SACRAMENTO – State Sen. Mike McGuire’s bill that will significantly expedite the appeal process for thousands of taxpayers with small tax claims has been included in Gov. Newsom’s May Budget Revision released last week. 

“Resolving tax disputes is stressful, costly, and time consuming. By including the Cut the Red Tape Act in this year’s budget, taxpayers and small businesses will be able to expedite their appeal process and the state will be able to process cases more quickly, saving taxpayers and small businesses both valuable time and money,” McGuire said.

SB 344 – which is now included in the state budget – gives small businesses and individual taxpayers with disputed taxes the option to expedite their appeal process, allowing the Office of Tax Appeals to process cases more quickly.

The Taxpayer Transparency and Fairness Act of 2017 shifted all non-property tax appeal functions from the Board of Equalization to the newly created OTA.

Current law requires all cases to go before a panel of three judges, regardless of the amount disputed or the complexity of the case. The typical time of an appeal process is about 270 days. OTA has posted about 21 opinions a month since it began publishing opinions in April 2018.

Requiring every case to be reviewed, heard, and ruled on by three different judges is time consuming and limits the number of cases OTA can process in a year.

If approved in this year’s budget, Senator McGuire’s fix will allow taxpayers and small businesses to choose to have their appeal decided by only one judge, so long as the appeal involves an issue less than $5,000, or business tax matters of less than $50,000.

Small businesses must also have less than $20 million in gross annual sales. This new process could potentially expedite hundreds of cases a year, impacting approximately 60 percent of OTA’s total tax caseload, and saving the taxpayers and small businesses who have filed appeals over two months of time.

This innovative new approach, and cutting of red tape, is now included in the revised budget and will provide much needed relief to individuals and small businesses by giving them an option to significantly shorten their appeal process time.

The legislature has until June 15 to pass this year’s budget.