The California State Board of Equalization is a state agency that is charged with the administration and enforcement of an array of tax duties in the state of California. The agency’s responsibilities cover four broad areas. These areas of responsibility are handling California, sales and use tax,state property taxes special taxes, and hearing appeals forfranchise and income tax collected by the Franchise Tax Board. The Board collects approximately $60 billion annually in business taxes, sales taxes, and taxes. The Board is unique because it is the only public tax board comprised of elected members.
There are four districts in the state of California with each sending a single member to represent its interests to the Board. Los Angeles is in a unique position because the city and towns in its immediate vicinity are divided between the first, third, and fourth districts. The First District stretches from northern L.A. County up the California coast. The Third District includes a significant portion of Los Angeles County including Los Angeles, Hidden Hills, Long Beach, Beverly Hills, West Hollywood, Santa Monica, and other nearby municipalities. The Fourth District includes a southern portion of L.A. County and stretches into extreme southern California. The elected, representative nature of the California BOE may make the body more responsive to public concern.
Cynthia Bridges was appointed the Executive Director of the State Board of Equalization in June 2012. However, her tenure in this role has come to an end. At a recent closed-session, it was announced that Ms. Bridges would continue to work with the California Board of Equalization in a consultant role until June 30, 2016. David Gau, the agency’s chief deputy director, was announced as Bridges replacement. by Chairwoman Fiona Ma.
The reassignment and eventual departure of Bridges were announced following “Discussion and action on personnel matters (Gov. Code, § 11126(a)).” This was the fourth item on the agenda during the recent March 30, 2016, closed session meeting.
While the exact reasons for the departure are not quite clear, some believe that the reassignment and delayed departure was motivated by a string of embarrassing scandals and mistakes that have recently plagued the Board. In a recent report California State Controller and former representative of the first district, Betty Yee, issued a report that showed the Board had bungled its finances. An internal accounting audit showed that agency staff apparently misdirected $47.8 million in California retail sales taxes to the state’s general fund. Furthermore, insufficient internal controls permitted employees to fail to reconcile travel expenses and to request salary advances without management approval.
A number of other scandals have also recently affected the Board perhaps motivating the change in leadership. In March 2016, a state auditor report rebuked the agency for a lack of internal control or cost expectations for projects that permitted a cost estimate of $17,000 to replace a single file room door. While the door was never built due to the cost concerns, the agency also failed to look into the reasons for the exorbitant cost or how management could bring these costs under control.
The California Board of Equalization also made headlines in early March due to alleged anti-Semitic remarks made by a board member in the presence of actor and movie state Rob Lowe. Lowe accused a board member of using the slur during a private meeting regarding a pending tax appeal on the sale of a home. The Board member claims that Lowe “misrepresented the facts” and made the remarks in retaliation against the Board member voting against Lowe’s tax appeal. Lowe prevailed in his appeal by a 3-2 vote netting the actora cost savings in excess of $500,000.
While we will probably never know the exact reasons behind the decision to alter the make-up of the California Board of Equalization leadership, it is hard to dismiss entirely the recent troubles and scandals had by the Board and its members.
However, if you are facing a California sales tax audit or considering a tax appeal, do not expect lenient or favorable treatment. If anything, the recent agency troubles may encourage auditors to take a more aggressive approach. Working with a California sales tax attorney can provide you with the insight and approach you need to file a successful appeal. The experienced tax professionals of the Tax Law Offices of David W. Klasing can represent you when facing an audit or an appeal. David Klasing has practiced tax law for more than 20 years and can put his experience as a former public auditor to work for you. To schedule a reduced-rate tax consultation at our Los Angeles or Irvine law offices call 800-681-1295 today.