In this edition of Across State Lines, published by State Tax Notes, Eversheds Sutherland attorney Eric Coffill interviews Diane Harkey, Chair of the California State Board of Equalization.
Under notice dated December 26, 2017, the California Office of Tax Appeals (OTA) released its Final Draft Emergency Regulations on the Rules for Tax Appeals (Emergency Regulations), which will be submitted to the Office of Administrative Law for review in the coming days.
- The Emergency Regulations are largely based on the Board of Equalization’s prior Rules for Tax Appeals but contain some notable differences.
- For example, the OTA is authorized to remove the precedential status of BOE opinions and designate its own opinions as precedential if the opinion establishes a new interpretation of law, resolves an apparent conflict in the law, or makes a significant contribution to the law, among other reasons.
- The Emergency Regulations also outline procedures for requesting a closed hearing and/or sealed records in appeals from both the California Department of Tax and Fee Administration and the California Franchise Tax Board.
The California Court of Appeal held that the entire value of an air taxi company’s jets were subject to the County of Los Angeles 1% personal property tax, despite the fact that the jets spent 40% of their time outside of California. The court reasoned that the brief touchdowns of the jets in out-of-state airports were insufficient for other states to acquire situs over the jets such that California could no longer tax the full value of the aircraft. The court further stated that the landing-based situs rule for aircraft under California Revenue & Tax Code section 1161(b) only applies to fractionally owned aircraft and thus declined to extend this special situs rule to all aircraft. Jetsuite Inc. v. Los Angeles, No. B279273 (2d Dist. 2017).
On September 16, 2017, California Governor Jerry Brown signed Assembly Bill 131, a budget trailer bill clarifying a number of provisions related to the roles of California’s two new tax agencies, the California Department of Tax and Fee Administration (CDTFA) and the Office of Tax Appeals (OTA), which were created to perform many of the California State Board of Equalization’s (BOE) previous duties by the Taxpayer Transparency and Fairness Act of 2017. Key clarifications include:
- The CDTFA will conduct appeals conferences related to sales and use taxes in the same manner as the BOE had prior to July 1, 2017, and will apply the BOE’s rules regarding appeals conferences.
- The OTA is not to be construed as a tax court so non-lawyers will be allowed to appear on behalf of taxpayers at appeals hearings.
- The standard of review for taxpayer appeals of OTA decisions is trial de novo in Superior Court.
On Aug. 28, 2017, in California Cannabis Coalition v. City of Upland, the California Supreme Court held local taxes imposed by taxpayers via initiative are subject to less stringent requirements than taxes imposed by local governments pursuant to Proposition 218. In their article for Law 360, Eversheds Sutherland attorneys Eric Coffill and Robert Merten discuss that this opinion has far-flung ramifications on how local taxes can be imposed in California.
Rarely does a subject as mundane as a documentary transfer tax become worthy of its own article. However, the June 29, 2017, decision of the California Supreme Court in 926 North Ardmore Avenue LLC v. County of Los Angeles is a worthy exception. Read this Law360 article by Eversheds Sutherland (US) attorneys Eric Coffill, Robert Merten and Nicholas Kump, which discusses:
- Three criteria that must be met in order for California’s documentary transfer tax to be imposed
- Background on the state’s Documentary Transfer Tax Act
- The California Supreme Court’s ruling in North Ardmore v. County of Los Angeles
- What’s to come
On April 6, the Third District California Court of Appeal decided Morning Star Packing Company v. California Air Resources Board, which challenged the state’s cap-and-trade auction process as an unconstitutional tax. View this latest edition of A Pinch of SALT, by Eversheds Sutherland (US) attorneys Eric Coffill and Robert Merten, which discusses:
- Background on the California cap-and-trade case
- The Morning Star opinion
- What’s next?
SACRAMENTO—Eversheds Sutherland (US) LLP is pleased to announce that state and local tax (SALT) attorneys Carley A. Roberts and Eric J. Coffill were selected as top Northern California attorneys by Super Lawyers. The designations are the result of an annual survey conducted by the publication, which focuses on professional achievement and peer recognition.
On June 15, the California Legislature passed Assembly Bill 102, the Taxpayer Transparency and Fairness Act of 2017, which divests the California State Board of Equalization (BOE) of several key functions and creates two new government agencies—the California Department of Tax and Fee Administration and the Office of Tax Appeals—to perform many of the BOE’s previous duties. Effective July 1, 2017, the Act:
- Confers all of the BOE’s collection and administrative responsibilities related to various taxes and fees, such as tobacco taxes, cannabis taxes, and sales and use tax, on the California Department of Tax and Fee Administration.
- Grants the Office of Tax Appeals the authority to perform the BOE’s appellate duties.
- Maintains the BOE’s duties as provided in the California Constitution including reviewing and adjusting certain property tax assessments and setting certain tax rates.