An advisory panel is calling on the city of Los Angeles to overhaul a board that reviews business tax appeals. Businesses have sharply criticized the review board as biased in favor of the city.

The Business Tax Advisory Committee – a panel with members appointed by Mayor Antonio Villaraigosa and the City Council – in late May recommended that the review board be expanded from three to five members. Three of the members would be tax professionals, while another board member would be required to have experience in the business world.

Currently, two city officials sit on the board, including a representative from the city’s Office of Finance, which administers the business tax. Only one public member serves on the board, and that member is not required to have experience running a business.

Businesses that have lost their appeals have criticized the board as being a rubber stamp for the city.

In a high-profile case, Creators Syndicate Inc., which sells syndicated columns and cartoons to media publications, was reclassified from the low-tax retail category to the high-tax professional services category, and billed $105,000 in back taxes and penalties. The company appealed to the board of review and lost.

Company founder and Chief Executive Richard Newcombe then wrote a scathing column in the Wall Street Journal about the city appeals process, likening the board to a “kangaroo court.”

In recommending the reform in a May 20 letter to Councilman Richard Alarcon, chairman of the council’s jobs and business development committee, the Business Tax Advisory Committee said the composition of the review board should be changed.

“It makes zero sense to have Office of Finance staff sit in judgment on a decision by one of their own,” said BTAC chairman Lloyd Greif, chief executive of the middle-market investment firm Greif & Co.

Greif said it was essential that the appeals board have at least one member who could see things from a business perspective.

“This member should have solid business experience to increase the likelihood that they can understand the oft-times complex issues raised in board hearings,” he said.

Greif said the Business Tax Advisory Committee will also consider recommending that the review board provide explanations for its decisions. The lack of explanations has been a sore point for businesses that have had their appeals rejected by the board.

Clean Truck Funds

The California Air Resources Board in May expanded a financial assistance program to help truck operators switch to cleaner trucks in order to meet requirements of a diesel truck and bus regulation passed in 2008.

The board approved changes to the regulation that make more trucks eligible to receive money from a $28 million fund to subsidize those truck operators who cannot afford to purchase cleaner trucks on their own. By making more trucks eligible, the board hopes to speed the replacement of pollution-spewing older model trucks with newer, cleaner ones.

With these changes, the board is specifically targeting independent truck operators that typically drive older diesel trucks that pollute more.

The board lowered the weight limit of trucks eligible for the program to 19,500 pounds from 60,000 pounds. The board also lowered the annual mileage threshold to 15,000 miles from 30,000 miles. In addition, trucks with engines made prior to 2003 are now eligible for funds; eligibility was previously restricted to engines made before 1994.

Also, exhaust system retrofits are now eligible for up to $10,000 in state funds.

“The board understands the need to expand our financial assistance programs and these changes give more small fleet and individual truck owners access to money to clean up their vehicles,” said Mary Nichols, chairman of the Air Resources Board.

Grants are made on a first-come, first-served basis after agency approval of applications. For more information, log on the Air Resources Board website at www.arb.ca.gov, click on the “Funding Programs” link on the left-hand side and then click on the “Voucher Incentive Program.”

Business Inspections

State tax inspectors are preparing to visit Alhambra retailers in order to check if they’ve paid all sales and use taxes to the state and have seller’s permits on display.

In late May, the state Board of Equalization sent notices to businesses in Alhambra’s 91801 ZIP code to warn them that agency inspectors would be visiting. The visits are part of a program the board launched two years ago to crack down on sales and use tax scofflaws. The board estimates that more than $2 billion in sales and use taxes go uncollected each year from retailers.

For more information, log on the board’s website at www.boe.ca.gov.

Staff reporter Howard Fine can be reached at [email protected] or at (323) 549-5225, ext. 227.