In our January 2017 issue, we provided you with an overview of the Taxpayers’ Bill of Rights Hearing held on December 8, 2016.
This month, we share some of the responses provided regarding Power of Attorney, Level of Service, Policy Regarding Other State Tax Credit, the Texas Franchise Tax, and the Failure to Respond Penalty.
Power of Attorney Declaration (POA) Submissions
Our goal is to provide representatives with timely assistance to help their clients resolve their tax matters. We sincerely appreciate the feedback that has been provided. It’s made us look closer at the contacts we’ve received and our procedures. We agree that we can do better in this area and have obstacles to overcome. We are committed to making improvements in order to provide the level of service representatives have traditionally received from us. Improving the POA process is a top priority for us and we are taking both short and long-term steps, investing the time and effort necessary to make changes so that representatives are able to conduct business with us efficiently and effectively.
In the short term, to decrease processing timeframes we have hired more than 50 additional POA processing staff, beginning in July, 2016. We have also improved procedures to enable staff to interact with representatives quickly and easily, and in most cases without a processed POA declaration. This is done through the process of “implied consent” which occurs when a taxpayer’s representative can provide enough information from an FTB notice or a taxpayer’s account to indicate that the representative has authorization to discuss specific account information. In general terms, to assist a representative and establish authorization, our customer service staff need to verify the representative’s identity and establish the right-to-know, using details from an FTB notice, transaction, or sufficient taxpayer information and details. We recommend representatives obtain details from their client prior to calling us.
While the concept of implied consent is not new at FTB, given the changes to our POA process, many practitioners now rely more on implied consent to resolve their clients’ issues. For this reason, we assembled an enterprise-wide team early this year to review our implied consent procedures. Team members from Filing, Collections, Legal, Disclosure, Audit and the Taxpayers’ Rights Advocate participated. We have clarified and simplified our procedures and are currently in the process of training our contact center staff, supervisors and managers. Our goal is to ensure that we provide representatives with consistent service, regardless of which business area they contact. If at any time you are unable to obtain information using implied consent and feel that you have provided the information necessary to do so, you may escalate the contact to a supervisor or manager.
We also understand that implied consent may not be the solution for every practitioner and every situation; there will always be a need for POAs. For this reason, longer-term efforts are underway to improve and address other areas of concern you have voiced with POA declarations. We have embarked on a comprehensive review of our POA process that began in September 2016. We are committed to making improvements in the POA process where possible. We are carefully looking at all phases of the POA process, including the various POA forms, different privileges based on need, and access to MyFTB. We are identifying areas that are “pain points” for the tax professional and working to alleviate them so we can help you serve your clients better.
Finally, if you have submitted a POA for processing and it has not been worked within our processing timeframes, you may contact us and request expedited processing.
Level of Service
We understand the importance of our Practitioner Hotline to you, especially during peak filing season. We are committed to providing an acceptable level of service and continuously seek out opportunities to improve our level of access and the service we provide to our customers.
While our permanent staffing levels for the Practitioner Hotline and average wait times have remained constant, we have added technology solutions which provide options for you to self-serve and more quickly resolve your clients’ issues. These include Live Chat, which has a high level of access, and Secure Chat, which allows you to discuss confidential taxpayer information with our customer service staff. While these new service channels are not intended to replace the traditional methods of communicating with us, they do offer our customers additional ways to contact us.
However, we understand that there will always be certain issues and circumstances that require direct phone contact with a customer service staff in a timely manner. We are adding processes across the department to better manage the flow of notices we send, which should help level out the volume of calls we receive, overall reducing wait times. We will also continue redirecting staff to the Practitioner Hotline during peak periods.
Finally, we have implemented a Customer Service Dashboard revising the Processing Time Frames page, to also include contact center wait times. Check out the Customer Service Dashboard article in this issue of Tax News.
Clarify Policy Regarding Other State Tax Credit and the Texas Franchise Tax
On January 12, 2016, we issued Technical Advice Memorandum 2016-01 indicating that payment of the Revised Texas Franchise Tax (RTFT) is not eligible for the other state tax credit (OSTC) for any taxable year because the RTFT is not a net income tax as required by Revenue and Taxation Code sections 18001 and 18002. Our prior guidance indicated the RTFT may be eligible for the OSTC in some cases based upon a factual analysis; however, this guidance was withdrawn by FTB Notice 2014-01 on January 17, 2014.
We drafted Legal Ruling 2017-01 that affirms the position taken in our Technical Advice Memorandum 2016-01 and provides an analysis and examples to give further guidance to taxpayers.
We received feedback from taxpayers following the issuance of Technical Advice Memorandum 2016-01, and we evaluated each of the legal arguments made in support of those taxpayers’ positions prior to drafting the legal ruling in an effort to ensure that the legal ruling was well reasoned and provided appropriate guidance to taxpayers.
In the event that a taxpayer relied upon our prior guidance in deciding to file a return claiming the OSTC for payment of the RTFT for tax years prior to 2015, such reliance will be one factor taken into consideration when determining whether cause has been shown to abate any penalties imposed as a result of the disallowance of the OSTC.
Failure to Respond Penalty
We currently impose a “failure to provide information requested/failure to file a return upon demand" penalty on any taxpayer that fails to provide requested information, or fails to file a return after notice and demand. The penalty is equal to 25 percent of the total tax liability assessed without regard to any payments or credits. This penalty may be waived for reasonable cause and not willful neglect.
In response to your concerns that a taxpayer may be assessed the penalty even though they have moved out of the state, it should be noted that the penalty is only applied if the taxpayer has a tax due and a filing requirement. Presumably, even if the taxpayer moved out of California, they would still be aware of their filing requirement in California, if any. Additionally, if that taxpayer can prove that the failure to file was due to reasonable cause and not willful neglect, the provisions of our statute allow the penalty to be abated in those cases.
We appreciate your concern and we are currently completing a comprehensive review of all penalties we assess. Once we’ve completed our review and determined where improvements can be made, we are committed to pursuing all avenues available to us, including possible legislation.
Susan Maples, CPA
Taxpayers' Rights Advocate
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