Advocate’s summary Taxpayers’ Bill of Rights Annual Report to the Legislature

Susan Maples, CPA
Taxpayers’ Rights Advocate

Members of the California Legislature:

When the Legislature enacted the Katz-Harris Taxpayers’ Bill of Rights Act in 1988, they placed guarantees in the law to ensure that the rights, privacy, and property of California taxpayers are adequately protected during the assessment and collection of taxes.

As the Advocate, I take my role seriously in ensuring that California’s taxpayers are treated fairly and their rights are respected. With this in mind, I am recommending that changes be made to the reporting relationship between the Advocate and its designee(s) for coordinating the resolution of taxpayer complaints and problems. I am working with our Legal and Executive Office to make the changes necessary to increase accountability and responsiveness to taxpayers’ and representatives’ concerns.

FTB focused a great deal of attention this past year on improving and streamlining its Power of Attorney (POA) process. A POA allows an authorized representative to communicate with FTB, receive confidential information, and take action on behalf of a taxpayer. Changes to our POA process that were put in place in 2017 initially led to POA processing times as high as 45 days and rejection rates that approached 60 percent. With the improvements now in place, I am pleased to report that most POAs are now processed within 5 business days or less and our rejection rates now have declined to only 26 percent. To further reduce the rejection rate, we continue to provide education and outreach to tax professionals on the most common reasons why POAs are rejected. Through these efforts, we hope to see lower rejection rates for POAs in the coming years.

We continue to look for improvements in the Filing Enforcement (FE) Program. This is a necessary program and one that brings a significant number of nonfilers into compliance each year. However, it also has the potential to create an undue burden on taxpayers, especially when inaccurate income information is used to generate an assessment and/or when notices do not reach taxpayers at their current mailing address. This can leave taxpayers frustrated, especially when the normal statutory timeframes for disputing an assessment have passed and involuntary collection may be underway.

The Federal H.R.1, Tax Cuts and Jobs Act (2017), also known as the TCJA, made significant changes to federal law, many of which California did not conform to. The changes which likely impacted the largest number of individual taxpayers were the changes to federal itemized deductions, beginning with the 2018 tax year. These changes required significant revisions to the forms used by taxpayers to reconcile their allowable federal and California itemized deductions. I am proud of the effort made by our Tax Forms Development and Distribution team in revising our existing forms. They did an exemplary job, reformatting and expanding the forms as needed, allowing taxpayers to easily identify all California adjustments to corresponding federal line items listed on the form. We also expanded our education and outreach, and worked closely with our Media partners about the new tax law, helping to ease the burden of what many felt was the most challenging tax filing season in several decades.

Finally, I would like to thank the many tax professionals, external stakeholders, and other partners who have worked alongside me this past year to make real change possible. Together, we faced many challenges navigating an ever-changing and complex tax landscape. I am proud of the way we have maintained our high standards for quality work and service to California’s taxpayers. The positive outcomes would not have been possible without this collaboration, and I am grateful for that.