Office of Tax Appeals

OTA Establishes Precedent Despite Disagreement of Majority of its Judges

The Office of Tax Appeals posted 43 opinions to its website June 7, including five “pending precedential” decisions and two unanimous opinions that conflict with a new precedent announced the same day. The OTA last month issued a “pending precedential” opinion in the Appeal of R. Jones in which a split panel of administrative law judges supported the Franchise Tax Board’s interpretation of when the “demand penalty” can be imposed. The Jones opinion was relabeled as “precedential” when the latest…

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FTB Wrongly Seized $6,734 From Maryland Resident, but He Won’t Get a Refund

“Notwithstanding the fact that appellant’s tax was erroneously paid and not owed in the first place, we must nevertheless find that appellant is not entitled to a refund of taxes paid for 2013 due to the expiration of the statute of limitations,” the Office of Tax Appeals wrote in its 3-0 opinion in The Appeal of W. Keller. Keller lived in California in part of 2012 and filed a resident return with a California address. In 2013, he did not…

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OTA Rejects FTB’s Argument That Man Who Moved to Saudi Arabia Was Still a California Resident

The issue in the Appeal of A. Khan was whether the taxpayer was still a California resident for the 2013 tax year even though he moved from San Bernardino County to Saudi Arabia, where he obtained a residency permit, got a job, bought a new car, rented an apartment under a two-year lease, opened bank accounts and obtained a 10-year driver’s license (the longest term available). Before leaving California, the taxpayer ceased using a storage locker in California, sold most…

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OTA Rules on Dispute Dating Back to President Carter’s Term

The Office of Tax Appeals posted 21 opinions to its website November 2, including a pending precedential case involving its lack of jurisdiction and a case involving a dispute that dates back to the year Jimmy Carter was elected president of the United States. The only precedential case, the Appeal of M. Savage, involved a dispute over the appellant’s personal liability for a restaurant’s unpaid taxes, and whether the debt was discharged in bankruptcy proceedings. The OTA unanimously dismissed the…

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OTA Issues 45 Opinions, Including Three Pending Precedential Decisions

The Office of Tax Appeals posted 45 opinions to its website October 5, including three pending precedential cases. All of the precedent-setting cases involve taxes administered by the California Department of Tax and Fee Administration, and all were decided unanimously in favor of the tax agency. The pending precedential cases: The Appeal of Micelle Laboratories Inc., a complicated appeal involving the sale of a business that manufactured nutritional supplements, and the value of machinery, consumable supplies and other assets transferred…

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UC Regents Participated in Donor’s Tax-Avoidance Scheme, OTA Rules

The Office of Tax Appeals posted 143 opinions to its website this week, including one involving the University of California Board of Regents’ participation in a transaction determined to be designed solely to help a donor avoid income tax. In the Appeal of the Estate of Tony D. Stelliga, the OTA unanimously upheld a noneconomic substance transaction (NEST) penalty of $86,174, an interest-based penalty of $58,523, and applicable interest. Additionally, the OTA upheld the Franchise Tax Board’s decision to disallow…

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Office of Tax Appeals: Taxpayer Who Relied on Instructions in FTB Publication Loses Appeal

The Office of Tax Appeals posted 23 opinions to its website April 7, including a “pending precedential” rejection of an appeal filed by a taxpayer who followed a Franchise Tax Board publication’s instructions with what the OTA termed an “unfortunate” omission. In the Appeal of Conrad E. Dandridge, the taxpayer challenged the FTB’s disallowance of a mortgage insurance premium deduction on his 2012 return. The taxpayer, who argued his case during a January 2019 hearing, said he relied on guidance…

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Office of Tax Appeals: New Opinions Include Three Precedential Decisions

The Office of Tax Appeals posted 41 new opinions to its website March 3, including three “pending precedential opinions” decided largely in favor of the tax agencies. The three pending precedential opinions posted this week: The Appeal of Alfredo J. Talavera, involving a used-car dealer who was found to be personally liable for unpaid sales tax liabilities and appealed for a reduction in the amount owed. The OTA unanimously upheld the California Department of Tax and Fee Administration’s position, and…

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Office of Tax Appeals: New Opinions Include Precedential Case on Definition of ‘Overcollection’

The Office of Tax Appeals posted 36 opinions to its website this week, including one “pending precedential” decision on what constitutes an “overcollection” by the Franchise Tax Board within the meaning of a technical advice memorandum (TAM) issued by the agency in 2007. This month’s opinions included 32 personal and franchise income tax cases and four appeals of business taxes, all involving common disputes and all decided unanimously in favor of the tax agencies. Most of the opinions have issuance…

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