Office of Tax Appeals

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’Precedent’ Applied Retroactively to Negate Taxpayer’s Successful Appeal

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…

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OTA Issues First Opinion Decided by Single Judge Under the Small Case Program

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…

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February Opinions Include One Precedential Case

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…

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Texas Resident Owes California Tax

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…

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OTA Denies Refund for Business That Relied on Inaccurate Information Posted on Tax Agency’s Website

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…

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OTA Rejects Taxpayers’ Claim That Error Occurred Only Because of FTB’s Electronic Payment Mandate

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…

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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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