Tax News

CCH (cch.taxgroup.com) reports:

A settlement has been reached in General Electric Co. v. Franchise Tax Board, a case challenging the threatened imposition of an amnesty penalty against a California corporation franchise and income tax taxpayer who had paid taxes under a protective claim rather than participating in California's amnesty program. The case was pending before the First Appellate District of the California Court of Appeals, after the taxpayer had appealed a California superior court decision that granted the FTB's demurrer to the taxpayer's complaint on the basis that the case was not ripe for judicial decision because the tax years at issue were still in protest status and the amnesty penalty had not yet been imposed (see TAXDAY, 2006/09/29, S.8).
The taxpayer's original complaint sought a declaratory judgment that the 50% interest penalty should not apply to tax liabilities that became final after the end of the amnesty period, as long as the taxpayer paid the full amount of the deficiency reflected in the NPAs within 15 days after receiving notice and demand for payment from the FTB. In the alternative, the taxpayer sought a declaration that the 50% interest penalty violated both substantive and procedural Due Process guarantees under the U.S. and California Constitutions.
The settlement of the case leaves unanswered the question of how the courts will resolve the statutory and constitutional challenges raised by the taxpayer.
General Electric Co. v. Franchise Tax Board, Dismissal Order Filed, California Court of Appeals, First Appellate District, No. A115530, July 13, 2007.