News & Analysis as of

Franchise Tax Board

Franchise Tax Board Penalties: Accuracy-Related Penalties, Part III: Substantial Misstatements

by Moskowitz LLP on

We continue our discussion of Franchise Tax Board (FTB) accuracy-related penalties with penalties relating to substantial understatements or misstatements of income and asset values....more

Franchise Tax Board Penalties: Accuracy-Related Penalties, Part II: Negligence

by Moskowitz LLP on

The penalties for negligent errors on your tax return can be high, but they pale in comparison to those imposed if the government (federal and/or state) concludes that your mistakes were intentional. In this post, we are...more

Franchise Tax Board Penalties: Accuracy-Related Penalties, Part I: The Basics

by Moskowitz LLP on

It’s not enough to just file your tax returns and pay some amount to the government – the penalties for incorrect returns can be as significant as those for late filing and payment. There are quite a few accuracy-related...more

FTB Publishes Disinformation About Corporations

by Allen Matkins on

Recently, I happened across a summary of the “key features” of a corporation on the California Franchise Tax Board’s website. Recognizing that it is always a challenge to summarize accurately complex legal matters, I do beg...more

New California Office of Tax Appeals Discusses Emergency Regulations

by McDermott Will & Emery on

The New California Office of Tax Appeals (OTA) on November 6, 2017, held an interested parties meeting in Sacramento to discuss the contents of a draft of emergency regulations to guide both income tax appeals from the...more

Potential Traps for the Unwary in the California Office of Tax Appeals Draft Regulations

by Reed Smith on

The California Office of Tax Appeals (the “OTA”), the new tax tribunal that will be assuming some of the functions of the California State Board of Equalization (“BOE”), has issued its initial set of draft regulations. The...more

California’s New Office of Tax Appeals Issues Preliminary Draft of Procedural Rules that Is Silent on Discovery Matters

by McDermott Will & Emery on

As part of Governor Jerry Brown’s 2017 budget bill, the California State Board of Equalization (SBE) was stripped of its functions that had been authorized by statute, leaving principally property tax matters deriving from...more

California Expands Voluntary Disclosure Program for Out-of-State Trusts

by Reed Smith on

On September 25, Governor Brown signed into law Senate Bill No. 813, which updated the California Voluntary Disclosure Program (VDP) to include out-of-state trusts with California beneficiaries and non-resident partners of...more

New California Tax Agencies’ Roles Clarified

On September 16, 2017, California Governor Jerry Brown signed Assembly Bill (A.B.) 131 into law, making various changes to the Taxpayer Transparency and Fairness Act of 2017 (Act) enacted on June 27, 2017. The Act overhauled...more

California State Board of Equalization Gutted

The Taxpayer Transparency and Fairness Act of 2017 - Established by the California Constitution in 1879, the California State Board of Equalization (the “BOE”) has been the agency charged with administering most of the...more

State Tax Update for Delaware Corporations

by Dechert LLP on

While the State of Delaware has numerous attractive aspects for entities that incorporate there (a flexible corporation statute, the well-respected Court of Chancery, a legislature that prioritizes the stability of Delaware’s...more

California Legislature Passes Bill That Creates Two New Tax Agencies and Reduces the Board of Equalization’s Powers

Major changes to California’s tax policies got a step closer after the California Legislature passed Assembly Bill 102, the Taxpayer Transparency and Fairness Act of 2017 (Act) on June 15, 2017, as part of the state budget....more

California FTB Provides Guidance on Certain Section 382 Calculations - Tax Update Volume 2017, Issue 3

by Pepper Hamilton LLP on

California requires taxpayers that have income within and outside the state to "apportion" their overall income between the two categories based upon certain factors and rules for determining their California tax liability....more

Swart's Athwart California's Taxation of Out-of-State Corporations

by Nossaman LLP on

The California Franchise Tax Board (“FTB”) started 2017 with a setback as the Court of Appeal for the Fifth Appellate District held in Swart Enterprises, Inc. v. Franchise Tax Board that the FTB could not impose California’s...more

California Court of Appeal Holds Doing Business ? Any Activity Engaged In for Pecuniary Gain

On January 12, 2017, the California Court of Appeal held in a published opinion that a taxpayer passively holding a 0.2 percent interest in a California-based limited liability company (CA LLC) was not “doing business” in the...more

O Frabjous Day! Court Holds Passive Member Is Not “Doing Business”

by Allen Matkins on

The State of California imposes its franchise tax on every corporation (other than a bank, financial corporation or exempt corporation) that is “doing business” in California. Cal. Rev. & Tax Code § 23151. This tax is...more

California FTB Schedules Interested Parties Meeting on Short Notice to Discuss Issues in the Regulations on Sourcing Income from...

by McDermott Will & Emery on

The California Franchise Tax Board has scheduled an Interested Parties Meeting to discuss proposed changes to its apportionment regulations. Several years ago, when the statute called for sourcing receipts from services and...more

Did You Make the Multistate Tax Compact Apportionment Election in California? Watch Out for Penalties

by Reed Smith on

On December 31, 2015, the California Supreme Court ruled against the taxpayer in The Gillette Company v. Franchise Tax Board. The United States Supreme Court denied review of Gillette on October 11, 2016. Thus, Gillette is...more

Breaking News: U.S. Supreme Court Denies Review of Gillette

by Reed Smith on

On October 11, 2016, the United States Supreme Court denied review of the California Supreme Court’s decision in The Gillette Company & Subs. v. California Franchise Tax Board. The issue was whether Gillette was required to...more

Res Judicata: California Mandamus Claims Are Not Fundamentally Distinct From Federal Counterparts Under California’s Primary...

The age-old doctrine of res judicata is as strong as ever in California. In Franceschi v. Franchise Tax Board, et al. (B267719, filed July 8, 2016) the California Court of Appeal Second District, held that Ernest Franceschi’s...more

Operation Underground Economy

The California Department of Insurance’s news release on its latest efforts to target the underground economy reminds me of some lines of Mission Impossible: “this is not mission difficult, Mr. Hunt. It’s mission impossible.”...more

How To Revive A Suspended Corporation

by Allen Matkins on

Yesterday’s post concerned the circumstances that will cause the California Franchise Tax Board to suspend a corporation’s rights, powers, and privileges to conduct business in California. Suspension, however, is reversible,...more

Suspension By The Franchise Tax Board

by Allen Matkins on

Yesterday’s post concerned the two circumstances in which the Secretary of State might suspend a corporation. The California Franchise Tax Board will suspend a corporation if it fails to pay taxes, penalties, fees or...more

Corporate Suspension By The California Secretary Of State

by Allen Matkins on

In California, a corporation may find its powers, rights and privileges suspended by either the Secretary of State or by the Franchise Tax Board.  Today’s post discusses the two roads to suspension by the California Secretary...more

California Steps Up Criminal Tax Enforcement

by Sanford Millar on

California has a multi-agency task force known as the Revenue Recovery and Enforcement Team that was established to attack criminal tax evasion. The stated goals of the team are: (a) According to the State Board of...more

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