During the audit stage, the SBOE auditor will present his or her findings to you. If you disagree with a decision of the staff of the BOE regarding your liability for taxes or fees, you can usually contest that decision by filing a timely appeal. Generally, you must file an appeal within 30 days of the date of the notice of determination. After filing an SBOE appeal, you will proceed through a succession of steps known the SBOE settlement and an appeals program. If you do not resolve your dispute with the SBOE in the settlement or appeals stages, you have a right to a hearing before the elected Members of the Board of Equalization.
As mentioned above, there are several steps involved in the appeals process. It is not uncommon for an appeal to be referred back to a prior step. As a result, you may go through some of the steps in the appeals process more than once.
Who is Eligible to use the SBOE Settlement Program?
The Board’s settlement program is available to taxpayers who have submitted a petition for redetermination, administrative protest or claim for refund pending in connection with a tax or fee liability administered by the Board. Settlement proposals may be considered for civil tax or fee matters in dispute under the sales and use tax program or certain special tax and fee programs.
While you are pursuing an administrative tax appeal before the California State Board of Equalization, you may request consideration of your SBOE tax dispute under the settlement program. The settlement program is intended to expedite the resolution of tax and fee disputes consistent with a reasonable evaluation of litigation risks and costs. You will have a chance to submit evidence, documentation, and arguments as to why the SBOE auditor’s proposed assessment is not correct. You will have a settlement conference with the settlement officer typically over the phone. A taxpayer’s inability to pay the disputed tax liability is not considered under the settlement program. If you are only seeking relief from a tax or fee liability on the basis of an inability to pay, you may need to inquire about the Offers in Compromise program.
SBOE Settlement Review and Negotiations
You should review your disputed facts and documents and submit a proposal for settlement to the settlement officer. The settlement officer will evaluate your proposal and advise you whether your case is suitable for settlement consideration. Settlement is discretionary and your case may be declined for a variety of reasons. The settlement officer will consider hazards of litigation in assessing whether to agree to a settlement proposal. It is critical to know where the SBOE has a weak case and to explain why there are hazards of litigation.
The SBOE settlement officer may accept your offer or, if appropriate, seek to negotiate an agreement for a different amount. If a tentative agreement is reached between you and the settlement officer, you will be asked to sign a formal document setting forth the terms of the agreement. Settlements entered into by the parties are final and may be appealed only upon a showing of fraud or misrepresentation of a material fact.
Once you have reached an agreement with the settlement officer, you will typically be required to pay up to 25% of the settlement amount up front to the settlement officer within 30 or 60 days. In addition, generally the balance of the amount agreed to in settlement will be required to be paid within 24 months. However, if the taxpayer can show a lower ability to pay based on substantiated financial statements, the SBOE may consider extending the 24-month period. Once a taxpayer has paid the up-front down payment in agreement, the SBOE will work with the taxpayer so that the taxpayer can pay the remaining balance.
Interest Accruing on The Proposed SBOE Tax Assessment
Even though you have submitted a timely appeal of a proposed SBOE assessment, interest will continue to accrue until the tax or fee liability is paid, so you may want to pay the amount of the tax or fee due while your appeal is pending. If you pay the tax or fee due while your appeal is pending, that payment will not be interpreted to mean that you agree with the amount you dispute in your appeal, but it will stop the accrual of interest. In effect a payment will be considered a deposit of tax to stop the accrual of interest.
SBOE Appeals Conference
If you cannot come to an agreement with the settlement division, your case will be forward to the appeals division. An appeals officer will be assigned to your case, and you will have the option of requesting an appeals hearing.
The appeals conference is intended to be an informal discussion of relevant facts and applicable law with the SBOE appeals officer. Rules of evidence are not strictly followed. The purpose of the conference is for you to present your position and all your supporting evidence and arguments concerning the disputed matter that is the subject of your appeal to an Appeals Division attorney or auditor who has had no prior involvement with your case, and for the Department’s representative to explain the Department’s position.
It is important to be thoroughly prepared with any arguments and documentation in support of your position before your conference. You are allowed to submit written arguments and documentary evidence in support of your appeal to the Appeals Division at any time before or during the appeals conference, but may do so after the conference only with the consent of the Appeals Division. If you have not submitted all relevant materials before or during the appeals conference, you may, during the conference, request permission to submit additional written arguments and documentary evidence. You may be allowed at least 15 days, but not more than 30 days without the consent of the Assistant Chief Counsel of the Appeals Division, to make an additional submission.
Contact a Los Angeles SBOE tax attorney
If you are in dispute with the SBOE pertaining to a tax liability, the settlement or appeals programs may be the right option for you. Contact a Los Angeles SBOE tax attorney at Disparte Tax Law today for a free consultation.