United States: California Tax Developments

Last Updated: May 9 2015
Article by Marty Dakessian, Mike Shaikh, Shirley J. Wei, Erin J. Mariano and Jenny J. Choi

Most Read Contributor in United States, October 2017

Regulatory Updates

GO-Biz Rolls Out First Awards of 2015 For fiscal year 2015, the Governor's Office of Business and Economic Development ("GO-Biz") is authorized to award $151.1 million in California Competes Tax Credits to taxpayers who apply for and compete for the lucrative credits. There were three application periods for the 2014-2015 fiscal year. On January 15, GO-Biz awarded $31 million in tax credits to 94 taxpayers. The credit awards for the first application period for fiscal year 2015 ranged from $20,000 to more than $3 million.

For the second application period, which ran from January 5 through February 2, GO-Biz received 253 applications requesting credits totaling $289 million. However, GO-Biz was authorized to award only $75 million of credits for this application period.

The third application period for fiscal year 2015 ran from March 9 through April 6. For this period, GO-Biz is authorized to distribute $31.1 million of credits, plus any unallocated amounts from the first application period.

Takeaway: The California Competes Tax Credits are part of the governor's new economic incentive plan. The application process consists of multiple steps, and includes both a quantitative component and a qualitative component. As noted above, some of the credit awards have been substantial. Contact an author of this update to discuss the eligibility requirements and the application process for the 2015-2016 year.

Legislative and Administrative Updates

New Members on the State Board of Equalization Following the November 2014 elections, two new members were elected to serve on the five-member State Board of Equalization. Fiona Ma was elected to represent the Second District, which includes 23 counties in Northern California. Board Member Ma previously served on the San Francisco Board of Supervisors, and also represented California's 12th Assembly District and served on the Assembly Revenue and Taxation Committee.

Diane Harkey was elected to represent the Fourth District, which includes five counties in Southern California. Board Member Harkey previously served three terms in the California State Assembly representing the 73rd District encompassing south Orange County, and was Vice-Chair for the Assembly Revenue and Taxation Committee.

Controller Betty Yee has appointed Yvette Stowers to serve as Deputy State Controller for Taxation. Since 2008, Ms. Stowers has served as a Tax Consultant Expert II to Board Member Yee, handling complex tax disputes and reviews involving multinational corporations, small businesses and individual taxpayers. Ms. Stowers previously served as a Program Specialist and Audit Manager at the Franchise Tax Board.

Gov. Brown Releases Proposed Budget Gov. Brown published his annual budget proposal in January. In the proposal, Gov. Brown projected general fund revenue of more than $113 billion (a 4.9% increase from last year). This projected increase comes not from proposed tax law or rate changes, but mostly from a forecasted increase in personal income tax collections.

The lack of tax increase proposals in the governor's budget does not necessarily mean that tax increases are not on the horizon. In 2012, with the strong support of Gov. Brown, the voters passed Proposition 30, which temporarily increased both sales and personal income tax rates in the state. With the sales tax increase set to expire in 2017 and the income tax increase set to expire in 2019, there have been some proposals to make those rate increases permanent. Gov. Brown has not publicly supported these proposals. The governor has also remained silent on proposals to expand the sales tax base to apply to services.

Takeaway: Gov. Brown's revised budget will be released in May. This revised budget may include tax law changes that were not part of the governor's original budget proposal.

Senate Bill Introduced Relating to California Public Records Act California's Public Records Act, codified in the Government Code1 and governed by the state constitution, generally requires that government records be made available for public inspection or disclosure upon request, unless a specific exemption from disclosure applies. The state and its agencies bear the burden of proving that records are exempt from disclosure.

Sen. Bob Wieckowski introduced Senate Bill 201 February 10, 2015. The Bill would amend the Public Records Act to allow third parties seeking to block disclosure of a public record to seek an injunction or declaratory relief in the California courts. Under the Bill, the courts are to apply the Public Records Act, as if the third-party action had been initiated by a person requesting disclosure of a public record. The Bill would also require third parties seeking an injunction or declaratory relief to provide notice to the person who requested the action at the same time as it serves the public agency. Finally, the Bill would require courts to permit the person whose request prompted the action to intervene upon request.

Takeaway: The Public Records Act is a powerful tool for citizens and keeps the government accountable to the public. This Bill would add certain notice requirements to the Public Records Act process to provide individuals and businesses with protections against the disclosure of sensitive information (such as tax information) through Public Records Act requests.

Assembly Bill Would Provide Automatic Refunds to Taxpayers who Paid an Unconstitutional or Illegal Tax On February 26, 2015, Assembly Bill No. 867 was introduced to extend common-sense protections to taxpayers by requiring California to provide an automatic full refund to all individuals who paid a tax or other amount that is later declared unconstitutional or illegal. Currently, taxpayers must timely file a claim for refund and exhaust all of their administrative remedies in order to receive a refund of tax paid. AB 867 would allow taxpayers to file a claim for refund within one year from the final and non-appealable decision of a court of competent jurisdiction that a tax, fee, assessment, surcharge, or other amount paid was determined to be illegally levied or collected by the tax agency. Under AB 867, a taxpayer would be able to bring an action in court for recovery of the whole or any part of the amount claimed once the one-year claim period had expired without issuance of a refund. The state would also be required under the bill to automatically issue refunds of amounts illegally levied or collected to taxpayers who can be sufficiently identified through the state agency's system. The state would be required to issue a refund even in situations where the normal statute of limitations for filing refund claims had expired. Under the bill, interest would be allowed on all refunds of unconstitutional or illegal taxes, computed as provided under current law for interest on overpayments.

Takeaway: This bill represents good tax policy. Taxpayers who pay amounts that are later found to be unconstitutional or illegal should not be required to expend time and resources to go through the administrative process.


Mike Shaikh named Law360 Rising Star Law360 named Mike, a senior associate on our team, as one of the top attorneys under 40 in the nation. Mike was acknowledged for his successful representation of taxpayers in significant controversy matters, both at the administrative level and in court. The publication also recognized Mike's experience as tax counsel on business transactions. Mike is an outspoken leader in the state tax community, having published numerous articles and spoken about state tax matters in many venues. Law360 has recognized this commitment to his clients and the tax community by awarding Mike the honor of a Rising Star.

Meet the Team: Kyle Sollie Kyle, a partner on our team, was formerly resident in the San Francisco office. Now located in Philadelphia, Kyle serves as an East Coast liaison with the California practice, offering clients an eastern-time-zone California technical resource. Kyle works with clients on cutting-edge issues in California, such as extending NOL carryover periods, avoiding NOL "silos" for California taxpayers, "untrapping" California EZ credits, getting factor representation for foreign dividends received by California water's-edge taxpayers, limiting the effect of California "foreign investment offset" rules, and reducing California tax on gains reported on federal form 4797.

About Reed Smith State Tax Reed Smith's state and local tax practice is composed of more than 30 lawyers across seven offices nationwide. The practice focuses on state and local audit defense and refund appeals (from the administrative level through the appellate courts), as well as planning and transactional matters involving income, franchise, unclaimed property, sales and use, and property tax issues. View our State Tax team. For more information on Reed Smith's California tax practice, visit State Tax - California.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.