Executive summary Taxpayers’ Bill of Rights Annual Report to the Legislature

Selvi Stanislaus
Executive Officer

As I approach my 18th year leading California’s Franchise Tax Board (FTB), I’m struck more than ever by the many ways our employees impact the lives of Californians, including in times of great need.

Following a series of devastating winter storms in late 2022 and early 2023, FTB managed an unprecedented seven-month deadline extension that allowed most Californians to file and pay their state taxes as late as November 16, 2023. We mirrored the IRS’s extension, which benefitted Californians impacted by the severe storms. FTB staff also participated in multi-agency disaster relief centers to assist storm victims with tax issues, including how to deduct property losses on their tax returns.

And, of course, last year we concluded our administration of the state’s largest economic relief package ever – the $9.2 billion Better For Families Act, also known as the Middle Class Tax Refund (MCTR). The program’s $200 to $1,050 payments, to help Californians cope with inflation, benefitted nearly 32 million taxpayers and their family members. MCTR marked the third multibillion-dollar relief program–after two Golden State Stimulus rounds–FTB has administered since the COVID-19 outbreak in 2020.

I’m proud that our staff remained so dedicated and focused as they handled these programs on top of FTB’s traditional work, including administering two major state tax programs, personal income and corporate taxes, and collecting more than 74 percent of the state’s general fund. These funds are used for public safety, education, healthcare, infrastructure (such as roads and bridges), and social safety net programs (such as food stamps and the California Earned Income Tax Credit (CalEITC)).

Speaking of CalEITC, last year FTB identified and reached out to two separate groups of Californians who might qualify for, but hadn’t claimed, CalEITC. The credit is potentially worth hundreds or even thousands of dollars for qualified taxpayers. The first group of Californians had filed their tax year 2022 returns without claiming CalEITC, while the second group had filed returns in previous years but not for 2021 or 2022. This outreach stems from Senate Bill 1409, which was enacted in 2020, that directed FTB to explore options to increase the uptake of CalEITC.

Here are a few other examples of how FTB assisted taxpayers and tax professionals:

  • We used our website ftb.ca.gov, FTB’s Tax News publication, and direct outreach via mailed letters to alert legally compliant California cannabis businesses of two new state tax credits–one worth up to $250,000–they may qualify for beginning with tax year 2023.
  • Last year, FTB adapted lessons learned during the pandemic and employed virtual platforms such as Microsoft Teams to engage with taxpayers for audit, claims, and protest programs whenever suitable. We also resumed in-person interactions for field audits when deemed appropriate.
  • Our Taxpayers’ Rights Advocate’s Office gave dozens of presentations on state tax law updates and other topics to taxpayers and tax professionals.
  • FTB implemented virtual hold technology to help manage high call volumes to our Tax Practitioner Hotline. This technology allows callers to request a callback within a set time frame rather than wait on hold, which reduces abandoned and deflected calls and increases customer satisfaction.

We are also looking inward for ways to improve our customer service. FTB leadership believes that fostering a diverse and inclusive workplace is the best way to ensure we have a productive and responsive workforce that best serves the taxpayers of this incredibly diverse state. We continue to emphasize diversity, equity, inclusion, and access or DEIA. Last year, as part of our Strategic Plan update, we rolled out our new FTB Values to reflect DEIA in administering our responsibilities. We introduced a vendor-provided training suite that includes dozens of new DEIA-focused videos and micro-learning content, and we began developing our own DEIA awareness training–slated for a late 2023 launch–for all employees.

As for the future, we continue to modernize our Information Technology (IT) systems to enhance reliability, efficiency, and customer service, and to address the tax gap – the difference between the taxes owed and paid. We are on track and halfway through our Enterprise Data to Revenue project, or EDR2, the second phase of one of the state’s largest technology upgrades ever. Last year, following a successful pilot under EDR2, we replaced our automated personal income tax (PIT) audit system, while replacement of our automated PIT collections system is scheduled for early 2024.

FTB will continue to listen closely to taxpayers and the tax professional community, with whom we maintain an open and constructive dialogue. I believe we are all committed to ensuring taxpayers file accurate returns and are treated respectfully.

With the above in mind, I humbly submit this year’s Taxpayers’ Bill of Rights Annual Report to the Legislature for your review. Thank you for your support as we work together to serve the great state of California.

Selvi Stanislaus

Executive Officer