Law360 quoted partner William Gorrod in an article about a measure in California's new budget tax law that would prevent decisions from the state's Office of Tax Appeals, such as the one Microsoft secured earlier this year, holding that it could include 100% of the dividends from foreign affiliates in its California sales factor denominator. The measure turns into law a regulation from California's Franchise Tax Board (FTB) that disallows including receipts in the sales factor if the related income is not also taxed.
Will noted that the budget language also says that the FTB can implement the law changes without first going through formalities called for in the state administrative procedure act.
"The FTB doesn't have to adhere to those," Will said. "This is trying to free the FTB from requirements that are in place for a good reason."