The law governing BF&R's composition and the manner in which it hears appeals has not been altered in more than 50 years. BF&R has been criticized for its lack of independence from the Department of Revenue, whose decisions were the subject of the appeal. Treasury worked in a bipartisan fashion with leaders of the business, legal and tax accounting communities to help craft Act 52 of 2013. The law, effective April 1, 2014, changed BF&R as described below:
The former six-member Board (the Treasurer, the Auditor General, the Attorney General and three agencies under the Governor's jurisdiction, including the Department of Revenue), was replaced by a three-member independent Board. Two members were appointed by the Governor and confirmed by the Pennsylvania Senate - one initially serving a four-year term and one serving a six-year term. All subsequent terms will be for six years. The State Treasurer or his designee fills the third seat and remains as Chair. The new Board members must:
Appointed members serve until their successor is qualified and are renominated.
Effective April 1, 2014, the law prohibits Board members and Board staff from participating in any ex parte communications with a taxpayer or their representative or the Department of Revenue regarding the merits of any tax appeal pending before the Board.
The Board's Regulations, Chapter 702, Subchapter D, discuss in more detail.
It is the policy of the Board to encourage compromise settlements as a judicious means of resolving tax matters thereby reducing the costs associated with potential litigation. The Board's regulations, Chapter 703, Subchapter B, discus in more detail!
Decisions of the Board, including dissenting opinions, are published (after deletion of certain confidential information) on a publicly accessible, searchable, internet website. The database does not contain any decisions until after April 1, 2014.
The primary thrust of the recent Tax Reform Code Amendment was to create more independence for Board of Finance and Revenue decisions. Accordingly, the Department of Revenue no longer sits in judgment, but instead as an advocate, in state tax matters at the second level of appeal. As a consequence, Revenue now possesses the right to present evidence and argument before the Board as it has automatic statutory standing.
BF&R hearings remain open to the public.
Taxpayers may be represented before the Board by themselves, by an attorney, by an accountant, or by another representative so long as the representation does not constitute the unauthorized practice of law.
Decisions from the Board of Finance and Revenue may be appealed to the Commonwealth Court and will be heard de novo (i.e., no formal record, such as a transcript, will be made before the Board and new evidence may be presented on appeal to court).