California

California’s Proposition 15 Is Failing While San Francisco Accepts a Bevy of Local Tax Measures

Posted November 9, 2020

by Craig A. Becker, Breann E. Robowski and William L. Bennett

Craig A. Becker

Breann E. Robowski

William L. Bennett

On November 3, California and San Francisco voters were asked to decide several tax‑related referenda with major implications across all business industries. Although it is too early to state with certainty, voters appear to have rejected Proposition 15, a measure that would introduce a so-called “split roll” property tax system. On the same day, voters in San Francisco overwhelmingly approved a battery of tax-related measures: Proposition F, which overhauls San Francisco’s business taxes; Proposition I, which doubles the real estate transfer tax on transactions exceeding $10 million; Proposition L, which institutes an aggressive new “Overpaid Executive Gross Receipts Tax;” and Proposition J, which repeals and replaces an annual parcel tax.

Pillsbury attorneys Craig Becker, Breann Robowski, and William Bennett explain.

To read the full article, please click here.

CalTax’s Splitting the Property Tax Roll Webinar Series

Posted September 17, 2020

by Pillsbury SALT

Pillsbury SALT

Pillsbury partners Breann Robowski and Craig Becker will present during CalTax’s Splitting the Property Tax Roll webinar series in October.

Splitting the Property Tax Roll, a webinar series on the Technical Provisions of Proposition 15, will feature a new episode every Tuesday in October.

Breann will present during Episode 1, “California’s Property Tax System” on October 6. The speakers will discuss what California’s property tax system was like prior to the passage of Proposition 13 in 1978, provide an overview of the current property tax structure and how the measure has evolved over time, and discuss the provisions of Proposition 15.

Craig will present during Episode 2, “Ready, Set, Split Roll: The Impact of Proposition 15″ on October 13. This webinar will cover the economic impact of Proposition 15, including how the measure would impact consumers and private-sector employment. Speakers will cover how to interpret Proposition 15, drafting flaws, and how the measure would have specific impact on certain industries, including agricultural properties and vineyards, energy, and telecommunications.

For more information, please visit the event page.

CalTax members may find a recording of Breann’s presentation here and Craig’s presentation here.

Council on State Taxation’s 2020 Property Tax Webinar

Posted September 9, 2020

by Pillsbury SALT

Pillsbury SALT

cost-300x90 Pillsbury attorneys Craig Becker and Robert Merten III will present during COST’s 2020 Property Tax webinar, held in cooperation with the International Property Tax Institute (IPTI).

Craig will present “California – Examining Property Tax Issues in the Golden State” on Wednesday, September 16 at 4:10pm. The presenters will address how business taxpayers may have to deal with split-rolls, transfer taxes as a result of the intersection of the Ardmore decision and Prop 13, the erosion of Proposition 13 protections through post-Uplands litigation that may make it easier to increase taxes at the local level, and technology transfer agreements. In addition, renovations of buildings have the potential to trigger “New Building” assessments in California.

Robert will present “Your Tax Department Should Work as a Team – Strategies to Make it Work – Even When Working Remotely,” on Thursday, September 17 at 2:05pm. In this session, the panelists will provide examples of how the different tax types intersect and how those relationships need to be taken into account, especially in the current stay-at-home COVID-19 environment.

For more information, please click here.

Council on State Taxation’s Pacific Southwest Regional State Tax Webinar

Posted August 12, 2020

by Pillsbury SALT

Pillsbury SALT

cost-300x90 Pillsbury partners Jeff Vesely and Annie Huang will present “Market-Based Sourcing Issues in the Southwestern States with a Focus on California” during COST’s Pacific Southwest Regional State Tax Webinar on August 27.

California Court of Appeal Concludes That a Trust With a Non-California Trustee May Be Subject to Tax on All of Its Gain from the Sale of Stock

Posted August 6, 2020

by Annie H. Huang and Jeffrey M. Vesely

Annie H. Huang

Jeffrey M. Vesely

The California Court of Appeal recently came down with a published decision in the Paula Trust case, a case involving the taxation of trusts and limited partners—two very nettlesome issues in California. (Steuer v. Franchise Tax Board, No. A154691, 2020 BL 240383 (Cal. Ct. App. 6/29/20)). The Court of Appeal reversed the trial court and held that the trust was taxable on the entire capital gain generated from the sale of stock in various businesses. The case involves California’s unique and somewhat confusing system of taxing trusts. Generally speaking, the taxability of a trust is dependent upon the residency of fiduciaries (i.e., trustee) and beneficiaries. In this case, there were two trustees—one who was a California resident and one who was a Maryland resident, along with a contingent beneficiary who was a California resident.

California Court of Appeal Concludes Transfer Tax Not Applicable to Purchase of Realty Encumbered by Long-Term Leasehold

Posted June 29, 2020

by Craig A. Becker, Breann E. Robowski, Richard E. Nielsen and Robert P. Merten III

In 731 Market Street Owner LLC v. City and County of San Francisco 731_Market_St-300x180 (June 18, 2020), California appellate court affirms that local realty transfer tax does not apply when leasehold has a remaining term of 35 years or more. SeeSALT authors Craig Becker, Breann Robowski, Richard Nielsen, and Robert Merten III explain.

Read the full article here.

The Split-Roll Initiative Is Poised to Rock California’s Property Tax System

Posted June 29, 2020

by Craig A. Becker, Richard E. Nielsen and Breann E. Robowski

Craig A. Becker

Richard E. Nielsen

Breann E. Robowski

This November, California voters will decide whether commercial Split-Roll-Initiative-300x180 and industrial properties will lose their Proposition 13 protection against property tax reassessment. Authors Craig Becker, Richard Nielsen, and Breann Robowski explain.

Read the full article here.

California Legislature Passes Governor Newsom’s Proposal to Suspend California Net Operating Loss Deductions and Limit Tax Credits during 2020 – 2022

Posted June 24, 2020

by Jeffrey M. Vesely, Craig A. Becker, Carley Roberts and Breann E. Robowski

AB-85-300x180 SeeSALT partners Jeff Vesely, Craig Becker, Carley Roberts and Breann Robowski break down Governor Newsom’s proposed tax legislation, recently passed by the California Legislature, to raise additional income tax revenue to assist in balancing the California budget. (AB 85). The Senate and Assembly each achieved the two-thirds majority vote required for California tax increases (27-11 in the Senate and 56-20 in the Assembly), with Governor Newsom expected to sign the legislation later this week.

To view the full article, please click here.

California Supermajority Tax Challenge Cases are Onto the Next Level: Last Trial Court Ruling Issued

Posted May 18, 2020

by Robert P. Merten III

Robert P. Merten III

A San Francisco trial court judge has ruled that Proposition G, a parcel tax to fund educational purposes that passed with a 60.76% vote in 2018, is a valid voter initiative that did not require a two-thirds supermajority vote like local special taxes introduced by mayors or local boards of supervisors. The same deciding judge already issued a pair of rulings in favor of San Francisco last July on similar supermajority vote validity-challenging actions concerning San Francisco’s Homelessness Gross Receipts Tax and Early Care and Education Commercial Rents Tax. Both previous rulings are currently under separate appeals in the First District Court of Appeal.

OTA Rules in Precedential Opinion Taxpayer Entitled to Interest Abatement Due to FTB’s Delays in the Protest Process

Posted April 30, 2020

by Carley Roberts

Carley Roberts

CA_OTA-Corner1080-300x169

The California Office of Tax Appeals held the Franchise Tax Board abused its discretion in failing to abate interest for a 248-day delay caused by the FTB’s failure to assign a protest hearing officer to the taxpayer’s protest. Taxpayer wins involving interest abatement requests on appeal are fairly uncommon in California and even more uncommon in precedential opinions. This makes exploring a taxpayer’s recent win before the OTA especially worthy.

The FTB has discretionary authority to abate interest related to a proposed deficiency to the extent the interest is attributable in whole or in part to an unreasonable error or delay by an officer or employee of the FTB in performing a ministerial or managerial act. On appeal, the OTA only reviews FTB’s interest abatement determinations for abuse of discretion. This makes a taxpayer’s burden of proof on appeal much greater than the ordinary preponderance of the evidence standard. The taxpayer must show the FTB exercised its discretion “arbitrarily, capriciously, or without sound basis in fact or law.”