On May 24, 2016, Jesse W. McClellan, Managing Partner, testified before the Members of the State Board of Equalization (Board) at the California Taxpayers’ Bill of Rights Hearings in Sacramento, California to address a variety of concerns he had with Board policies. Part of his testimony focused on procedural problems with appeals cases that are scheduled for hearings before the elected Members of the Board. Specifically, Mr. McClellan stressed the need to establish guidelines for appeals cases that are removed from the hearing calendar by Board staff.

A hearing before the elected Members of the Board is the final stage in the California sales and use tax administrative appeals process. It generally takes several years to reach a Board level hearing (more than 10 years in some cases), and the monetary and emotional burden on business operators throughout the process is significant. In short, by the time a case reaches a Board level hearing, our clients are generally very eager to have their case heard and concluded. Historically, however, the Board’s staff was permitted to unilaterally remove cases from the hearing calendar without providing any basis for the removal, and without providing any specific timeframe within which they were required to address their mysterious basis for removing the case. The practice significantly lacked transparency and it served to exacerbate the frustrations of our clients and other business-taxpayers that were impacted by the questionable policy.

Why should the Board’s staff be permitted to unilaterally remove cases from a calendar for an allegedly impartial hearing? Especially, when it’s being done without providing a reason for the removal, or a timeframe within which the case will be resolved or rescheduled! Taxpayers don’t get to do that, and if the process is impartial, why should the Board’s staff be permitted to do it? We decided the practice lacked transparency, was unreasonable, and unfair to California taxpayers and our clients, so we took action to do something about it.

As a result of our written submissions to the Board Members, the Taxpayers’ Rights Advocate Office, meetings with key Board personnel, and Mr. McClellan’s presentation before the Members of the Board, effective July 15, 2016, Board staff must now provide the underlining reason(s) behind their request to remove a case from the calendar. In addition, the matter must be addressed in writing by Board staff within 90 days from the date the notification was made to the business operator. We believe the new policy will help to ease tensions of business operators that were previously left in the dark, and it will help avoid significant further delays in the process. We applaud the Members of the Board, the Taxpayers’ Rights Advocate Office (in particular, Todd Gilman, Taxpayer Advocate Chief), and the Board’s staff for taking action on this matter. Sometimes a small change in procedure can make a big differences for taxpayers. This is one example.

McClellan Davis continues to actively seek out ways to help improve and create new policies, procedures, regulations and laws that will benefit business-taxpayers. Stay tuned for additional efforts that will come to fruition soon!