THEIR APPEAL LOOKED AT
ONCE MORE. ONCE THEY'VE
EXHAUSTED THAT, THEY WOULD HAVE
TO, THE TAX WOULD BE DUE, BUT
THEY COULD ENGAGE WITH THE
PROGRAMS THAT DIRECTOR MADURO
ALLUDED TO, WHICH BOTH FTB AND
CDTFA HAVE OF PAYMENT PLANS,
OFFER AND COMPROMISE. ALSO,
DURING THE PETITION FOR
REHEARING PROCESS, SOMETIMES
WHEN TAXPAYER OR TAX AGENCY
FILE, THEY CAN GO BACK INTO
SETTLEMENT AND THEN THE CASE
SETTLES. WITHOUT OUR OUR
DECISION WILL BE POSTED. BUT
WHATEVER THE SETTLEMENT
AGREEMENT, IF THEY MAKE ONE GOES
FORWARD. SO WHAT YOU JUST
DESCRIBED IS FINAL. BASICALLY
IT'S FINAL. IT'S FINAL. YES. SO
THAT THEY HAVE NO. SO THEY HAVE
NO RECOURSE IN TERMS OF TAKING
IT TO COURT. OH THEY MAY ALWAYS
GO TO COURT. THEY CAN SKIP US
AND GO TO COURT. THE COURT LOOKS
AT THESE CASES DE NOVO AT THEIR
OWN EXPENSE. YES, WE ARE A
PREPAYMENT FORUM THAT EXISTS.
BUT COURT OBVIOUSLY YOU'D HAVE
TO PAY AND OF COURSE THAT'S
EXPENSIVE AND YOU'D HAVE TO PAY
THE TAX. THEY HAVE TO PAY THE
TAX. BUT A COURT CAN OVERTURN
THAT. YOUR DECISION. YES THEY
MAY. HOW MANY CASES HAVE
ACTUALLY HOW MANY BUSINESSES
HAVE ACTUALLY DONE THAT? I'M
JUST CURIOUS, ARE YOU AWARE THAT
I'M AWARE OF I DON'T KNOW OF ANY
BUSINESSES. THERE WAS ONE CASE
THAT WENT TO COURT, A TRUST
CASE, AND THEY AFFIRMED ON EVEN
THOUGH THEY DIDN'T HAVE TO, AND
USED THE ANALYSIS FROM OUR
OPINION TO AFFIRM. SO THEY
UPHELD YOUR DECISION. BUT IT
WASN'T A BUSINESS. IT WAS A
TRUST CASE. OKAY. BUT STILL.
YES. YEAH. OKAY. ALL RIGHT. SO
WE HAVE THE OPPORTUNITY TO BRING
UP THE PANEL MEMBERS. IF YOU
HAVE ADDITIONAL QUESTIONS, I
DON'T KNOW, ADDITIONAL QUESTIONS
OKAY. WELL THANK YOU VERY MUCH.
SO MUCH. AND WE WILL NOW
TRANSITION TO THE PUBLIC COMMENT
PORTION OF OUR AGENDA TO ENSURE
THAT EVERYBODY WHO WISHES HAS A
CHANCE TO SPEAK. WE WILL BE
LIMITING PUBLIC COMMENT TO TWO
MINUTES PER PERSON. ADDITIONALLY,
THE COMMITTEE IS ACCEPTING
WRITTEN PUBLIC COMMENTS. SO
PLEASE CONSIDER THAT OPTION IF
YOU WOULD LIKE TO PROVIDE
GREATER DETAIL. AND MEMBERS OF
THE PUBLIC ARE WELCOME UP. MADAM
CHAIR, AS THE PUBLIC IS COMING,
CAN WE MAKE SURE THAT I KNOW
THERE WAS A LOT OF INFORMATION
THAT I GUESS MYSELF AND YOU AND
MR. TÍNH COULD NOT GET OUT OF
THE PANEL, AND THE PANEL
INDICATED THAT THEY WOULD BE
MORE THAN HAPPY TO SUPPLY THAT
INFORMATION TO US. SO CAN YOU
REAFFIRM THEY WILL SUPPLY THAT
INFORMATION TO US IN A VERY
TIMELY MANNER FORTHWITH? ALL
RIGHT. WE HAVE IN WRITING AND I
THINK THE LA Þ ALSO IN WRITING,
IN WRITING TO THE COMMITTEE THAT
WOULD BE THAT WOULD BE THANK YOU
VERY MUCH. THEY'RE ALL SHAKING
THEIR HEADS. YES. OKAY. GOOD
AFTERNOON. MY NAME IS JOAN
ARMENTA ROBERTS AND I'M WITH CAL
TAX. AND I WANT TO GIVE YOU A
REALLY QUICK BACKGROUND. SO YOU
KIND OF KNOW WHERE I CAME FROM.
I STARTED MY CAREER AS A SALES
AND USE TAX AUDITOR WITH THE
BOARD OF EQUALIZATION, AND I
ALSO WORKED FOR ONE OF THE
ELECTED BOARD MEMBERS AND THEN
WENT ON TO WORK AT TWO OF THE
LARGE BIG FOUR ACCOUNTING FIRMS
AND NOW, ALONG WITH CAL TAX,
WORKING PART TIME, I REPRESENT
VERY SMALL BUSINESSES. AS A
CONSULTANT, I HAVE MY OWN
CONSULTING BUSINESS, SO JUST
KIND OF I HAVE THAT
INSTITUTIONAL KNOWLEDGE OF
EVERYTHING THAT'S BEEN DISCUSSED
TODAY. THE MOST SIGNIFICANT
CHANGE THAT TAXPAYERS HAVE
EXPERIENCED WITH THE EMERGENCE
OF THE EMERGENCE OF THE K¾T AFA
IS THE LACK OF OVERSIGHT AND
LACK OF ADVOCACY FOR TAXPAYERS.
LET ME EXPLAIN THIS. THERE'S
JUST A FEW CASES THAT I'VE SEEN
AND I'M AWARE OF, AND THE
BIGGEST EXAMPLE IS THE
REGULATORY PROCESS RIGHT NOW
DOES NOT INCLUDE AN UNBIASED
THIRD PARTY REVIEW. SO
CURRENTLY, WHEN THE CDTFA MAKE
THE REGULATORY CHANGES, THEIR
PROPOSED AMENDMENTS AND THEY
ALLOW TAXPAYERS TO WEIGH IN AND
ENCOURAGE THEM TO SEND IN THEIR
COMMENTS, BUT THEIR COMMENTS ARE
REGULARLY ARE NOT VERY OFTEN
ACCEPTED. AND SO THEIR OPTION
THEN IS TO, YOU KNOW, THEY THEY
HAVE INTERESTED PARTIES,
MEETINGS AND AFTER THAT THEIR
OPTION IS TO ASK FOR A PUBLIC
HEARING. BUT THE SAME STAFF HOLD
THE PUBLIC HEARING. SO IT IS
KIND OF LIKE THEY MAKE THE LAW
AND THERE'S NO THERE'S NO ONE
THAT OVERSEES IT. SO I THINK
THERE SHOULD BE AN INDEPENDENT
THIRD PARTY ASSIGNED TO REVIEW
BOTH SIDES AND MAKE THE FINAL
DECISION. A SECOND EXAMPLE IS
CHANGING LONG STANDING POLICIES,
WHICH YOU'VE DISCUSSED ALREADY.
ONE WAS THE ATTEMPT TO CHANGE
THE AUDIT MANUAL, AND IT WAS
CHALLENGED AS AN UNDERGROUND REG.
AND THE CHANGE WAS STOPPED. IN
ADDITION, RIGHT NOW THERE'S A
SECOND. THERE'S A SECOND CHANGE
IN POLICY CURRENTLY BEING
CHALLENGED AS AN UNDERGROUND
REGULATION, WHICH WAS ALLUDED
TO, AND A TAXPAYER IS TAKING IT
TO COURT AND WITHOUT OVERSIGHT.
THIS WILL LIKELY CONTINUE AS
THERE APPEARS TO BE A DESIRE TO
FLIP DECISIONS MADE IN THE PAST
BY CREATING NEW POLICIES WITHOUT
STATUTORY OR REGULATORY
AUTHORITY. A THIRD ISSUE THAT
HAS EMERGED IS THE ATTITUDE OF
AUDITORS AND OTHER PERSONNEL.
THE TAXPAYERS NO LONGER HAVE
ANYONE TO RUN TO GET HELP IF
THEY DISAGREE WITH AN AUDIT OR
DECISION MADE BY STAFF, AND THE
STAFF KIND OF FEEL LIKE THEY
DON'T HAVE, THEY DON'T HAVE
ANYBODY TO ANSWER EITHER. AND
I'M TALKING ABOUT THE I DEAL
WITH TAX OR AUDITORS THROUGHOUT
THE STATE. A COMMON RESPONSE,
TAXPAYERS ARE TOLD, IS IF YOU
DISAGREE, YOU CAN APPEAL TO
APPEAL. AN AUDIT IS A LONG AND
ARDUOUS PROCESS THAT MANY
TAXPAYERS CANNOT AFFORD. I'M
GOING TO HAVE TO ASK YOU TO WRAP
IT UP, PLEASE. OKAY. I'M SORRY.
ASK YOU TO WRAP IT UP. OKAY. I'M
SORRY. THE RECENT THE MOST
RECENT TAXPAYER BILL OF RIGHTS
HEARING, THERE WAS A LOT OF
TAXPAYERS THAT COMPLAINED ABOUT
NOT BEING TREATED FAIRLY AND SO
I HAPPEN TO KNOW WHO TO GO TO.
AND I GET I KNOW MR. GONZALEZ IS
GREAT. SHE'S VERY RESPONSIVE.
THERE'S PEOPLE AT THE HIGHER
LEVEL, BUT I DON'T LIKE TO HAVE
TO TAKE IT TO THAT LEVEL. SO I
THINK THIS NEEDS TO BE RESOLVED
AT A LOWER LEVEL. THANK YOU.
THANK YOU VERY MUCH. HI, GINA
RODRIGUEZ, I'M A PRINCIPAL AT
RYAN LLC. I'M IN THEIR ADVOCACY
SERVICES AREA. WE ARE NOT
SUBJECT TO SARBANES-OXLEY ACT,
SO WE ARE ALLOWED TO TRY TO HELP
GOVERNMENT IMPROVE PROCESSES AND
ENSURE TAXPAYER RIGHTS ARE
PROTECTED. JUST TWO VERY QUICK
ISSUES. I HOPE NO ONE TODAY
DISCUSSED THE HIGH NUMBER OF
APPEALS THAT ARE WITHDRAWN FROM
THE OTA, AND I THINK OTA IS
DOING EITHER A REALLY GOOD JOB
TRYING TO ENSURE THAT TAXPAYERS
UNDERSTAND WHAT THE WHAT THE
ISSUE IS, BUT I PULLED SOME
NUMBERS AND IN 2018 TO 2022, SO
FOR A FIVE YEAR PERIOD, FTB AND
I DON'T HAVE CDTFA, BUT FTB HAD
PULLED WITHDREW FROM THE OTA
2900 CASES, SO 2900 APPEALS. AND
AGAIN, WE HAD ALL TALKED ABOUT
MAKING SURE WE RESOLVE CASES AT
THE LOWEST POSSIBLE LEVEL
BECAUSE IT'S MUCH MORE EFFECTIVE
AND EFFICIENT FOR THE STATE AS
WELL AS MUCH CHEAPER FOR
TAXPAYERS. SO THAT WAS SOMETHING
OF CONCERN. HIGH NUMBER OF
APPEALS BEING WITHDRAWN FROM
FROM THE OTA. THE SECOND ISSUE
IS WE HAVE A DEEMED DENIAL
PROCESS FOR THE FTB FRANCHISE
TAX BOARD. WE ALSO HAVE ONE FOR
THE CDTFA, BUT THEY DON'T MATCH.
SO IF I AM IN APPEALS OR EXCUSE
ME IF I HAVE A REFUND CLAIM AT
FTB AND SIX MONTHS GO BY, I CAN
APPEAL THAT TO THE OTA OR I CAN
GO TO COURT IF I HAVE A REFUND
CLAIM AT CDTFA AND SIX MONTHS GO
BY. IT IS ALSO DEEMED DENIED
JUST LIKE IT IS AT THE FTB. BUT
I HAVE NO OPTION TO GO TO THE
OTA. I HAVE TO GO TO COURT AND
THIS IS SIMPLY WRONG FOR
TAXPAYERS. WE SHOULD BE GIVEN
THE OPTION TO GO TO THE OTA IN
THESE SITUATIONS. THANK YOU VERY
MUCH. THANK YOU VERY MUCH. MADAM
CHAIR, MR. GIBSON, MEMBERS OF
THE COMMITTEE STAFF, MARK ÁP,
I'M HERE ON BEHALF OF THE
CALIFORNIA ALLIANCE OF TAXPAYER
ADVOCATES. IT IS A TRADE
ASSOCIATION REPRESENTING
PROPERTY TAX PRACTITIONERS.
THANK YOU FOR THE OPPORTUNITY TO
SPEAK. I NOTE THAT THE TITLE OF
THE HEARING IS EVALUATING
CALIFORNIA'S NEWEST TAX
AGENCIES. YET MUCH OF THE
HEARING WAS DEDICATED TO
RELITIGATING ACA 11 AND PAST TAX
AGENCIES. I WANT TO REMIND THE
COMMITTEE THAT ACA 11 CAME
BEFORE THIS COMMITTEE ON TWO
OCCASIONS. IT NEVER PASSED, AND
THERE WAS CONSIDERABLE
OPPOSITION, NOT ONLY FROM CAÑADA
MY CLIENT, BUT FROM OTHER
TAXPAYER ORGANIZATIONS AS WELL
AS THE CALIFORNIA ASSESSORS
ASSOCIATION. AND WHILE THERE
WERE MANY REASONS FOR THE
OPPOSITION TO THAT MEASURE, THE
PRIMARY REASON FOR THE
OPPOSITION WAS THAT THE EXISTING
BOE IS A BODY THAT IS HAS
ELECTED MEMBERS. THE STATE
COMPTROLLER AND FOUR BOE MEMBERS
AND TAXPAYERS, AS WELL AS
ASSESSORS, APPRECIATE THE FACT
THAT WE HAVE ELECTED OFFICIALS
TO WHICH WE CAN PETITION, AND
THE FACT THAT WE HAVE PARTIES
THAT ARE OFTENTIMES AT ODDS,
BOTH OPPOSING THAT MEASURE AND
SUPPORTING THE BOE. I HOPE THE
COMMITTEE WILL TAKE NOTE OF
THAT. THANK YOU FOR YOUR TIME.
THANK YOU VERY MUCH. AND I WOULD
JUST LIKE TO ASK IF ANYBODY
WOULD LIKE TO RESPOND TO THE
FROM THE PANEL. WOULD YOU LIKE
TO RESPOND TO ANY OF THE PUBLIC
COMMENTS? NO NEED TO, BUT IF YOU
WOULD LIKE TO, IF YOU HAVE
SOMETHING TO RESPOND, MR.
MADURO'S. I WOULD JUST THANK THE
SPEAKERS FOR THEIR COMMENTS AND
SAY THAT WE, YOU KNOW, BOTH WITH
MR. ROBERTS AND MR. RODRIGUEZ,
WE DEAL WITH BOTH OF YOU AND,
YOU KNOW, WE CONTINUE TO TRY TO
RESOLVE ANY ISSUES THAT THAT YOU
MAY HAVE. I DON'T NECESSARILY
AGREE WITH THE CHARACTERIZATION
OF THE, YOU KNOW, OF SOME OF THE
COMMENTS, BUT I DO THINK, YOU
KNOW, AGAIN, IT'S A LARGE
DEPARTMENT AND YOU'RE GOING TO
HAVE SOME OUTLIERS. AND WE TRY
AND RESOLVE THOSE WHEREVER
THEY'RE RAISED. SO PLEASE
CONTINUE TO WORK WITH US AND
WITH TRISTA. AND WHO'S THE CHIEF
DEPUTY AT THE DEPARTMENT TO TRY
TO RESOLVE THOSE. AND WITH
REGARD TO GINA RODRIGUEZ'S
COMMENT ABOUT THE DIFFERENCE
BETWEEN THE FRANCHISE TAX BOARD
DEEMED DENIAL AND THE CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION, THERE ARE
SEVERAL AREAS OF LAW THAT
ACTUALLY HAVE DIFFERENCES
BETWEEN THE TWO, AND I THINK
THAT STEMS FROM PART OF THE
APPEALS PROCESS PRIOR BEING A
VERTICAL FOR THE APPEALS THAT
WERE EMANATING BUSINESS TAX
APPEALS VERSUS FRANCHISE AND
INCOME TAX APPEALS. SO THAT'S
SOMETHING IF POLICYMAKERS WOULD
LIKE TO LOOK AT AND MAKE THE
RULES MORE IN LINE. THERE ARE
ACTUALLY SEVERAL DIFFERENCES IN
LAW THAT I'D BE HAPPY TO DISCUSS
OUTSIDE OF THIS. AND I WOULD SAY
THAT YOU KNOW, WE'RE TRYING TO
RESOLVE THAT REALLY IS A
COMMENT. I THINK, LARGELY AROUND
THE TECHNOLOGY TRANSFER
AGREEMENTS, WHERE WE RECOGNIZE
WE HAVE REFUND CLAIMS THAT HAVE
BEEN SITTING FOR QUITE A WHILE.
I'M NOT SURE IT'S IN THE STATE'S
INTEREST. I THINK IT'S IN THE
STATE'S BEST INTEREST TO TRY TO
RESOLVE THAT THROUGH THE
REGULATORY PROCESS. AND GET A
PROCESS IN PLACE, RATHER THAN
JUST SHIFT THE PROBLEM. THE
DIFFICULTIES TO OTA. ALL RIGHT.
THANK YOU. OKAY. ANY. ALL RIGHT.
YOU WANT TO SAY SOMETHING THERE,
MR. GIBSON? NO, I WAS I WAS
GOING TO USE IT FOR MY CLOTHES
FOR THE FINAL COMMENT. WELL, HOW
ABOUT YOU CLOSE WITH YOUR FINAL
COMMENTS? THANK YOU VERY MUCH. I
APPRECIATE THAT, AND THIS HAS
CERTAINLY BEEN ENLIGHTENING FOR
ME. AND I CERTAINLY APPRECIATE
THE ROBUST CONVERSATION WE'VE
HAD. AND THANK YOU FOR THE
AGENCIES. YOU HAVE CERTAINLY
SHARED A GREAT DEAL OF LIGHT.
I'VE TAKEN A LOT OF NOTES AND
CERTAINLY FOR ME IT'S IMPORTANT
THAT WE DO. SOME FOLLOW UP AND
GET YOUR FEEDBACK AND ALSO
ANSWERS THE QUESTIONS YOU WERE
NOT ABLE TO ADDRESS. BUT IT ALSO
POINTS TO THE PUBLIC COMMENTS.
AGAIN, OVERSIGHT AND
ACCOUNTABILITY THAT WORD
CONTINUES TO RING LOUD AND CLEAR
IN MY MIND THAT WE NEED TO MAKE
SURE WE HAVE THAT BECAUSE WE AS
ELECTED, WHETHER IT'S THE BOE
MEMBERS OR JUST ASSEMBLY MEMBERS
OR SENATORS, WE ARE ACCOUNTABLE
TO THE TO OUR CONSTITUENTS. AND
OUR CONSTITUENTS ARE THE PEOPLE
WE REPRESENT. THEY HAVE THE
RIGHT AND THE RESPONSIBILITY TO
BE ABLE TO REACH OUT TO US AND
CALL OUR OFFICES AND GET THE
RESPONSE, OR AT LEAST THE DIALOG
STARTED WITH RESPECT TO ANY
ISSUES THEY MAY HAVE. AND I
DON'T SEE THAT. AND WE'RE
TALKING ABOUT THE LARGEST
TAXPAYING, YOU KNOW,
CALIFORNIA'S LARGE. WE'RE
TALKING ABOUT THE STATE BOARD OF
EQUALIZATION WAS CREATED FOR A
TIME TO HOLD THESE ELECTED
OFFICIALS ACCOUNTABLE, AND THEY
SHOULD BE HELD ACCOUNTABLE. AND
I DON'T BELIEVE THAT IT WAS IN
THE BEST INTEREST OF OUR WELL, I
DON'T BELIEVE THAT OUR
FOREFATHERS ENVISIONED TO HAVE A
TAX AGENCY WITH NO
ACCOUNTABILITY. IT SHOULD BE
CERTAINLY HAVE ELECTED
REPRESENTATION FROM PEOPLE WHO
ELECT THEM AND HAVE AN
EXPECTATION AND THIS DOESN'T.
AND I LOOK FORWARD TO THE FOLLOW
UP AND THE DIALOG AND THANK THE
CHAIR FOR ONE, CALLING THIS
INFORMATIONAL HEARING. AGAIN, I
THINK IT WAS MOST ENLIGHTENING.
OKAY. AND I WOULD LIKE TO THANK
ALL THE COMMITTEE MEMBERS THAT
SHOWED UP TODAY. AND CERTAINLY
THE STAFF WORKED VERY HARD.
THANK YOU TO THE PANELISTS ALSO.
BUT MR. GIBSON, I REALLY WANT TO
THANK YOU BECAUSE AGAIN, THIS
THIS BIG CHANGE TOOK PLACE IN
2017 AND TO OUR KNOWLEDGE, WE
HAVE NOT HAD A MEETING LIKE THIS
WHERE WE'RE REALLY TALKING ABOUT
HOW HAS HOW HAVE THINGS
PROGRESSED WITH CDTFA AND OTAS
SINCE 2017. SO THIS MEETING,
THIS OVERSIGHT HEARING WAS
REALLY THIS HEARING WAS REALLY
LONG OVERDUE. AND I WANT TO
THANK YOU FOR REQUESTING IT. AND
WE WILL CONTINUE THE
CONVERSATION. I ALSO WANT TO
THANK THE SPEAKER'S OFFICE FOR
APPROVING IT AND APPRECIATE YOU
FOR YOUR LEADERSHIP AS WELL. ALL
RIGHT. OKAY. AND WITH THAT, THIS
MEETING IS ADJOURNED.