FTB Archives

FTB to Hold Interested Party Meeting Concerning Its Financial Institution Program that Identifies Accounts of Delinquent Tax Debtors.

The Franchise Tax Board (FTB) is having a public hearing regarding its Financial Institution Records Match (FIRM), one of its most important tools in the collection of delinquent tax liabilities. The hearing is scheduled for 1:00 p.m., on Wednesday, March 27, 2013, at the Franchise Tax Board, 9646 Butterfield Way, Town Center, Valley Quail Room, Sacramento, California. The hearing will allow interested parties to weigh in on the FTB's administration of FIRM, an enforcement tool used to collect delinquent taxes and non-tax debts of individuals and business entities.

FTB Loses against an Out-of-State Nevada Corporation Owned by California Resident

In February, the Franchise Tax Board (FTB) lost a case, DANIEL V INC. v. Franchise Tax Board, in a Los Angeles Superior Court where it had asserted that a Nevada Company was commercially domiciled in California because it was owned by a California resident, Ron Lane. The FTB assessed taxes, interest and penalties in excess of $2.27 million for the 1997 and 1998 tax years. The Company appealed through the FTB appeals process and then the Board of Equalization, losing in both instances. The Company then paid the taxes, and sued the FTB for a refund.

FTB Shares Common Tax Issues for Corporations

The California FTB shared some of the most common tax audit issues for corporations today. Heading the list is the cost of performance and sourcing of intangible sales, along with sales factor and gross receipts, abusive tax shelters and credits. If you have questions about how this may affect your business, please contact our office at (916) 488-8501.

BNA Article Argues that Quill Safe Harbor Extends to Sales of Intangibles Through the Internet.

The Bureau of National Affairs (BNA) has published an article which argues that the activities involved in selling intangible goods, such as songs and digital books, by means of the Internet are not sufficiently connected to states so as to permit states to tax them. The article confines its analysis to an explication of Commerce Clause "nexus," but it also asserts along the way that the selling of intangibles on the Internet may also be protected from taxation by the Due Process Clause.

Franchise Tax Board Issues Ruling On Throwback Rule

The California Franchise Tax Board (FTB) recently issued a Chief Counsel Ruling 2012-03 addressing the throwback rules applied to sales made, by California based corporations, to purchasers located in foreign jurisdictions and other states. The throwback rule under California Revenue and Taxation Code (CRTC) Section 25135(a)(2) says that if tangible personal property is shipped from California to a state where the taxpayer is not taxable the sales will be "thrown back" in the numerator of the California sales factor.

FTB Advises Taxpayers on Gillette

On October 2, 2012, the Court of Appeal issued its decision in Gillette v. Franchise Tax Board. The case revolved around the issue of whether taxpayers could elect to utilize the apportionment formula contained in the Multistate Tax Compact instead of the mandatory double-weighted sales factor methodology contained in Revenue and Taxation Code Section 25128. The trial court had originally dismissed the suit for refund on the grounds that such an election was not available as a matter of law. On October 2, the Court of Appeal reversed the trial court's judgment of dismissal, finding for the taxpayer, and held that such an election was available.

L.A. Attorney and CPA Arrested for Promoting Abusive Tax Shelters

According to the FTB, two professionals cost the state more than $7.6 million due to their involvement promoting an abusive tax avoidance transaction (ATAT). Each faces three felony counts of aiding in the preparation of false state income tax returns and one felony count of conspiracy.

California Couple Receives Prison Sentence in Offshore Account Tax Evasion Case

Sean and Nadia Roberts of Tehachapi, California, pled guilty before the Eastern District of California to a criminal information charging them with filing a false tax return under Internal Revenue Code ยง 7206(1). The charge is related to an undisclosed Swiss bank account that they maintained at Union Bank of Switzerland (UBS), as well as other offshore bank accounts, the Justice Department and the Internal Revenue Service (IRS) announced today.

Amazon to Begin Collecting Tax in California - Amazon gets a Break and California gets Jobs

A year ago, California changed its tax laws requiring online retailers to collect sales tax from California residents and businesses who make purchases on-line. California is expecting $200 million in annual sales tax from online retailers, with Amazon being the largest contributor by far. Amazon responded by ending its marketing relationship with thousands of California-based website businesses and began working to overturn the law. Ultimately, however, Amazon reached a compromise with Governor Brown and the California legislature to get a year's reprieve from collecting sales tax, now scheduled to begin September 15th, in exchange for Amazon's promise to add jobs and warehouses in California.

California Court Upholds Use of Multistate Tax Compact Apportionment Formula

California's First District Court of Appeals issued an opinion on July 24, 2012 giving corporations relief from a 1993 California state law that gave double weight to sales, thereby increasing corporate income taxes on out-of-state corporations while giving those based in California possible relief from taxes. In Gillette Co. v. Franchise Tax Board, the Court ruled that California must comply with the multi-state compact which determines a corporation's taxable income based on three equally weighted factors: payroll, property and sales.

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For more information about our tax law services, or to discuss your tax matter, call our Sacramento office at (916) 488-8501 or toll free at (800) 684-7147. You may also send us an inquiry via email.

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