Thirty-Year-Old California Tax Policy Overturned

Akerman Senterfitt has won a significant victory over California's State Board of Equalization inParmar v. State Board of Equalization, which overturns a 30-year-old policy applied to some 25 tax and fee programs. The State Board of Equalization is California's principal tax administration body.

"We are thrilled about this win because it overturns an established policy that has adversely affected countless taxpayers in California for too many years" said Marty Dakessian, an Akerman shareholder based in the firm's Los Angeles office. "Thousands of taxpayers have been subject to an illegal tax for three decades."

Under the Board's policy, corporate executives were held liable for unpaid corporate excise taxes. In the case of Parmar v. State Board of Equalization, executives of Santos Agency, Inc., who were assessed taxes purportedly owed by their suspended corporation, challenged this unwritten policy. After a six-day bench trial, Los Angeles County Superior Court Judge Jane L. Johnson decided in their favor ruling that the Board's policy lack any statutory or regulatory support, violated California corporate law and the Administrative Procedures Act. Judge Johnson subsequently ordered the Board to refund all taxes paid by the plaintiffs.

"The key to the case was that a statutory basis for this policy simply did not exist," said Dakessian. "The BOE had overstepped its bounds and created and attempted to enforce an underground regulation."

Source: Akerman Senterfitt

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