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(This article originally appeared in the Journal of Multistate Taxation and Incentives, Vol. 28, No. 9.)

The question of whether or not an individual is a resident of a particular state has always been an important issue in the area of state personal income taxation. California, because of its top marginal personal income tax rate of 13.3 percent1, and the large number of high-wealth individuals living in the state, always has been one of the most significant jurisdictions for this issue. Indeed, California, at 13.3 percent, currently has the highest personal income tax rate of any state.2 The significance of the high California rate, and the residency issue in general, recently has taken on added significance as a result of two federal tax law changes.

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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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In “California Office of Tax Appeals Rejects Franchise Tax Board’s Broad Interpretation of California’s “Doing Business” Standard,” the SALT team examines the board’s rejection of the California Franchise Tax Board’s (FTB) extremely narrow interpretation and application of Swart Enterprises, Inc. v. Franchise Tax Board, involving California’s “doing business” standard.

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(This article was originally published by Law360 on August 24, 2018.)

California is the latest to join a growing list of states to ban local taxes targeted at sweetened beverages or similar sugar taxes. California Assembly Bill 1838 signed into law on June 28, 2018, imposes a 13-year ban on any new local taxes on carbonated and noncarbonated beverages and other “groceries.”1 Arizona and Michigan have done the same and three more states, Oregon, Pennsylvania and Washington are considering similar bans. The public policy debates behind these recent legislative enactments are no different than the all too familiar “sin taxes” that harken of decades, if not centuries past.

Aside from the inherent differences between sugary groceries and the likes of tobacco, alcohol or gambling, sweetened beverage taxes imposed at local levels pose serious compliance issues for distributors and retailers. The recent popularity of these taxes at the local level not only has the beverage and retail industry fired up over the compliance issues, but citizens are beginning to recognize the paternalistic nature of these taxes and their regressive effects on the communities.

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