Technology Transfer Agreements, including Software. Is ALL Software Exempt in California?

UPDATE: On January 20, 2016, the California Supreme Court denied the Board of Equalization’s petition for review of Lucent.  Thus, the TTA issue regarding software has now been put to rest.

This article discusses how tax applies to technology transfer agreements (TTAs) in California, and recent developments regarding the TTA status of prewritten software programs resulting from Nortel Networks Inc. v. Board of Equalization (2011) 191 Cal.App.4th 1259 and Lucent Technologies, Inc. v. State Board of Equalization, Docket No. B257808. A TTA is defined as an “agreement under which a person who holds a patent or copyright interest assigns or […]

Questionable Tax Audit Procedures for California Marijuana Dispensaries

Marijuana dispensaries have become one of the primary targets for sales and use tax audits performed by the State Board of Equalization. The historical treatment of marijuana as an illegal drug (which is still the case at the federal level), auditors’ underlying political beliefs, and the unusual audit methodologies employed for marijuana dispensaries, can often result in overstated liabilities. A general awareness of the audit procedures and the issues to look out for can help marijuana dispensaries avoid unnecessary and lengthy disputes with the Board of Equalization audit staff. This article addresses some of the intricacies and pitfalls of observation […]

Construction Contractors as Consumers When Installing Property of Others

In previous posts, my partner, Dan Davis, CPA, addressed how states tax installation charges and how states tax contracts with exempt entities. This article includes a related question: how states tax property that is being installed when title to that property is not held by the installing contractor and tax was not previously paid. For example, California generally considers a contractor to be the consumer of equipment and machinery which is furnished and installed under a contract with the U.S. Government, but the contractor will not generally be considered the consumer of such property if title is […]

Early Resolution of Tax Issues Provide the Best Possible Outcome

Former Board of Equalization Appeals Attorney, Lucian Khan,
provides a unique perspective on cases which could have avoided the appeals process.

It’s always best to resolve tax cases at the lowest possible level in order to avoid unnecessary time and expense.  This article discusses cases that could have been resolved prior to the appeals process, if they were handled properly.  By understanding the oversights that occurred in the presented cases, it may help you or your client avoid similar oversights.

Prior to my association with McClellan Davis LLC, I worked as an attorney for the California Board of Equalization’s Legal Department.  […]

Making the Right Call for Sales and Use Tax Outsourcing

Although the financial crisis of 2007 to 2009 is well behind us, the fallout from it continues to have an impact for businesses that are faced with doing business in an environment that is even more heavily regulated. To comply with the additional compliance requirements established by federal and state agencies, many businesses are forced to increase their in-house compliance staff, or outsource the obligations to a third party. This article provides a discussion of the various considerations that go into outsourcing sales and use tax compliance matters.  Understanding these factors will help enable you or your client to make […]