Discussion:California LLC Fee Resolution
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Discussion Forum Index --> Tax Questions --> California LLC Fee Resolution
| 22 October 2007 | |
| Been meaning to post this for a week ....
Gov. Schwarzenegger has signed AB 198, Ch. 381, Stats. 2007, which deals with the California LLC fee controversy. As most of us know, the LLC fee is determined with reference to an LLC's "total income" (gross receipts with some adjustments) without apportionment. Two Superior Court judges have ruled that the fee violates the commerce clause of the U.S. Constitution because it is not fairly apportioned. Those cases are on appeal, and a third case (involving an LLC doing all of its business in California) is pending in Superior Court in San Francisco. AB 198 provides that for years beginning on or after January 1, 2007, the basis for the fee will be calculated by following California's version of the UDITPA rules for assigning sales to the numerator of the sales factor in the apportionment formula (Cal. Rev. & Tax. Code Secs. 25135-25137), other than provisions that exclude receipts from the sales factor. In addition, the bill provides that if the prior law is finally adjudicated to be unconstitutional, refunds for prior years (for which timely claims for refund are filed) will be limited to the excess of the fee paid over the amount that would have been paid if the new rules had applied in prior years. The bill salvages the LLC fee, reducing the annual revenue arising from it to about $350 million from $400 million. | |
| 22 October 2007 | |
| Interesting how the refund claims for prior years will be granted or denied based on how the Northwest Energetic Services appeal (or similar case) finally resolves itself. | |
| 22 October 2007 | |
| Many people are using adjectives more colorful than "interesting" to describe this limitation <G>. There are concerns that the Legislature may be encouraged to intervene in other pending litigation by passing similar limitations. I'm sure this provision will be the subject of legal challenge, but since it seems to cure the discriminatory effect of the original statute, I'm not sure the courts would invalidate it. | |
| 22 October 2007 | |
| Thanks for the info Katie.
In a completely different state tax controversy (in Hawaii), one of our former state tax directors is now arguing on behalf of Safeway that Hawaii's use tax is unconstitutional (as applied to Safeway). http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20071021/NEWS01/710210366/1001/NEWS01 | |
