California’s Office of Tax Appeals (OTA) could resume in-person hearings in early 2022 but is also planning to continue offering virtual remote hearings, according to an official.
Michele Brown, assistant chief counsel with the OTA, told attendees of the California Lawyers Association's 2021 California Tax Bar and California Tax Policy Conference in San Diego that the agency was “uniquely situated to react when the [COVID-19] pandemic started” because it had the technology and equipment to quickly pivot to remote work and virtual hearings.
“Prior to the pandemic, all of our hearings were in person — Fresno, Sacramento, Cerritos,” Brown said during a November 4 panel. “We quickly [made] the switch to being able to do a virtual [hearing] at the taxpayer’s election,” and the office has been relying on virtual hearings since June 2020, she said. Although some cases are on hold because the taxpayers want to wait until in-person hearings resume, Brown said the virtual hearings have proven popular and are more convenient for many taxpayers than traveling to one of the office’s hearing locations. “We’ve decided it’s been so successful that even post-pandemic we plan to continue to offer that as an option,” she said.
But the OTA is preparing to start offering in-person hearings again, Brown said, noting that the agency has installed plexiglass barriers and air purification systems in the hearing locations and has set up new seating and room-capacity rules to ensure that in-person hearings are safe. She said the agency is expecting a busy year, in part because of increased case filings, which could be partly attributed to a decision by the Franchise Tax Board to include OTA appeal forms in its notices to taxpayers, raising awareness of the option to appeal.
The office is also hoping its new process for expediting small tax appeals will pick up steam. The normal appeals process involves taxpayers and tax agencies going before a panel of three administrative law judges and a formal briefing process. In 2019 lawmakers approved legislation authorizing the OTA to establish rules for an optional single-ALJ appeal process with abbreviated briefing for tax disputes worth less than $5,000 for individual income tax disputes and $50,000 or less for businesses with less than $20 million in annual revenue. The office developed rules and implemented the small case program in July.
“I’m excited to say we have our first taxpayer who has gone through the process and elected to participate in the program,” Brown said. “We’re looking forward to getting this first one under our belt . . . the goal of this is to provide a more efficient track for some of the less complex appeals and issues in dollar amounts, and really fast-track those cases.”
Brown said the OTA is working to advertise and promote the option for taxpayers, including notifying them that their cases may qualify for the small case process.
“We are doing our best to explain, and we’re hoping that taxpayers take advantage. I think once we have a few more months under our belt, maybe we’ll reexamine how we might be able to increase participation,” Brown said. However, she said it’s unlikely, at least for now, that the agency will consider making the small case process the default track for eligible tax disputes in order to boost participation.
Another development discussed at the panel is the OTA’s new online portal for submitting appeals, motions, forms, and documents. According to the agency, the portal is anticipated to launch by early 2022 and will allow taxpayers to file appeals and large documents online, as well as check on the progress of a case and receive communications from the office. The portal will also allow parties to make requests, such as extended deadlines or rescheduled conferences.
“We’re going to launch a portal on our website that’s hopefully going to make everyone in this room’s lives very easy, to have appeals before the OTA,” Brown said. “This will be a very prompt way to log in and get . . . an instant answer to where an appeal is in the process, but also submit motions and requests. . . . Especially in light of the pandemic, we’re really excited and think this is going to be a game-changer.”