The Internal Revenue Service recently issued a notice about proposed regulations that will address the deductibility of state and local tax payments for federal income tax purposes, specifically reminding taxpayers that the IRS position is that federal law controls the characterization of payments, regardless of the treatment under state law. To read the IRS press release, click here.
The California Supreme Court issued a ruling on August 28, 2017 in California Cannabis Coalition v. City of Upland that may have created a loophole for special interests to get around the limitations on tax increases established by Propositions 13 and 218. In the instant case, an initiative was proposed in Upland, California to repeal an ordinance banning medical marijuana dispensaries and instead allow up to three dispensaries to obtain permits, subject to an "annual Licensing and Inspection fee" totaling $75,000. Since this fee exceeds the costs incurred by the government for issuing the license, it is considered a general tax. Normally, such taxes can only be heard at general elections, but an exception was made and the initiative was voted on in a special election.