Ca. Tax Lawyer 2017, VOLUME 26, NUMBER 1

Legislative Proposal for Infusing Guaranteed Fairness in Tax Administration by Allowing Partial Prepayment Judicial Review of FTB-Proposed Personal Income and Franchise Tax Deficiencies1

By Mark Bernsley2


In a 2013 ranking of what can be considered a measure of fairness of State tax dispute resolution mechanisms, California tied for dead last. The most obvious feature leading to that ranking was the lack of an independent (i.e., judicial) prepayment review procedure.

This paper proposes legislative changes that would allow partial prepayment (and sometimes no prepayment) access to judicial review for Franchise Tax Board ("FTB") income and franchise tax deficiency determinations otherwise subject to Board of Equalization ("BOE" or "Board") appeals. The new procedure would be available as an alternative, rather than a replacement, to the current, exclusive pre-payment BOE appeals procedure. The proposal would leave the current system intact, providing an optional alternative path. The new procedure would increase fairness by allowing judicial review for, inter alia, taxpayers who are unable to pay the FTB-determined deficiencies in full.

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