Office of Tax Appeals

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…

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…

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…

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…

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…

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…