The California Office of Tax Appeals (OTA) held a California resident was not entitled to claim an other state tax credit (OSTC) for taxes paid to Massachusetts because gain from the sale of an LLC membership interest was wholly sourced to the taxpayer’s domicile under California law. Continue Reading ›
Articles Posted in California
California Lawmakers Propose Constitutional Amendment to Abolish the State Board of Equalization
California Democratic lawmakers recently introduced Assembly Constitutional Amendment 11 (ACA 11) which proposes to abolish the State Board of Equalization (BOE) and reassign its responsibilities to other state tax agencies effective January 1, 2026. Continue Reading ›
Property Tax Rate Dispute Merits California Supreme Court Review
For years, some California counties have been imposing disproportionately higher property tax rates on centrally assessed property despite the state constitutional mandate that this property be assessed like locally assessed property.
In a challenge brought by centrally assessed utilities, the California Court of Appeal conceded that the higher property tax rates disproportionally burden utility company property but concluded that this disparity does not violate the California Constitution.
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UPDATE: California Adds New Counties, Further Extends Deadlines to File and Pay Taxes for Businesses and Individuals Affected by Severe Winter Storms
In addition to the tax relief announced in January, the California Franchise Tax Board (FTB) has automatically extended the income tax filing and payment deadlines for businesses and individuals affected by severe winter storms in California until October 16, 2023.
California Extends Deadlines to File and Pay Taxes for Businesses and Individuals Affected by Severe Winter Storms
Following the IRS’s announcement of tax relief for 41 California counties* affected by severe winter storms, the California Franchise Tax Board (FTB) and California Department of Tax and Fee Administration (CDTFA) announced similar relief for state-level taxes and fees.
The California Franchise Tax Board Fails to Follow the Order of Its Market-Based Sourcing Cascading Rules
In the Appeal of Sheward, 2022-OTA-228P (May 25, 2022), the California Office of Tax Appeals (OTA) held the California Franchise Tax Board (FTB) failed to follow its own market-based sourcing apportionment regulation by prematurely using reasonable approximation to source the income of a multistate unitary business. During the tax year 2017, the taxpayer operated a business providing in-person services as a horse racetrack judge in California and Minnesota but failed to file a California return. Related to such services, the taxpayer received Form 1099s from the State of California, the State of Minnesota, and Minnesota Harness Racing, Inc.
2022 Annual Meeting of the California Tax Bar and California Tax Policy Conference
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.
Industry Trade Association Sues California Franchise Tax Board Over “Radical” New Interpretation on Scope of Public Law 86-272 Post-Wayfair
The American Catalog Mailers Association (ACMA), which describes itself as the nation’s leading industry trade association advocating for catalog, online, direct mail, and other remote-selling merchants and their suppliers, has filed suit against the California Franchise Tax Board (FTB) in the San Francisco County Superior Court of California.
ACMA’s complaint seeks a judicial declaration that the FTB’s 2022 publicly-issued guidance related to Public Law 86-272 (PL 86-272) – specifically, Technical Advice Memorandum (TAM) 2022-01 and FTB Publication 1050 – are invalid because (1) they contradict PL 86-272 and the U.S. Constitution; and (2) the FTB did not properly follow the California Administrative Procedure Act’s required rulemaking process before publishing such guidance. In the alternative, ACMA seeks a judicial declaration that the FTB’s new guidance applies on a prospective basis only. ACMA also seeks attorney’s fees and costs of suit for bringing the action to enforce an important right affecting the public interest.
California Court Holds Nonresidents’ Pass-through Income from Intangibles Is Taxable if It Is Classified as Business Income at the Entity Level.
The California Court of Appeal held a nonresident S corporation shareholder’s pro rata share of gain on the sale of goodwill classified as business income by the S corporation has a California source and is subject to tax for personal income tax purposes to the extent of the S corporation’s California apportionment formula and is not sourced 100 percent to the nonresident shareholder’s domicile. Continue Reading ›
California Tax Credits and NOL Deductions Are Back! Governor Signs Legislation Reinstating Business Taxpayer Benefits Limited by 2020 Legislation
California Governor Gavin Newsom has signed legislation (i.e., S.B. 113) to, among other things, reinstate business tax credits and net operating loss (NOL) deductions originally limited by the enactment of A.B. 85 in 2020.