The California Office of Tax Appeals: What to Expect at Your Hearing

What OTA Is

The Taxpayer Transparency and Fairness Act of 2017 established OTA. According to OTA, it is an independent office that is separate and distinct from the state’s tax agencies, and each tax appeal is heard by a panel of three administrative law judges. OTA hears appeals involving both the FTB and the California Department of Tax and Fee Administration (CDTFA).

When an Appeal Can Be Filed

For FTB matters, OTA’s rules set two main deadlines. An appeal from the FTB’s notice of action on a protest of a proposed assessment must be filed within 30 days of the date the FTB mails that notice. An appeal from the FTB’s denial of a refund claim must be filed within 90 days of the date the FTB mails its notice of action on the claim. If the FTB does not act on a refund claim within six months, the FTB’s Audit/Protest/Appeals guide (FTB 985) explains that the taxpayer may treat it as denied and appeal.

An audit dispute generally reaches OTA only after a protest. If no protest is filed within 60 days of a Notice of Proposed Assessment, the assessment becomes final (Revenue and Taxation Code § 19042), and the remaining route is to pay the tax and file a claim for refund.

Filing the Appeal

Appeals can be filed through OTA’s online portal or by mail or fax. OTA asks for its Request for Appeal form or a written request that states the specific grounds for the appeal, a copy of the FTB notice being appealed, and supporting documentation such as bank statements or receipts.

Briefing

Much of an appeal is presented in writing. The FTB files an opening brief, and the parties exchange briefs and exhibits. FTB 985 notes that an appeal gives the taxpayer an opportunity to provide additional supporting information, so documents that were missing during the audit or protest should be organized and submitted at this stage.

The Small Case Program

For personal income tax appeals from FTB actions, OTA’s Small Case Program is available when the total amount in dispute is less than $5,000 per tax year. These appeals are heard by a single administrative law judge rather than a panel of three. OTA notifies eligible taxpayers after the FTB files its opening brief, and the taxpayer has one opportunity to elect the program.

The Oral Hearing

Taxpayers may request an oral hearing. OTA’s hearing calendar lists hearings in Sacramento, Cerritos, and Fresno, as well as virtual hearings, and many hearings are livestreamed. OTA also publishes guides on pre-hearing conferences and on what to expect at the hearing.

Hearings are less formal than a court trial. Under OTA’s rules, the panel may admit relevant evidence of the kind that responsible people rely on in serious matters, and the appealing party generally bears the burden of proof. A complete, well-organized record is the foundation of a persuasive presentation.

The Opinion and Rehearing

According to OTA, the panel prepares a written opinion and mails it within 100 days of the hearing. A party that disagrees may file a petition for rehearing no more than 30 days after the opinion is issued. OTA’s guidance lists the grounds, which include an irregularity in the proceedings, newly discovered evidence, insufficient evidence to justify the opinion, and an opinion that is contrary to law.

After OTA

OTA’s guidance describes the court options. If the appeal involved a proposed assessment, the taxpayer can pay the liability, file a claim for refund with the FTB, and then file an action in California Superior Court within 90 days of the denial. If the appeal involved a refund claim, the taxpayer can file in Superior Court within 90 days after OTA’s opinion becomes final.

Settlement

Resolution by agreement remains possible while a case is pending. The FTB’s Settlement Bureau handles settlements under its Settlement Program, and OTA publishes guidance on settling or withdrawing an appeal.

The Bottom Line

OTA offers an independent review of FTB decisions, but its deadlines are firm and its decisions rest on the written record and the hearing. Filing on time, choosing between the regular and Small Case procedures, and presenting complete documentation are the foundations of a well-prepared appeal.