Tax News
Ask the Advocate

Steve Sims, Taxpayers' Rights Advocate.

Responses to Hearing Questions

On December 1, 2011, the Franchise Tax Board held its annual Taxpayers’ Bill of Rights Hearing along with a regularly scheduled Board meeting. Practitioners and taxpayers were invited to submit issues in writing and could also request time to address the Board during the meeting to present their issue.

As the Taxpayers’ Rights Advocate, my goal is to review and address each issue as well as all of the issues I received in writing. Below I provided some of the issues along with my responses:

Power of Attorney (POA) Notification on all Taxpayer Correspondence

As we mentioned in last year’s response, our present POA system does not allow us to automate the noticing process and it would be cost prohibitive in most cases to provide duplicate notices to the taxpayer and their representative. When the Enterprise Data to Revenue (EDR) - Taxpayer Folder becomes available, representatives will have the ability to view their client’s account including account status, FTB actions, an online view of notices issued electronic images of tax returns and associated correspondence.

It is very important for us to maintain a cooperative working relationship with the tax professional community. We understand your concerns and to that extent, we are sending your comments to the EDR Project, so that these concerns can be considered during the requirement development process.

Implementation of Virtual Hold Technology (VHT) Service on Practitioner Hotline

Virtual Hold (VH) systems are designed for call centers with high call volumes and large staffing levels. Risks are involved when implementing VH into a small call center; therefore, the vendor recommended that the Practitioner Hotline not offer this tool.

The Practitioner Hotline consists of 20 customer service representatives (CSRs). Staffing levels regularly fluctuate between 12 to 17 CSRs due to start and end of shifts, breaks, lunch, planned vacation, and absenteeism. Low staffing levels in call centers utilizing VH may result in:

  • Inaccurate Estimated Wait Times for customers electing to hold or receive a call back.
    • The VH system uses an algorithm which includes the number of available staff and estimated wait time for the last 70 calls. In a small call center, the calculation does not work well due to the lower volume of calls and staffing fluctuations throughout the day.
  • Callbacks being returned outside return call parameters (10 percent before and 20percent after estimated call back time).
  • Unexpected, additional wait times for customers in the “waiting queue,” after the callback is made.
  • Difficulties managing level of access/service, due to large VH call back queues, resulting in higher deflection rates and possible system purges.

In addition to the technical aspects, the following issues exist:

  • We currently use VH on toll-free numbers. The Hotline is a toll number, and therefore we would be incurring toll charges for the callbacks. We are not budgeted for these outgoing calls.
  • When a callback is made to a tax professional, it may travel through a company switchboard or a secretary. This could result in CSRs having to hold until the switchboard/secretary can connect the appropriate party, which would increase the call time and impact other practitioners trying to get to a CSR.

We tried VH on a small toll-free call center and has found it extremely difficult, if not impossible, to manage effectively.

We value our relationship with the practitioner community. Although VH is not feasible for the Hotline, FTB is committed to providing excellent service to tax practitioners.

Update Requested on Increase to Lien Filing Threshold

We continue to evaluate and review the effectiveness of the lien program including the impact of our current dollar threshold for filing liens. During our ongoing review, we identified improvements to current lien practices and procedures, and the need for taxpayer-focused education. We expect to enhance lien information available on our public website in March 2012, and also plan for future enhancements to our Interactive Voice Response (IVR) and collection notices to better educate taxpayers on the impacts of a lien.

Disability Waiver of Mandatory e-Payment Requirement

Initially, we looked at the legislative process to create a permanent disability mandatory e-pay waiver. We have since determined that we could handle these permanent waiver requests administratively. This administrative remedy is in the process of being developed and requires changes to existing forms, publications, processing procedures, website content, and our IT systems. We are working as quickly as possible and expect that the mandatory e-pay permanent disability waiver will be available to taxpayers prior to the April 17 filing deadline. Once the process becomes final, we will update our external website and publish a Tax News article.

Property Tax Deduction on Schedule CA

We understand the importance of educating taxpayers and tax practitioners to improve self-reporting of property taxes as an itemized deduction. While some taxpayers and practitioners correctly report this deduction, we realize that many taxpayers are not aware of guidance provided by us and the IRS on how to correctly report this deduction. Our goal is to provide information and tools needed to accurately report this deduction.

After exhaustive research, we believe and have announced that federal law is clear in that an itemized deduction for real property tax is not allowed for a Mello-Roos assessment, to the extent it is not based by the value of the property assessed. However, our chief counsel formally requested clarification from the chief counsel of the IRS in Washington DC regarding the validity of a memorandum authored in 2003 by a local IRS attorney indicating that a Mello-Roos assessment may be deductible even though it is not assessed on an ad valorem basis.

We also contacted each county with information about our Real Estate Tax Deduction Education Campaign. This includes our education efforts for the current filing season, as well as additional reporting requirements beginning with the 2012 tax return.

We will continue to enhance our webpage with guidance and links to county information to assist taxpayers in understanding their tax bills so that they can accurately determine the legally allowable deduction for real estate taxes.

All of the issues and my responses will be posted on our website.

Steve Sims, EA
Taxpayers’ Rights Advocate

Follow me on Twitter at twitter.com/FTBAdvocate.

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