The NorCal Tea Party is the lead plaintiff in a class-action federal lawsuit filed today in Cincinnati against the Internal Revenue Service, seeking damages for what they call “illegal and harassing behavior in the handling and processing of their applications for nonprofit status.”

The NorCal Tea Party, based in the Placer County city of Colfax, is an umbrella group to local chapters across the Golden State’s northern half. Helping it file this lawsuit is Citizens for Self-Governance, a Texas-based group founded and led by Grass Valley attorney Mark Meckler, a co-founder and former national coordinator for Tea Party Patriots.

Meckler and NorCal Tea Party President Ginny Rapini are scheduled to hold a news conference tomorrow, Tuesday, May 21, at the National Press Club in Washington, D.C.

“We stand shoulder to shoulder with all those known and unknown who have been abused by a federal government run amok,” Meckler said. “Instead of just playing defense, it is time for the citizens to go on offense. We are, after all, ‘We the People.’ And when the federal government runs amok, it is up to us reign it in. Neither party in Congress can be relied upon to satisfactorily resolve this issue. They created the IRS, fund the IRS, and oversee the IRS. All of this abuse happened on their watch.”

The IRS’ apparent targeting of conservative groups for special scrutiny about tax-exempt status is dogging the White House and setting the Capitol’s corridors ablaze with anger.

The lawsuit says the NorCal Tea Party “came together to exercise their right to free expression.”

“However, under pain of denial of tax-exempt status, the IRS and its agents singled out groups like NorCal Tea Party Patriots for intensive and intrusive scrutiny, probing their members’ associates, speech, activities, and beliefs,” the complaint says. “NorCal and its members suffered years of delay and expense while awaiting the exemption and spending valuable time and money answering the IRS’s questions. The result was a muffling and muzzling of free expression.”

The suit seeks damages for violation of the Privacy Act and of the NorCal Tea Party members’ constitutional rights, “including damages for loss of benefit of tax exempt status, cost of complying with burdensome requests, loss of donors and membership fees, damages for impairment of constitutionally protected rights, punitive damages, litigation costs, and reasonable attorney’s fees.”

A proposed ballot measure to enact an oil severance tax, with most of the revenue spent on education, has received its official title and summary and is about to start circulating for petition signatures.

Conceived by UC-Berkeley students, the California Modernization and Economic Development Act places a 9.5 percent tax on oil and gas extracted from California; supporters say it would bring about $2 billion of new revenue per year. Of that, about $1.2 billion would be allocated in four equal parts towards K-12 education, California Community Colleges, California State University and the University of California.

Another $400 million or so would be used to provide businesses with subsidies for switching to cleaner, cheaper forms of energy, and about $300 million would go to county governments for infrastructure repair, public works projects, and funding public services.

Californians for Responsible Economic Development, the group behind the measure, has 150 days to collect 505,000 signatures in order to qualify it for the 2014 ballot. The group says it’ll do both grassroots organizing and fundraising for paid signature gathering.

California over recent decades has seen many legislative bills and ballot measures – either proposed, or unsuccessful with voters – to impose such a tax. More than 30 states have oil and gas severance taxes, but opponents say such a tax could reduce California’s oil production, costing jobs.

Former U.S. Labor Secretary Robert Reich, now a Cal professor, endorsed the effort in February, saying using oil severance tax revenue for education “should be a no-brainer. It will only improve our schools. The real question is why California hasn’t done this long before now.”

The measure last week won support from state Senator Noreen Evans, D-Santa Rosa, whose SB 241 would impose an oil severance tax to fund education and parks in California. She said she supports any effort to let “California to collect on these vast and irreplaceable natural resource revenues that should fund one of the most important core services of government – education. It’s past time California ends the oil industry’s free ride and finally sets a solid revenue stream towards funding government’s education obligations.”

CMED campaign manager Jack Tibbets, a junior at Cal, said his staff will be working closely with Evans’ office. “Should the Senate fail to vote and pass SB 241, our campaign will work with public officials, donors, interest groups and students to produce an extraction tax for the 2014 ballot.”

Here’s the official title and summary issued today by the state Attorney General’s office:

TAX ON OIL AND NATURAL GAS. REVENUES TO EDUCATION, CLEAN ENERGY, COUNTY INFRASTRUCTURE AND SERVICES, AND STATE PARKS. INITIATIVE STATUTE.
Imposes 9.5% tax on value of oil and natural gas extracted in California. During first ten years, allocates revenues: 60% to education for classroom instruction (split equally between UC, CSU, community colleges, and K-12 schools); 22% to clean energy projects and research; 15% to counties for infrastructure and public health and safety services; 3% to state parks. Thereafter, allocates 80% to education, 15% to counties, and 5% to state parks. Prohibits passing tax on to consumers through higher fuel prices.
Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Increased state revenues from a new oil and gas severance tax of $1.5 billion to $2 billion per year initially (which could either grow or decline over time), to be spent on public schools, colleges, and universities; clean energy research and development; local infrastructure projects; and state parks. (13-0002.)

You might be getting a call soon from the state Franchise Tax Board if you didn’t file a state income tax return for 2011.

The board is contacting more than one million Californians who didn’t meet the Oct. 15, 2012 deadline. It’s comparing records of filed tax returns with more than 400 million income records it receives each year from third parties to find those who earned California income but didn’t file a return. The FTB gets income information from the IRS, banks, employers, state departments, and other sources, and also uses occupational licenses and mortgage interest payment information to detect others who may also have a requirement to file a state tax return.

Around here, the FTB is looking up 27,751 people in Alameda County; 19,466 in Contra Costa County; 10,855 in San Mateo County; 25,435 in Santa Clara County, and 3,876 in Santa Cruz County. Last year, FTB collected more than $714 million statewide through these efforts.

Those contacted have 30 days to file a state tax return or show why one is not due. When a required return is not filed, FTB issues a tax assessment using income records to estimate the amount of state tax due; that assessment includes interest, fees, and penalties that can total up to 50 percent.

With supermajorities in both legislative chambers, Democrats must walk a finer line than ever, Assemblywoman Nancy Skinner said Wednesday.

My coffee meeting with Skinner, D-Berkeley, yielded a wide-ranging conversation about her party’s considerable new power and the responsibilities that go with it, as well as her own legislative priorities. The former Berkeley councilwoman has just won re-election to her third and final Assembly term, and she sees a productive but sensitive session ahead.

“We’ve been given this privilege by the voters and we want to be respectful of the privilege we’ve been handed,” she said Wednesday.

The caucus must choose its battles, she said, but not choose them so carefully that none ever get fought.

She’s in a position to help choose those battles because, as the Assembly Rules Committee’s chair, Skinner is among the Legislature’s top leaders. Rules is responsible for assigning bills to committees, setting salaries for legislative staff, waiving rules and overseeing the Assembly’s business; it’s basically an executive committee for the chamber, and its seats are coveted.

But Skinner on Wednesday said the supermajorities were achieved by votes in individual districts, not a statewide vote, and so lawmakers must move cautiously to ensure they don’t salt the field.

For example, she said, voters’ approval of Proposition 30 – Gov. Jerry Brown’s measure temporarily increasing sales taxes and income taxes for the state’s richest residents to fund K-12 and higher education – was “great,” but it would take a lot more revenue to return the state’s schools, colleges and universities to their heyday.

“There’s probably appetite for some more revenue,” she said, but it has to be something that’s palatable to voters.

For example, state Sen. Ted Lieu’s proposal to triple the Vehicle License Fee – which was slashed by former Gov. Arnold Schwarzenegger, blowing a huge hole in the state budget – was withdrawn almost as soon as it was advanced last month due to public backlash. And voters in November 2010 handily rejected Proposition 21, which would’ve boosted the VLF to bankroll state parks. Voters just don’t like the VLF, Skinner said.

“We have to look at the range of … tax expenditures, what I call tax loopholes or tax giveaways, that were part of various budget deals in order to get a Republican vote” in past years, she said.

One such loophole was the single-sales factor, just repealed last month by Proposition 39; that’ll bring in about $1 billion a year, half of which for the first five years is earmarked for projects increasing energy efficiency and creating green jobs. Skinner this month introduced the Assembly version of a bill to implement that.

“But there’s others like that,” she said, citing the “net operating loss carryback” deduction that was suspended for 2010 and 2011 but will apply to 2012’s corporate taxes.

This and other loopholes, if closed, “could be worth from $2.5 billion to $4 billion, which is significant,” she said.

And of course there’s the possibility of “split-roll” reform of Proposition 13 so that residential properties remain protected but commercial properties are re-assessed more often, she said. Assemblyman Tom Ammiano, D-San Francisco, already has announced a bill to tighten state laws enacted under Prop. 13 so that it’s harder for businesses to avoid re-assessment and higher taxes when property changes hands – a half-step toward split-roll that wouldn’t require voters’ approval of a ballot measure.

Lots more, after the jump…
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With the fiscal cliff approaching, four dozen California millionaires have renewed their call for Congress to let tax cuts expire for America’s richest citizens.

The millionaires are part of the national group Patriotic Millionaires for Fiscal Strength, a movement of more than 200 Americans with incomes over $1 million a year calling for higher taxes on incomes of that level. They’re joining with The Action, a broad coalition of labor and progressive groups pursuing the same goal.

“The rich have done extremely well in America for the past 30 years and it is past time for them to begin paying more taxes to support better public services,” retired attorney Guy Saperstein of Piedmont, one of the millionaires, said in today’s news release.

Another of the millionaires, former Wall Street Executive and author Ken Morris of Ross, said “fiscal intelligence suffered while millionaires benefited from GOP intransigence on fair taxation for far too long.”

“For the sake of renewing middle class economic health, it is high time to undo those policies by allowing the Bush tax cuts on the wealthiest 2 percent of Americans to expire,” he said.

Follow after the jump for a full list of the California millionaires…
Read the rest of this entry »

Hot on the heels of a poll showing support for altering Proposition 13 so commercial properties can be taxed at their current value, a Bay Area lawmaker says he’ll pursue exactly that.

The “split roll” property tax, in which all of Proposition 13’s protections for residential properties would remain but commercial properties would be regularly re-assessed, has been a goal of many Democrats for quite some time. But now, with a super-majority in both the Assembly and the state Senate as well as a Democratic governor, they may be in a position to actually do something about it.

A Public Policy Institute of California poll found majorities – 57 percent of adults, 58 percent of likely voters – favor such a plan; it’s supported by 66 percent of Democrats and 58 percent of independents, while Republicans are split (47 percent in favor, 48 percent opposed). The poll of 2,001 Californians was conducted Nov. 13-20; it has a 3.5-percentage-point margin of error for all adults and a 4-point margin of error for likely voters.

Assemblyman Tom Ammiano, D-San Francisco, announced this morning he’ll introduce commercial re-assessment legislation this session – not his first bite at this apple, but perhaps he’s feeling better about his chances.

“Prop. 13 is not the untouchable third-rail anymore. It’s more like the bad guy with the mustache who has tied California to the rails with the fiscal train wreck coming,” he said in his news release. “This year’s election, both at the federal and state level, shows that people recognize we have to improve revenue to maintain needed services. Reform of Prop. 13 is one possibility.”

Actually changing Proposition 13 would require another ballot measure, but Ammiano aims to reduce corporations’ ability to structure ownership to avoid having property reassessed when it changes hands. The change would not be a tax increase, he noted, but would increase needed revenues for education and other uses by taxing properties at their actual value, rather than leaving those values at artificially depressed levels.

“Corporations want to be treated as people when it suits them, as in the Citizens United case, but when it comes to paying their fair share of taxes, they are looking for a deal that real people – like you and your neighbor – can’t get,” he said.

Congress and the White House might be at loggerheads over how to address the “fiscal cliff,” but activists in California and across the nation aren’t letting any grass grow under their feet.

The Action – a broad coalition of labor and progressive groups demanding that the Bush tax cuts be allowed to expire for those making more than $250,000 per year – organized phone banks this past Saturday at 38 sites across California, including Burlingame, Daly City, El Sobrante, Los Altos, Martinez, Morgan Hill, Oakland, Palo Alto, San Francisco, San Leandro, San Lorenzo, Santa Clara, Santa Cruz, Santa Rose, Sebastopol and Walnut Creek.

The phone bank targeted California voters, who were urged in turn to call their representatives in Congress.

“For months, Republicans in Congress have held the middle-class hostage to tax cuts for the wealthiest 2 percent of Americans,” said a Friday e-mail announcing the phone banks. “The Senate has already passed legislation to keep middle-class taxes from rising, and it’s time for the House of Representatives to act. It’s time to set our priorities straight: Tax cuts for the wealthy means fewer Pell Grants, fewer Head Starts and more kids shoved into crowded classrooms.”

Former U.S. Labor Secretary Robert Reich, now UC-Berkeley professor, is helping to define the debate for Democrats (via MoveOn.org):

On Tuesday evening, members of the Sacramento Alliance of Californians for Community Empowerment will be out singing some special, re-purposed Christmas carols “to urge Congress to vote for middle class tax cuts without holding them hostage for tax cuts for the wealthy.” They’ll be at 16th and J streets at 6 p.m., performing for shoppers, commuters and people waiting in line to see former President Bill Clinton speak at the Sacramento Speakers Series – a friendly crowd, one would think.

National activism is afoot too: Several organizations are planning a Congressional Call-In Day this Wednesday, with a toll-free number, 800-998-0180, that will connect callers directly to their Congressional leaders. As the National Committee to Preserve Social Security and Medicare puts it, the goal “is to flood members of Congress with calls reminding them that Americans of all ages and political parties oppose cutting middle-class benefits to pay for deficit reduction. Our message to Congress is simple: ‘NO CUTS to Social Security, Medicare and Medicaid. They should not be a part of this deficit debate.’ ”

And there’ll be a demonstration at noon Friday outside House Minority Leader Nancy Pelosi’s San Francisco office – at 7th and Mission streets – urging her to vote against any “grand bargain” solution. California Alliance for Retired Americans, Jobs with Justice, Gray Panthers of San Francisco and other groups are expected to take part.

“We’re not broke,” said Hene Kelly the California Alliance for Retired Americans’ legislative director. “We’ve been robbed. If Congress wants to get our economy back on track we need to focus on additional investments in jobs and services that rebuild our economy. That means Congress must raise more revenue by making the wealthy and big corporations pay their fair share of taxes. Anything less would be a grand swindle of working people, not a grand bargain.”

California’s Franchise Tax Board announced this morning that it’s holding more than $14 million in returned state income tax refunds, mostly for taxpayers who moved and didn’t update their addresses.

“I want to make sure all taxpayers receive their refunds and as quickly as possible,” state Controller John Chiang, who chairs the FTB, said in a news release. “This is an easy way update your contact information and get the refund before the holiday season.”

Nearly 48,000 refunds, ranging from $1 to $35,000, were returned this year by the U.S. Postal Service. Here’s the breakdown for some Bay Area counties:

Alameda – 1,382 returns worth $442,000

Contra Costa – 730 returns worth $254,000

Santa Clara – 1,681 returns worth $590,000

San Mateo – 507 returns worth $159,000

Santa Cruz – 341 returns worth $63,000

San Francisco – 918 returns worth $497,000

If you suspect some of this money might belong do you, update your address on the FTB’s website; the board will re-issue returned refunds automatically once a new address is received.

Anyone expecting a refund or unsure if they received one can check their status online as well. As of November 29, the board had issued more than 10 million refunds worth nearly $10 billion.

Finding some awesome holiday gift deals on this Cyber Monday? They may not be quite as awesome as you think, Californians: You owe taxes on those purchases.

California law imposes tax not only on in-state purchases, but also on items bought out-of-state for use in California; this “use tax” has been law since 1935, to prevent out-of-state retailers from having a competitive advantage over California-based vendors who were required to report sales tax beginning in 1933. And the advent of online shopping hasn’t changed anything.

So if an out-of-state or online retailer doesn’t collect this tax for an item delivered to California, it’s the purchaser’s duty to pay it, based on the tax rate for the area in which they live.

There are two ways to pay any use tax you may owe: Register and pay on the state’s eReg website after each purchase; or pay it as a line item on your state income taxes, using the Board of Equalization’s and the Franchise Tax Board’s use-tax calculation based on your adjusted gross income.

The average California family owes about $61 in use tax each year, and the Board of Equalization estimates that California consumers and businesses failing to report and pay the use tax they owe costs the state more than $1.1 billion a year. Like sales tax, this money helps fund programs such as public education, public safety, and transportation.

The proponent of a proposed ballot initiative that would hike various taxes to fund California’s public universities and community colleges has been cleared to start collecting petition signatures, Secretary of State Debra Bowen said Monday.

Here’s the official title and summary prepared by the state attorney general’s office:

TAXES TO FUND CALIFORNIA PUBLIC UNIVERSITIES AND COMMUNITY COLLEGES. INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE. Imposes new taxes on gasoline and diesel fuel ($0.025 per gallon), alcohol ($0.05-$1.65 per gallon), and cigarettes ($0.0125 each); raises vehicle license fees by 0.5% of vehicle market value. Allocates new revenues 80% to University of California and California State University, 20% to California Community Colleges. Maintains state funding for higher education at or above 2009-2010 levels and student financial aid at or above 2010-2011 levels. Caps student tuition and systemwide fees at 2009-2010 levels. Creates joint commission to recommend cost efficiencies in higher education. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Additional state tax revenues from increases in various taxes of about $2.2 billion annually that would be dedicated to public universities and colleges. Depending on whether the new state tax revenues are sufficient to replace lost tuition and fee revenues (due to lower student tuition and fee levels), unknown effect on total funding for public universities and colleges. Depending on whether the new state tax revenues are sufficient to satisfy increased state spending requirements on public universities and colleges, unknown effects on other parts of the state budget and the state General Fund. (12-0015.)

Proponent Jesse Lucas – the California State University-Los Angeles Associated Students’ Legislative Affairs Committee Student-at-Large – must collect at least 807,615 valid signatures from California registered voters by April 15 in order to qualify this for the ballot in November 2014.