Taxation

Ca. Tax Lawyer 2017, VOLUME 26, NUMBER 2

2017 Sacramento Delegation

By Chris Campbell1

The fifth annual Sacramento Delegation was held on Friday, February 3, 2017, at the State Capitol. A number of government practitioners were in attendance, including, Assembly Committee on Revenue and Taxation Chief Consultant, David Ruff; Senate Government and Finance Committee Staff Director, Colin Grinnell; and members of the Franchise Tax Board’s ("FTB’s") Legal Division management team. The authors took turns presenting their proposals for the government attendees. The government attendees engaged in robust discussions with the authors on the viability of their proposals and provided valuable suggestions on how to achieve implementation. Participants enjoyed a reception at Greenberg Traurig, LLP following the event.

A brief summary of each proposal is provided below.

  • Tax Procedure: California Should Conform To Federal Law And Allow Expedited Tentative NOL Refunds Benjamin Elliott and Lauren Knapp, both of Deloitte Tax LLP, requested that the California Legislature enact provision to follow the program implemented by the Internal Revenue Service which allows taxpayers to apply for an expedited refund resulting from the use of NOL carrybacks.
  • New Federal Partnership Audit Procedures — Issues To Consider And When To Act Nikki Dobay of Council On State Taxation recommended that the California Legislature wait to conform to the new federal partnership audit procedures passed under the Bipartisan Budget Act of 2015 to allow the new procedures to be finalized and fleshed out at the federal level prior to making California legislative changes that may have to be undone later.
  • California’s Per Partner Penalty: A Pro-posal For Reform To Encourage Compliance But Not Unfairly Punish Brian Toman and Shirley Wei, both of Deloitte Tax LLP, proposed a legislative change to cap California’s "per partner" penalty that is imposed on partnerships for the failure to timely file a partnership return for partnership that have one thousand or more partners at a maximum penalty of $216,000 ($18 multiplied by 1,000 partners multiplied by 12 months) for the current year.
  • Uncertainty When A Unitary Foreign Affiliate Becomes A Taxpayer In A Water’s-Edge Combined Reporting Group: Reform To Fairly Reflect The Intent Of The Water’s-Edge Election And Account For The New Unitary Foreign Affiliate Taxpayer Robert Keith Gray and Joshua Grossman, both of Deloitte Tax LLP, urged the California Legislature to amend California’s statute governing the water’s-edge election so that unitary foreign affiliates that become California taxpayers as a result of California’s economic nexus standard may be deemed to be included in an existing water’s edge election made by their California unitary affiliates.

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