California Franchise and Sales Tax Update: Critical New Developments

Adapting Compliance and Tax Planning to Latest Requirements

Recording of a 100-minute CPE/CLE webinar with Q&A

Conducted on Wednesday, June 17, 2009

Program Materials

This seminar will offer a thorough review of key details of finalized and proposed changes involving California sales and use, corporation franchise and income tax compliance for tax specialists at companies with tax obligations in California.


California's economic problems are staggering, and its governor, legislature and revenue agencies are passing on the pain to corporate taxpayers. Corporate tax professionals must grasp every detail and nuance to adjust their companies' tax compliance and planning.

In sales and use tax, taxpayers face a general rate increase, suspension of interest payments on refunds, and more aggressive state policing of non-registration. Proposals for sales tax nexus caused by online marketing, two-year cut-offs of audits, and new audit penalties are being debated.

In corporate franchise/income tax, companies grapple with limits on claiming state tax credits and NOLs, a big new underreporting penalty, a slowdown on refunds, a new definition of "doing business", and earlier payment of LLC fees. On the plus side, many can opt for single-sales apportionment.

Listen as our panel of veteran advisors from California accounting and tax law firms, experienced with smaller and large corporate clients, gives you a thorough briefing of all key recent developments involving the state's corporate taxes. The panel will offer their perspectives about how companies can adjust to the changes.



  1. Key developments in corporate franchise and income tax
    1. Budget Senate Bill X3
      1. New standard for “doing business” in California
      2. Single-sales apportionment election
      3. Elimination of cost-of-performance sourcing
      4. Switch from Joyce to Finnegan approach in calculating combined sales factor numerator
    2. Budget Assembly Bill X3
      1. New jobs creation tax credit for small businesses
      2. New film production expenses tax credit
    3. New 20% penalty for large corporate underpayments
    4. Restrictions driven by state’s financial crisis
      1. 50% limitation on state tax credit claims and suspension of NOL deductions
      2. FTB’s delays of franchise tax refunds
  2. Key developments in state sales and use tax
    1. 2009 through 2011 general rate increase
    2. Proposed Reg. 1698.5 on two-year deadline on audits
    3. Assembly Bill 347 on new 25% penalty for not producing electronic records for audits
    4. Assembly Bill 178 on affiliate nexus standard for online business activities
  3. Shifts in California tax compliance and planning to consider as result


The panel will explore these and other important topics:

  • Finalized sales and use tax developments: The rate hike, suspension of refund interest, managed audits for open tax accounts, and tougher oversight of registration.
  • Proposed sales and use tax changes: The impact if the proposed Web nexus, audit cut-off and audit records penalty measures become reality, and how soon to expect action.
  • Finalized corporation franchise and income tax developments: The pace of refunds, limits on using tax credits and NOLs, the major new underreporting penalty, the single-sales apportionment alternative and the new "doing business" standard.

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Greta Hoversten
Greta Hoversten

Tax Partner
Ghirardo CPA

She has worked with the firm since 2001 and has more than 17 years of accounting experience. She previously worked with...  |  Read More

Stuart Simon
Stuart Simon

Senior Counsel
Buchalter Nemer

He is attached to the firm's Tax Group and is particularly active with transactional tax matters for business clients....  |  Read More

Thomas Steele
Thomas Steele

Morrison & Foerster

He chairs the firm's West Coast State and Local Practice Group and has been a partner since 1982. He focuses on SALT...  |  Read More

Paul McGovern
Paul McGovern
Senior Tax Director, Southern California SALT Practice Leader

He has worked with BDO Seidman for 1 1/2 years. Previously, he worked in the PricewaterhouseCoopers SALT group for nine...  |  Read More

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