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Public Meeting Minutes

FRANCHISE TAX BOARD
MINUTES

October 4, 1999

The Franchise Tax Board met in open session at 2:30 p.m. at the State Board of Equalization, 450 N Street, Hearing Room 121, Sacramento, California.  Present were Hon. Kathleen Connell, Hon. Johan Klehs, Hon. B. Timothy Gage.

Franchise Tax Board
Staff Participating:
Gerald H. Goldberg, Brian W. Toman, Lynette Iwafuchi, Frank Lanza, Maria De Angelis, and Katie Horn.
Others Participating:Sally Lee representing Board of Equalization, Bill Woodruff representing MCI Worldcom, Brett Kelsey representing International Network Services, Greg Morgan representing Andersen Consulting, Christina Polley representing Department of General Services.

Item 1. - Electronic Filing - Internet

Mr. Goldberg introduced Frank Lanza, who gave the status report on this item.  Mr. Lanza reported that the pilot is progressing on schedule and summarized the key achievements that have occurred in the last few weeks.

The first is that the contractual and administrative issues have been settled between the Franchise Tax Board, the Department of General Services, and the vendors.  The prime vendor will be MCI Worldcom, and Andersen Consulting will be the subcontractor.

Staff has developed a booklet (explaining how the EZ Taxpayer can use this option) that will be sent to the printer on schedule.

Project cost has been kept under 500,000 dollars as originally planned.

Mr. Lanza also explained that the project would not use the taxpayer’s Social Security number for identification but instead would use a partial Social Security number (the last four digits), a customer service number, and the taxpayer’s last name.

There was discussion of the contract in regard to Franchise Tax Board’s ability to terminate MCI/Andersen, performance standards, and the target group for the pilot (1.8 million EZ filers who have an income of not more than $50,000).

Mr. Lanza reported that the department had its annual meeting with the National Association of Computerized Tax Processors, and that the Board’s desire to have commercial preparers provide free filing at the $50,000/$100,000 levels was shared with them and that the department solicited their input.

Bill Woodruff, Branch Manager for MCI Worldcom’s public sector business, gave a description of MCI Worldcom’s experience in similar projects, and explained their subcontract with Andersen Consulting. Mr. Woodruff explained that there are specific milestones for deliverables:  acceptance of the prototype, successful implementation of the pilot project, and acceptance of the evaluation report by the Franchise Tax Board.

Greg Morgan, a partner in Andersen Consulting, informed the Board that Andersen’s role is to serve primarily as the software supplier to MCI, and supply the tax expertise – the E-commerce expertise for the pilot project.

Sally Lee from the Board of Equalization explained that the BOE has done a feasibility study report on developing an in-house system and will present these findings to the five-member board at the Board of Equalization along with staff’s recommendation to use a third party.

Brett Kelsey, Security Consultant with International Network Services, gave a description of their services and explained that they have assessed the security requirements for the Internet tax–filing project.  Mr. Kelsey stated that the department has met all of the recommendations his company has made.

Chair Connell asked Mr. Lanza to find out what New York and Illinois are doing in regard to Internet filing.

Item 2. – Child Support

Mr. Goldberg informed the Board of a candlelight vigil that was to be held at the central office location of FTB, that the three bills - AB 196, SB 542, and AB 150 - have been signed, and that the department is preparing BCPs for collection expansion and the single statewide automated child support system.

Mr. Goldberg also informed the Board that David Maxwell-Jolly has been appointed as Deputy Undersecretary at the Health and Human Services Agency and will be the Child Support Transition Team leader, but a director for the department of child support services has not yet been chosen.

Mr. Goldberg told the Board that a transition team has been created, that staff are scheduled to hold meetings with the counties in an effort to build relationships, and staff will be meeting with federal officials.

Chair Connell asked Mr. Goldberg in the future to put the Board materials relating to child support into a CPM chart in order to show where decisions are being delayed and who has the responsibility for moving those decisions forward.

Chair Connell and Mr. Goldberg discussed whether there would be an advisory board for the Franchise Tax Board. Mr. Goldberg stated that staff has an internal steering committee and that he does not anticipate an external group becoming involved due to the conflict that it might cause with the advisory board that the director of the new department might put together.

Mr. Goldberg stated that he would update the Board on child support matters at each Board meeting, but no less than quarterly.

Chair Connell asked if there is any way that California can avoid the next federal penalty.  Mr. Goldberg reported that it is anticipated that the state will be impacted by penalties over the next three years at least, and that this is one of the reasons we will be meeting with the federal officials.

Lynette Iwafuchi addressed questions that Chair Connell had about the FTB 90-day Action Plan flow chart, pertaining to the State Auditor's findings & involvement, and procurement activities.

The meeting was adjourned at 3:29 p.m.