Just in time for the election – Touching the Third Rail: The California Initiative Process, Proposition 13, and the Effort to Fix It

Just in time for the election – Touching the Third Rail: The California Initiative Process, Proposition 13, and the Effort to Fix It

Touching the Third Rail: The California Initiative Process, Proposition 13, and the Effort to Fix It

In October 1911, shortly after California progressive Hiram Johnson’s landslide gubernatorial win,[1] voters in a special election passed several measures, among them a state constitutional amendment establishing the California initiative process, giving voters the right to enact legislation.[2] The initiative, referendum, and recall[3] provide the voters equal power to the legislative branch, effectively creating a “fourth branch” of government.[4] The progressive (and some argue populist[5]) movement towards direct democracy measures in several states in the early 20th century intended to satisfy popular demand to wrangle power from entrenched monopolies and “special interests.”[6] However, the next century’s political development showed that direct democracy, and the initiative in particular, has moved well beyond its original intent, to the point that it has often overwhelmed the governing process it was designed to monitor.

 

Read the rest of the article on the Contra Costa County Bar Association Website.

California State Tax Case Resources

California State Tax Case Resources

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Walnut Creek Main Office

1990 N. California BLVd.
Suite 1020
Walnut Creek, CA 94596

(925) 390-3222

San Francisco Office

95 Third Street
2nd Floor
San Francisco, CA 94103

(628) 216-5558

Oakland Office

66 Franklin Street
Suite 300
Oakland, CA 94607

(510) 822-2770

San Jose Office

3031 Tisch Way
110 Plaza West
San Jose, CA 94607

(408) 707-1667

California State Tax Resources

California State Tax Resources

Office of Tax Appeals Hearings

The Office of Tax Appeals (OTA) is an independent and impartial appeals body created by the Taxpayer Transparency and Fairness Act of 2017. The office was established to hear appeals from California taxpayers regarding various taxes and fees administered by the California Department of Tax and Fee Administration and the Franchise Tax Board.

California Franchise Tax Board (FTB)

MyFTB gives individuals, business representatives, and tax professionals online access to tax account information and online services.

California City & County Sales & Use Tax Rates

The mission of the CDTFA is to make life better for Californians by fairly and efficiently collecting the revenue that supports our essential public services.

California Employment Development Department

EDD Services. The Employment Development Department (EDD) offers a wide variety of services to millions of Californians under Unemployment Insurance (UI), State Disability Insurance (SDI), workforce investment (Jobs and Training), and Labor Market Information programs.

When Is Your Trust Taxable in California?

When Is Your Trust Taxable in California?

Generally, a trust is taxable in California if a fiduciary or beneficiary (other than a contingent beneficiary) is a resident of California under California Revenue and Taxation Code 17742.  This is true even if the original settlor was not a resident of California.

This means even if a non-California resident settlor creates a trust outside of California, with all non-California resident beneficiaries, the trust could still eventually be subject to taxation in California.

How does this happen?  If a trust is ongoing for a number of years, a corporate fiduciary may need to step in once there all of the successor trustees in the trust document have been exhausted.  If the corporate fiduciary who steps in is in California, the trust will be subject to tax in California.

This seems an unfortunate result.  At Mendes Weed, LLP, we participate in the Conference of California Bar Associations each year to try to enact and change legislation.  This year, we have drafted Resolution 05-07-2018 which addresses this issue of unintended California taxation of an out-of-state trust.

We advocate for our clients in every way that we can.  When our clients have legal issues that come up, and we do not believe the law properly addresses their issue, we work to change that.

At Mendes Weed, LLP, we are Federal and California Tax Lawyers.  If you have any questions about tax law, tax controversy, compliance, or appeals, we are happy to assist you.

Mendes Weed, LLP is here to help you if you have any questions.  (925) 390-3222.

SuperLawyers-RisingStars
Best of the East Bay Attorneys
Lisa Janine MendesReviewsout of 5 reviews
Walnut Creek Chanber of Commerce logo
Christina Weed - Taxation Law Specialist
lawyers of distinction badge 2020

Walnut Creek Main Office

1990 N. California BLVd.
Suite 1020
Walnut Creek, CA 94596

(925) 390-3222

San Francisco Office

95 Third Street
2nd Floor
San Francisco, CA 94103

(628) 216-5558

Oakland Office

66 Franklin Street
Suite 300
Oakland, CA 94607

(510) 822-2770

San Jose Office

3031 Tisch Way
110 Plaza West
San Jose, CA 94607

(408) 707-1667

California wants to increase your tax deductions. The IRS is trying to prevent that.

California wants to increase your tax deductions. The IRS is trying to prevent that.

At the end of May, 2018, the IRS issued Notice 2018-54.  The Notice indicates that the IRS is working on proposed regulations to address State attempts to circumvent the new laws regarding the deductibility of state and local tax payments on an individual’s federal income tax return.

See SB 227, which would have started the California Excellence Fund allowing taxpayers to make payments to the fund and deduct those payments as charitable deductions.  This was an attempt to help taxpayers in California achieve more deductions on their tax returns, since under the new federal tax law state and local income tax deductions are limited to $10,000.  Other states like New York were contemplating similar laws.

The Notice reiterates that federal law controls the characterization of payments for federal income tax purposes without deference to state law.

If the proposed regulations are passed, the California Excellence Fund would likely not happen.

If you have questions about the new tax laws, you should reach out to a tax lawyer who can assist you with your questions and concerns.

Mendes Weed, LLP is here to help you if you have any questions.  (925) 390-3222.

 

The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.

SuperLawyers-RisingStars
Best of the East Bay Attorneys
Lisa Janine MendesReviewsout of 5 reviews
Walnut Creek Chanber of Commerce logo
Christina Weed - Taxation Law Specialist
lawyers of distinction badge 2020

Walnut Creek Main Office

1990 N. California BLVd.
Suite 1020
Walnut Creek, CA 94596

(925) 390-3222

San Francisco Office

95 Third Street
2nd Floor
San Francisco, CA 94103

(628) 216-5558

Oakland Office

66 Franklin Street
Suite 300
Oakland, CA 94607

(510) 822-2770

San Jose Office

3031 Tisch Way
110 Plaza West
San Jose, CA 94607

(408) 707-1667

Office of Tax Appeals Hearing – 1031 Exchange

Office of Tax Appeals Hearing – 1031 Exchange

On April 27, 2018, the partners from Mendes Weed, LLP represented a taxpayer before the Office of Tax Appeals (OTA).

As of the date of this blog posting, Mendes Weed, LLP is one of only a handful of firms to have gone before the OTA because the OTA has only been hearing cases since January of 2018.

Last week, we discussed some of the procedural issues that came up during the hearing.  This week, we wanted to address some of the issues before the OTA during our hearing.

The primary issue at the hearing was whether the Franchise Tax Board’s (FTB) disallowance of a taxpayer’s like-kind exchange pursuant to Internal Revenue Code (IRC) Section 1031 should be sustained.

The FTB stated the primary issue was who was the true seller of the real property in issue.  The FTB’s secondary argument was that an assignment of income had occurred.

The Taxpayer argued that intent should control.  The Taxpayer in this case had completed numerous like-kind exchanges in the past, and she clearly had the intent required to complete a like-kind exchange.

Furthermore, there was no assignment of income, which implies some intent to evade tax.  A like-kind exchange is a mere deferral of the recognition of gain, not an evasion of tax.  The taxpayer’s counsel was quoted as saying the FTB was “grasping at straws” with this argument.

Of course, what the FTB is really getting at is that it arbitrarily applies a rule that the property exchanged must be held for a certain period of time.  There is no period of time delineated in the statute or the case law.  This is bad tax policy to apply this arbitrary rule, and it is not the law.

The elephant in the room during the entire hearing was that of the four like-kind exchanges completed by the taxpayer in 2007, the exchange before the OTA was the only property that was transferred out of California and into another state.  The other exchanges all took place outside of California, and none of them were challenged.  The FTB does not like the fact the property was exchanged out of California, but that is not adequate grounds for denying a like-kind exchange to a taxpayer who is entitled to it.

The decision, in this case, could take up to 100 days.  We will keep you posted on the outcome.

You have a right to pay only the correct amount of tax, not a penny more.  If you find that you need assistance, please contact us today.

If you have questions about which business entity might be right for you, you should reach out to a tax lawyer who can assist you with your questions and concerns.

SuperLawyers-RisingStars
Best of the East Bay Attorneys
Lisa Janine MendesReviewsout of 5 reviews
Walnut Creek Chanber of Commerce logo
Christina Weed - Taxation Law Specialist
lawyers of distinction badge 2020

Walnut Creek Main Office

1990 N. California BLVd.
Suite 1020
Walnut Creek, CA 94596

(925) 390-3222

San Francisco Office

95 Third Street
2nd Floor
San Francisco, CA 94103

(628) 216-5558

Oakland Office

66 Franklin Street
Suite 300
Oakland, CA 94607

(510) 822-2770

San Jose Office

3031 Tisch Way
110 Plaza West
San Jose, CA 94607

(408) 707-1667