The CA State Board of Equalization (BOE) is a powerful agency with a complex and important role in California's tax system.
With its broad authority over sales and use taxes, property taxes, and other taxes and fees, the BOE plays a critical role in ensuring that California's tax system is fair and effective.
But, despite its significance, the BOE remains a mysterious and often misunderstood entity.
From the controversies that have surrounded the BOE in recent years to the critical role it plays in California's economy, we'll cover everything you need to know to understand this essential element of California's tax system.
The California State Board of Equalization, also referred to as the BOE, is often likened to the state’s version of the Department of Revenue.
It's a tax agency that used to be responsible for administering a variety of taxes, including sales and use taxes, property taxes, and special taxes.
The BOE was also responsible for administering various regulatory programs related to alcohol and tobacco products.
Prior to 2017, the BOE was the primary government agency in charge of collecting sales and use taxes, auditing taxpayers, and hearing tax appeals.
These responsibilities were similar to the duties of other states’ departments of revenue mentioned above.
In fact, the responsibilities far outnumbered the three areas of taxes that the BOE is limited to overseeing today. Its duties previously included:
However, the state of California board of equalization was plagued with various controversies and issues that led to its restructuring in 2017.
Some of the major issues that the BOE faced included:
These issues led to a loss of public trust in the BOE and calls for its restructuring. As a result, the BOE's functions were transferred to other state agencies in 2017.
More specifically, one major event that contributed to an increase in calls to overhaul the BOE was a March 2017 report published by the California Department of Finance, which found that the BOE had misallocated millions of dollars in tax revenue.
Shortly after the publication of the report, then Governor Brown requested that legislative leaders draw up a new law to address the BOE’s missteps.
The new legislation ultimately included stripping the BOE of its tax administrative duties and authority to decide tax appeals.
As a result, on June 27, 2017, Governor Jerry Brown signed AB102, The Taxpayer Transparency and Fairness Act of 2017.
The Act cited many issues that had pervaded the BOE in the past, including:
Transparency was supposed to be the hallmark of the BOE.
Neither the public nor the California legislature were provided with accurate tax information by the Board.
Because of this, there was a lack of confidence both in the data the BOE reported, and in its ability to effectively administer California's taxes in the future.
The BOE members and their staff were subject to a barrage of complaints alleging that they had made numerous attempts to influence BOE employees.
More specifically, this was regarding the:
The BOE clearly made severe miscalculations throughout its operations, which became glaringly obvious when the allocation of over $60 billion in taxes were misappropriated.
And so, these funds were unable to go toward public services, city agencies, and other state and county-level benefits meant for the public.
As a result of the upheaval and damage caused by the Calif. Board of Equalization’s mistakes, the Act transferred a significant portion of the BOE’s responsibilities to
Under the terms of the Act, the CDTFA became responsible for administrating all taxes not mentioned under the California constitution, including:
The CDTFA would further gain the power to handle auditing of all state taxpayers.
Further, the power to adjudicate tax appeals was transferred to another newly-created department, known as the OTA.
Under the new legislation, the CA tax Board of Equalization’s remaining administration included overseeing only the taxes mentioned in the California Constitution:
Of the three primary areas of taxes that the CA SBOE is now responsible for, the most complex (and important) is, arguably, the Property Tax Program.
According to the BOE website, the Property Tax Program focuses intently on specific areas of property tax, but lets cover the new areas in more detail:
The first area is the valuation of state-assessed public utility and railroad property.
In accordance with this administrative responsibility, the BOE has the power to value the total state-assessed roll in excess of $110.5 billion annually.
Additionally, the BOE highlights the fact that it acts as an oversight division to “ensure compliance by county assessors with property tax laws, regulations, and assessment issues.”
In total, there are 58 county assessors, each representing a county within the state per the local office’s authority. For example, the first county assessor listed is Phong La of Alameda County.
Phong La’s role is “locating all taxable property within the County, establishing its taxable value, and applying any legal exemption.”
The assessor role is uniform throughout all counties in California. Considering that these assessors are already government representatives, the BOE’s role in overseeing and guiding the county assessors’ programs is yet another example of how its power has been minimized.
Effectively, the Act has shifted the BOE’s role from directly overseeing the people of the whole state to, instead, 58 assessors who, themselves, are already overseeing their direct constituents within their respective counties.
The BOE works in conjunction with CDTFA under the alcoholic beverage tax program,.
While the CDTFA collects and administers the taxes under the program in cooperation with the BOE, the BOE maintains the power to hear all appeals for claims for refund or petition for redetermination denials.
Finally, the BOE’s role in the realm of insurance tax is also one that is tied closely with the function of CDTFA, as well as the Department of Insurance (CDI) and the State Controller’s Office (SCO).
Under the Insurance Tax Program, the CDI holds the power to grant authority to insurance companies to transact insurance business in California.
The CDTFA has the responsibility for:
Despite these changes, the BOE maintains its ability to hear all appeals for claims “for refund or petition for redetermination denials.”
Ultimately, the BOE has clearly been relieved of almost all of its former duties. The CDTFA, OTA, CDI, and SCO have been delegated the vast majority of BOE’s prior responsibilities, some of which they share in tandem with or “on behalf of '' the BOE.
To provide some context, most other states do not have a “Board of Equalization.”
Typically, they are literally referred to as the state’s Department of Revenue, Division of Revenue, or some other permutation of the term.
For example, Pennsylvania’s Department of Revenue (DOR) states on its website that its mission is to collect and distribute “most of the tax monies due to the Commonwealth of Pennsylvania.”
It further states that, on an annual basis, the department will process over 10 million business and individual tax reports and payments.
Other states, such as Georgia and Delaware, have similar mission statements published on their DOR websites, following the shared theme of “administering the tax laws of the state” or “collect taxes and other revenues required by the law.”
By contrast to the more general functions of these other states’ departments, the CA State Board of Equalization has a fairly specific mission statement that enumerates its responsibilities.
The website states:
“Today, the BOE focuses on its Constitutional responsibilities: Property Tax, Alcoholic Beverage Tax, and Tax on Insurers.”
Despite the overhaul, the CA BOE remains the only publicly elected tax commission in the United States.
With this in mind, the Board is made up of four directly elected members, each representing a district, and a State Controller who is elected on a state-wide basis.
There are currently four California Board of Equalization districts:
The following counties make up the First Equalization District:
Alpine, Amador, Butte, Calaveras, Colusa, El Dorado, Fresno, Glenn, Inyo, Kern, Kings, Lassen, Madera, Mariposa, Merced, Modoc, Mono, Nevada, Placer, Plumas, Sacramento, San Bernardino, San Joaquin, Shasta, Sierra, Siskiyou, Solano, Stanislaus, Sutter, Tehama, Tulare, Tuolumne, Yolo, and Yuba.
The district’s current representative is Ted Gaines, a Republican politician whose platform centers upon tax-cutting, combating crime, and addressing the homelessness crisis.
His main supporters include:
The Second Equalization District is made up of:
Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Monterey, Napa, San Benito, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Sonoma, Trinity, and Ventura.
The district’s representative is Sally Lieber, who is a Democratic politician and won the district by a significant margin with 69.8% of the vote.
Her platform primarily focused on her status as a “corporate-free” candidate committed to establishing a fair and equitable tax system for “homeowners, renters, veterans, people with disabilities, small businesses, and communities of color.”
Unlike the other three districts, District 3 only serves one county: Los Angeles.
The incumbent representative is Tony Vazquez, a Democratic politician whose platform focuses on three top priorities:
His top supporters include:
Lastly, the Fourth Equalization District encompasses the counties of:
Imperial, Orange, Riverside, Sanbernardino, and San Diego.
The district’s current representative is Democrat Mike Schaefer whose platform highlights the top three priorities of:
His top supporters include:
Today, the BOE effectively does not have much of an influence at all when it comes to California sales tax collection, audits, and adjudication of appeals.
These responsibilities have been allocated to the CDTFA.
Check out our California sales tax audit guide for an in-depth view on what to do if you’re being audited.
The California State Board of Equalization today bears very little resemblance to the version that existed prior to the Taxpayer Transparency and Fairness Act.
Whether you are a resident or a small business owner in the state, the likelihood of a tax audit or investigation from the BOE is significantly slimmer compared to one issued by the more powerful CDTFA.
Nevertheless, if you have concerns or questions about the functions of any of the state’s various tax collecting agencies, the best measure you can take is to schedule a call with a trusted legal advisor.
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Last updated: March 25, 2023
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