Office of Tax Appeals

The Appeal of LBD Corporation involved a small, closely held corporation located in Texas that sold corporate assets in California via a California-based auction house.

The Office of Tax Appeals posted 41 opinions to its website October 3, including three “pending precedential” opinions and a large number of non-precedential decisions involving disputes over missed deadlines, unreported taxable sales, and other common issues. One of the pending precedential opinions, for The Appeal of J. Fisher and M. Fisher, presented the issue of whether there was reasonable cause to abate a late-filing penalty – something that has proven nearly impossible for taxpayers to demonstrate under California law.…

The Office of Tax Appeals posted 36 opinions on its website for May, including a ruling that reversed a taxpayer’s partial win based on a precedential decision released after the ruling. In the Appeal of A. Edwards, the OTA’s initial ruling, dated February 1, 2021, sided with the Franchise Tax Board on most issues but concluded that the “demand penalty” should be abated, using similar logic applied in a majority of the cases on the demand penalty up to that…

The Office of Tax Appeals posted 30 opinions to its website March 7, including the Appeal of E. Fakhoury – the first posted opinion issued by a single administrative law judge under the OTA’s Small Case Program, which was authorized by legislation that became effective March 1, 2021. Under the program, parties can opt to have their case heard and decided by a single judge rather than a three-judge panel if the amount in dispute meets certain qualifications (for personal…

The Office of Tax Appeals released 30 opinions February 7, including one pending precedential opinion upholding the Franchise Tax Board’s position in a dispute over the business income of an S corporation headquartered in North Carolina (the Appeal of Amarr Company). Amarr is headquartered in North Carolina, manufactures garage doors in Kansas and North Carolina, and sells the doors throughout the United States, including in California. The company sells its products through distribution centers, including several located in California. The…

In an opinion that might be important reading for those considering moving out of California, the Office of Tax Appeals ruled in the Appeal of S. Milam that a Texas resident owed more than $10,000 in California income tax despite never setting foot in the Golden State during the period in question. The taxpayer, whose Texas residency was not in dispute, asserted that income of $122,050 from a consulting deal with an Oakland-based school was earned by her wholly owned…

The Office of Tax Appeals posted 21 opinions September 7, including a pending precedential decision in which the OTA denied a refund for a business that got into tax trouble by relying on inaccurate information posted on the California Department of Tax and Fee Administration’s website. In the Appeal of Waterford Irrigation Supply Inc., the Office of Tax Appeals upheld the CDTFA’s denial of the taxpayer’s $16,362 claim for refund. The taxpayer is a retailer who sells irrigation equipment and…

The Office of Tax Appeals has rejected a personal income tax appeal based on an argument that a late payment occurred solely because of the Franchise Tax Board’s electronic payment mandate. In the Appeal of K. Raza and S. Raza, the taxpayers argued that if they had been allowed to pay by check, their accountant would not have made the typing error – entering “$130,002” instead of “$13,002” – that kept their electronic payment from being processed, and their record…

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…

“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…