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California OTA Introduces New Rules for State Tax Appeals in 2019

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    The California Office of Tax Appeals (OTA) was created in 2017 when former governor Jerry Brown signed Assembly Bill (A.B.) 131, placing into effect new rules under the Taxpayer Transparency and Fairness Act. The Act created two organizations – the California Department of Tax and Fee Administration (CDTFA), and the OTA – which took on many of the functions that were once performed by the California Board of Equalization (BOE), underscoring the need for careful tax guidance. As its name suggests, the OTA’s main function is providing a platform by which California taxpayers can formally dispute, in the OTA’s words, “various taxes and fees administered by the CDTFA and the Franchise Tax Board” (FTB), which administers state income taxes. In January 2019, the state of California introduced new regulations (“the Rules for Tax Appeals”) that may impact taxpayers who file appeals or petitions for rehearing with the OTA.

    California OTA Adopts New Rules for Tax Appeals, Including Sales, Use, Franchise, and Income Taxes

    The new OTA guidelines apply to appeals arising from FTB or CDTFA decisions, including but not limited to those concerning:

    • California cannabis taxes
    • California cigarette and tobacco product taxes
    • California diesel fuel taxes
    • California franchise taxes
    • California hazardous substance taxes
    • California income taxes
    • California motor vehicle fuel taxes
    • California sales and use taxes
    • California use fuel taxes

    The full text of the updated Rules for Tax Appeals is available here on the OTA website. In particular, the following sections may be of interest to taxpayers:

    • Chapter 3 – Appeal Requirements and Procedures
      • Various sections of this chapter set forth the requirements for filing an appeal, the time limits for an OTA appeal (including deadline extensions), and the procedures for “perfecting” an appeal, which is the process of preparing an appeal for court. It also discusses evidentiary rules (such as rules concerning subpoenas and witnesses), the burden of proof, and what will happen if the case is dismissed, settled, or otherwise resolved.
    • Chapter 4 – Briefing Schedules and Procedures
      • This section deals with “briefs” (written legal documents) as they relate to OTA appeals. When it comes to California tax disputes, one of the most important briefs is the “opening brief,” which is what the OTA calls the initial package of information a taxpayer submits to begin the appeals process. The opening brief must contain the taxpayer’s contact information, an explanation of the factual reasons the taxpayer disagrees with the decision being appealed, and copies of the relevant tax notices, among other submission materials.
    • Chapter 5 – General Oral Hearing Procedures
      • As the OTA explains, “An oral hearing is your opportunity to present your case, by explaining the reasons for your appeal, calling witnesses, and presenting documents in support of your appeal directly to a panel of administrative law judges” (ALJs). Note that, while it is not mandatory to participate in an oral hearing, choosing not to do so will force the OTA to make a decision based solely on written documentation. Chapter 5 of the new rules sets forth updated OTA procedures for waiving or requesting oral hearings, responding to government notices, and presenting information and documents at OTA oral hearings.

    Our California Tax Audit Appeals Lawyers Can Help You File an Appeal with OTA

    California taxpayers have the right to appeal various tax decisions to the OTA, including FTB or CDTFA tax assessments, interest charges, and/or penalties associated with income taxes, sales and use taxes, and other types of state taxes. If the FTB or CDTFA has notified you that you owe taxes, interest, or fines to the state of California, and you disagree with the decision, you should discuss your legal options with the audit appeals and litigation attorneys at the Tax Law Office of David W. Klasing. Our tax audit lawyers have extensive experience assisting California taxpayers with all aspects of the appeals process, and dedicate ourselves to staying current on the latest legislative developments to provide our clients with cutting-edge strategic representation. To arrange a reduced-rate consultation with a CPA or audit appeals and litigation lawyer, contact us online, or call the Tax Law Office of David W. Klasing at (800) 681-1295.

    Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.

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