A Pinch of Salt- February 2011-California FTB’s Interested Parties Process Offers Taxpayers a Voice


Since Selvi Stanislaus took over the helm of the California Franchise Tax Board four years ago, the FTB has tried to improve transparency and increase taxpayer participation in its policymaking function. Chief among the strategies for increasing openness at the FTB is the interested parties process, which entails a series of informal meetings that precede the formal process to implement or amend regulations. In this Pinch of SALT, we describe the interested parties process and its expanded use at the FTB, evaluate its benefits and drawbacks, and explain how and why taxpayers should participate in it.

Origins and Overview of the Process The interested parties process is an important component of implementing the FTB’s stated goals of improving transparency and accessibility.1 Interested parties meetings are open forums that allow stakeholders and tax administrators to discuss major policy changes informally and without attribution. 2 The FTB considers the interested parties process ‘‘an essential tool’’ for it to solicit input from the public on how it does business.3

The process began in earnest in 2006, when legislation was passed to allow domestic partners tofile as married persons on their personal income tax returns.4 The FTB anticipated numerous implementation problems with this law change because of a lack of conformity with federal law.5 Through the interested parties process, the FTB involved stakeholders affected by the law change, developed forms and instructions, and received helpful feedback from participants.6 The FTB held four interested party meetings in 2006 and has since held 47. These meetings have addressed topics ranging from the effect of the California Supreme Court’s decisions in Microsoft v. Franchise Tax Board and General Motors v. Franchise Tax Board to legislation providing for omnibus conformity with federal income tax law.7,8

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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