$2.8 Million Settlement Award of California Franchise Tax from Settlement Board

2-8-M-california-franchise-In this case, the Texas based client sold Texas based radio and TV stations for a significant gain. Since the California operations were unitary with the Texas and other operations the client properly apportioned the extraordinary gain. This resulted in over $10 million in California Franchise tax.

Upon our review of the return we determined that the taxpayer had correctly filed the return under the applicable rules in California. However, based on our perspective we nonetheless advised the client to seek a refund, simply based on the fact that the tax was not fair. Ironically, the very rule in California (i.e. alternative apportionment §25137) to correct “unfair” situations operated in this case to tax the client unfairly. In the end, we secured a $2.8 million settlement with the Franchise Tax Board, “found money” based on a refund claim literally filed days before the statute of limitations for the refund would have otherwise expired.

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In Summary, Barnwell Consulting, LLC can:

  • Find state income/franchise tax refunds and have collected millions of dollars in cash refunds
  • Assist with altering corporate structure when good business purpose exists, to help lower state income tax liabilities
  • Assist with FIN 48 accruals, but more importantly with strategies to resolve FIN 48 uncertainty projects that help companies lower the state effective tax rate.
  • Handle complex income and sales/use tax audits and have been successful in eliminating or reducing material assessments
  • Assist clients with SALT issues in acquisitions and divestitures
  • Identify credits and incentives, which fall into two broad categories, statutory and negotiated. With respect to the former, we see our job less as identifying statutory credits – and more focused on whether our client has fully recognized the credit, and obtained the maximum possible benefit.