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Closing out a process that began nearly nine years ago, the California Franchise Tax Board (FTB) recently submitted proposed amendments to its market sourcing regulation, California Code of Regulations, title 18, section 25136-2, to the Office of Administrative Law (OAL) for final approval. The version submitted to OAL includes the same simplifying presumptions for sourcing…

A California appeals court held that taxpayers challenging city fees as unconstitutional without seeking a refund need not exhaust their administrative remedies. The taxpayers alleged that the City of Azusa’s sewer and trash franchise fees violated Proposition 218, Article XIII D of the California Constitution because the fees exceeded the cost of providing those services…

The California Franchise Tax Board’s method of taxing banks and financial institutions is consistently complex, and a bit messy. This complexity would worsen under the January budget proposal of California Governor Gavin Newsom to tax banks (and savings and loans) using single-sales-factor apportionment.

In this installment of “A Pinch of SALT” published by Tax Notes…

In November 2024, voters approved Proposition M which provided for an overhaul of San Francisco’s gross receipts tax. (See our prior coverage here.) Proposition M changed the allocation and apportionment rules for most industries, generally requiring that three quarters of a taxpayer’s total receipts are allocated to the city on a market basis and…

The California Franchise Tax Board (FTB) has proposed amendments to its regulations that govern how sales of services and intangibles are sourced for income tax purposes. The changes to this income tax apportionment regulation will apply to nearly every corporation that pays California tax. Comments regarding these proposed changes are due no later than February…

In his draft budget plan for Fiscal Year 2025-2026 released on January 10, 2025, California Governor Gavin Newsom proposed to bring financial institutions in line with most other corporate taxpayers when it comes to apportioning multistate income. Banks and “financial corporations” currently use a three-factor apportionment formula consisting of property, payroll and sales to apportion…

In this article, originally published by CalCPA in the January/February 2025 issue of California CPA, Eversheds Sutherland Senior Counsel Eric Coffill spotlights the recent disappearance of Technical Advice Memorandums (TAMs) from the California Franchise Tax Board (FTB) website.

Read the full article here.

At long last, the California Franchise Tax Board (FTB) issued a Notice of Proposed Rulemaking today to amend FTB’s market sourcing regulation: California Code of Regulations, title 18, section 25136-2 (“Reg. 25136-2”). This is the latest step in a long journey that began over seven years ago, when FTB held its first interested parties meeting…

California’s 2024 tax landscape seems darker than ever. A “no tax increase” budget that increases taxes. Precedential decisions without any precedential effect whatsoever. But don’t despair! Glimmers of hope remain as taxpayers push back at the agencies and courts make headway. On August 27, join Eversheds Sutherland attorneys Tim Gustafson and Eric Coffill as they…

The California Supreme Court ruled that a corporation’s transfer of its ownership of two Los Angeles supermarkets to a trust that already owned 92.8% of the corporation’s stock was a “change in ownership,” permitting the revaluation of the supermarkets’ real property. Article XIII A of the California Constitution, added by Proposition 13, strictly limits increases…