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California Franchise Tax Board faces lawsuit to disclose forms

The California Franchise Tax Board is but one of several tax authorities that Californian’s may have to deal with. If a tax controversy arises for a California business that involves the FTB, the issues can have significant impact on the company. Sources say that the FTB can be extremely aggressive in its tax collection practices. Seeking representation as soon as possible is an important consideration for a California business.

A company that produces a tax newsletter for international distribution is suing the FTB in California courts in an effort to gain some transparency from the FTB. The company (which is based outside of California) says that the FTB’s public file references two documents that the newsletter believes are used by the board to analyze how one company’s gains and losses may impact the tax treatment of other companies that are affiliated with the first company.

The board claims that the forms are internal documents and not for public consumption. The lawsuit alleges that the FTB is unlawfully refusing to disclose the forms and the publisher and newsletter company is asking the California court system to bring the information into the light of day. The publisher and president of the newsletter company says that failing to disclose the information is “one of the more extreme examples of administering a tax system in the dark,” according to the San Francisco Chronicle.

The newsletter believes that disclosure of the information could be beneficial to companies in knowing how auditors internally make their determinations of whether to combine incomes of affiliated businesses.

Source: San Francisco Chronicle, “Tax newsletter sues California seeking release of documents,” Bob Egelko, June 14, 2014

Tags: Tax Controversy