California's Franchise Tax Board, like the IRS, has taken significant steps in the last 18 months to soften its image with individual taxpayers.
The FTB no longer rejects 96% of settlement offers made by cash-strapped taxpayers, as it did in 1997. Today, the agency accepts 44% of so-called "offers in compromise" that allow financially troubled residents to pay less than they owe. The IRS acceptance rate is about 50%.
The state is also far more generous today with installment plans that allow taxpayers to pay off their bills over time. Two years ago, fewer than 2,000 taxpayers were granted installment plans each month; today, the number has risen to 12,000 a month.
Most meet the state's new guideline that anyone who owes less than $10,000 and can pay it off within three years should be allowed to sign up for installment agreements that take the payments directly from the taxpayer's bank account. As a result, the amounts collected from these plans have increased nearly 60% and default rates have declined.
Also like the IRS, the FTB has dramatically decreased seizures, liens and other forcible collections. Seizures declined 37% between 1997 and 1998, while liens dropped 60%, to 93,000.
The declines have not seemed to hurt revenue, however. G. Alan Hunter, head of the FTB's collections division, said the agency collected $1.7 billion in overdue taxes last year, up 8% from the previous year.
FTB Executive Officer Gerald H. Goldberg said the changes were not prompted by the IRS' public humiliation at Senate hearings two years ago but by conversations the FTB initiated with enrolled agents and other tax preparers in mid-1997.
"What we heard was, 'A lot of people think you're being too tough,' " Goldberg said. "We were focused on doing a good job but not as much on customer service."
In recent years, new technology has also allowed the agency to better track returns, answer questions and resolve problems, Goldberg said.
* STATE AUDIT
Although the FTB is second in scope only to the IRS, it has received far less scrutiny. A1