California Superior Court Finds FTB’s Income Tax Guidance on Out-Of-State Sales Invalid

The California Superior Court Dec. 13, 2023 found that the Franchise Tax Board’s (FTB) income tax guidance on out-of-state sales was invalid, for corporate income tax purposes. Taxpayer, a nonprofit trade association, filed the case on behalf of catalog and other remote sellers and their suppliers. Taxpayer’s current motion sought a judgment declaring the FTB’s Technical Advice Memorandum (TAM) 2022-01 and Publication 1050 invalid underground regulations for failure to comply with the state’s Administrative Procedure Act (APA). The TAM and publication included a new interpretation of Public Law 86-272, a law which limits the taxation of out-of-state businesses based on ...