The California Attorney General has confirmed the Office of Tax Appeals (OTA) may decline to apply a tax regulation in a taxpayer appeal if it conflicts with the relevant statute. OTA must afford appropriate deference to the issuing agency, but its authority extends to setting aside the regulation for that appeal. OTA lacks authority to invalidate or repeal the regulation more broadly or to apply its conclusions outside the specific appeal.
The May Revision of California’s 2024-2025 state budget seeks to block refund claims, worth approximately $1.3 billion for historical tax years, and $200 million per year going forward, by codifying informal guidance recently rejected by the Office of Tax Appeal’s (OTA) decision in the Matter of the Appeal of Microsoft Corporation & Subsidiaries (Appeal of Microsoft) and by granting the Franchise Tax Board’s (FTB) quasi-legislative rulemaking authority exempt from the procedural protections afforded by the Administrative Procedure Act. The May Revision also proposes to suspend net operating loss (NOL) deductions and limit tax credit utilization to $5 million per year for tax years 2025-2027; however, the legislature proposes to apply the changes to tax years 2024-2026 instead.
A California trial court denied the Franchise Tax Board’s (FTB) motion to vacate and modify the judgment declaring FTB Technical Advice Memorandum (TAM) 2022-01 and FTB Publication 1050 invalid underground regulations adopted in violation of the Administrative Procedure Act.
A California trial court granted summary adjudication in the American Catalog Mailers Association’s (ACMA) action against the Franchise Tax Board (FTB), invalidating FTB guidance that says certain online activities exceed the protections of Public Law 86-272 for state income tax purposes. This follows the court’s denial of ACMA’s first motion for summary adjudication, which we discussed in detail in an earlier blog post, where the court found ACMA did not carry its burden to show FTB Technical Advice Memorandum (TAM) 2022-01 and amendments to FTB Publication 1050 are facially invalid because they contradict PL 86-272.
A California trial court denied summary judgment in the American Catalog Mailers Association’s (ACMA) action that seeks to invalidate Franchise Tax Board (FTB) guidance that says certain online activities exceed the protections of Public Law 86-272 for state income tax purposes. However, the court signaled it may invalidate the FTB’s guidance on the basis it constitutes underground regulations and violates California’s Administrative Procedure Act. Continue Reading ›
Pillsbury SALT partner Carley Roberts will be presenting at the Annual Meeting of the California Tax Bar and California Tax Policy Conference on November 3.
On February 15, 2021, the Maryland Court of Appeals issued a decision in Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore City, Case No. 24-C-18-001778 (Md. 2021), upholding the constitutionality of a local ordinance that imposes an annual excise tax on businesses selling advertising space on off-site billboards. The tax in question applies only to businesses that own or control off-site billboards in the City of Baltimore i.e., billboards that are not located on the premises where the goods or services being advertised are offered for sale. Continue Reading ›
On February 12, 2021, Maryland legislators voted to override Gov. Larry Hogan’s (R) veto of H.B. 732, making Maryland the first state in the nation to impose a digital advertising tax. While Maryland’s enactment of the bill is a first, other states have impending digital advertising tax bills, such as New York, Connecticut, Indiana, Nebraska, Washington, Montana and Massachusetts. Maryland’s digital advertising tax, which becomes effective March 14, 2021 (30 days after the Governor’s veto), has been preemptively challenged in U.S. District Court. Continue Reading ›
The New Mexico Court of Appeals decided a case illustrating the heavy risks of failing to comply with a court’s order. Specifically, the Court of Appeals upheld the District Court’s full dismissal of a taxpayer’s refund claim for violating a discovery order. In Bowman v. Manforte, the taxpayer sought a refund of Gross Receipts Tax arguing that her income was exempt as wage income rather than income from an independent business. The New Mexico Department of Revenue Services (“Department”) suspected the taxpayer’s federal tax return would reflect deductions against the income that would be permitted only if the income were business income and not wages for federal income tax purposes. The taxpayer refused to produce the federal tax return, claiming that the return was privileged from civil disclosure under New Mexico’s tax secrecy law. The Department brought the taxpayer’s refusal before the District Court and twice obtained orders requiring the taxpayer to produce the return. After the taxpayer failed to comply with the disclosure orders, the District Court took the dramatic step of dismissing the taxpayer’s refund claim altogether. The taxpayer appealed to the Court of Appeals. Continue Reading ›
In SeeSALT Digest, members of our team examine important issues in play in the State and Local Tax arena. In “Ill-Fated Litigation: Exhausting Administrative Remedies and De Novo Review,” published in State Tax Notes, colleagues Carley Roberts and Jessica Allen take a look at two of the more dangerous pre-litigation pitfalls that can present themselves at any stage of the state or local tax controversy life cycle.
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