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California Abolishes Board of Equalization

by Scott Donald, Irvine, July 2017

 

The California Legislature approved a bill to do away with the state Board of Equalization (BOE), the only elected tax board in the nation. In its place will be two new tax departments: one to manage dozens of tax and fee programs; and the other to hear disputes from taxpayers.

 

The change to the property tax appeal process will only impact state-assessed valuation challenges. The majority of property tax appeals are handled at the county level. The bulk of BOE appeals are for sales and use, Franchise Tax Board issued taxes and other special taxes and fees.

 

Not a New Idea

 

California's Legislative Analyst's Office has been calling for dissolution of the BOE for decades. It was created in 1879 to ensure that county assessors fairly collected property taxes. Since then, it has grown into one of the main tax collection agencies in state government.

 

The move to abolish the Board comes after the California Department of Finance discovered a misallocation of $47.8 million in tax revenue, as well as accounting and administrative control deficiencies.

 

New Law

 

Governor Jerry Brown is expected to sign The Taxpayer Transparency and Fairness Act of 2017 into law. The elected BOE will continue hearing appeals through the end of this year. Over the next six months, the state plans to hire administrative judges. Three judge panels will begin hearing tax complaints on January 1, 2018.

 

The reorganization will not save taxpayers money. In fact, the legislation includes an extra $5 million to establish the Office of Tax Appeals.