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(This article was originally published by Law360 on January 15, 2019.)

The growing tension between government promises of transparency and taxpayers’ right to confidentiality is likely to continue in 2019. Although the spirit of government transparency to enhance public access is well-meaning, this lofty goal often conflicts with taxpayer confidentiality and the associated expectation of privacy. Striking the appropriate balance between these two often conflicting positions can prove difficult, as highlighted by two recent developments, namely, the Pennsylvania Board of Finance and Revenue’s push to record and publish hearings on its website and the California Office of Tax Appeals’ attempts to address concerns regarding closed hearings and sealed records.

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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.