Tax Headlines


California ~ Corporate Income Tax: Court Vacates Decision in Gillette, Orders Rehearing

On its own motion, and for good cause, a California court of appeal has vacated its earlier decision in Gillette v. Franchise Tax Board and ordered a rehearing in the taxpayer’s challenge to the FTB’s position that despite California’s participation in the Multistate Tax Compact (MTC), California taxpayers were required to utilize the double-weighted sales tax formula to apportion their net business income for corporation franchise and income tax purposes. In the decision that was vacated, the court had ruled that the FTB’s interpretation was incorrect and that so long as California was a member of the MTC, taxpayers could elect to utilize the MTC’s equally-weighted apportionment formula (TAXDAY, 2012/07/25, S.7 )

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IRS Had Authority to Abate Interest on Erroneous Refund; Refusal to Abate Interest Not an Abuse of Discretion Where Taxpayer Error Contributed to Erroneous Refund (Allcorn, III, TC)

The IRS had authority to abate interest on an erroneous refund. However, it did not abuse its discretion when it denied an individual’s request to abate interest assessed on the refund. The individual had mistakenly added an estimated tax payment to the income tax withheld reported on line 62 of his Form 1040 income tax return instead of listing it as an estimated tax payment on line 63, and that mistake contributed to the issuance of the refund.

When the IRS realized that the refund was issued in error, it informed the individual

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Work-Product Doctrine Applicable to Documents Relating to Tax Shelter Transaction; Voluntary Disclosure of Documents Waived Tax Practitioner Privilege (Santander Holdings USA, Inc., DC Mass.)

Documents that provided advice regarding changes in the law in the United Kingdom and the United States and unwinding a corporation’s STARS transaction were protected from disclosure under the attorney-client and tax-practitioner privileges and the work-product doctrine.

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