Although not without its critics-including the federal government, which in 2000 refused to grant it anticipated funding on the grounds that it wasn't statewide-the program was successful enough that the Franchise Tax Board's role as state collections agent has expanded to include other fees and payments.Ģ007 Annual Report: History (Franchise Tax Board website)Ĭalifornia Democrats' Golden Era: 1958-1966 (Martin Huff interview, conducted by Gabrielle Morris, Regional Oral History Office, Bancroft Library)
In 1992, the FTB began a pilot program for collecting delinquent child support payments, and expanded it to any county that wished to enroll in 1994. In 1985, it began doing the same thing with lottery winnings.
That year, the board began intercepting tax refunds of individuals who owe money to other state and local agencies, and redirecting the money to the agencies owed. In 1975, in the wake of the Watergate scandal, an independent unit of the board began conducting audits of reports and statements filed with the state by candidates for political office, political committees and lobbyists. The board's responsibilities have remained largely unchanged since its formation, with some expansion. In 1950, rather than untangling problems in the existing agency, the Legislature abolished it entirely and established the current Franchise Tax Board. When California had adopted constitutional changes in 1934 creating the civil service system, it neglected to mention the tax commissioner, leaving the means for hiring and firing him unclear. The McColgan inquiry focused, at least officially, on his civil service status rather than his rumored personal problems. He would shut the door and that was it.” Thomas Kuchel, who was serving as state Controller at the time, recalled afterwards that McColgan “did not function.” He would go into his office and his own employees never knew him at work. According to Huff, after almost two decades on the job, McColgan “had become a recluse. In 1948, lawmakers investigated accusations that some of the office's employees were freelancing as tax preparers, and, at least in theory, could take money to file tax returns as private citizens and then review those same returns as public servants.Īlso of concern was the tax commissioner himself, Charles McColgan. The tax commissioner's office soon presented its own problems for politicians. According to the recollection of Martin Huff, the second executive officer of the FTB, “the political climate was such that did not want to attach the income tax to the Board of Equalization.” When the state personal income tax was created in 1935, the responsibility for the revenue it would bring in would have been a boon for any department, and was assigned to the tax commissioner's office rather than the much more powerful Board of Equalization (which administers sales and use taxes) or the state Controller's office. The Legislature passed the Bank and Corporation Franchise Tax Act and formed the Office of the Franchise Tax Commissioner, predecessor to the Franchise Tax Board (FTB), to administer it.
In 1929, California joined a wave of states adopting income taxes during the Great Depression.
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