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Nossaman Tax Partner Douglas Schwartz Quoted In Nor Cal Record On Swart Ruling

02/22/2017 Northern California Record

Nossaman Tax and Corporate Partner Douglas Schwartz was quoted in the Northern California Record story, “Appeals Court Finds Swart Not Obligated To Pay State Franchise Tax.”  The article examines the Court of Appeal for the 5th Appellate District’s ruling in Swart Enterprises Inc. v. Franchise Tax Board that the state of California could not impose its franchise tax on an out-of-state corporation based solely on the corporation’s investment in a limited liability company doing business in the state.  The ruling potentially opens the state up to millions in refunds of franchise taxes collected from other out-of-state companies over the years.  Commenting on the outcome, Mr. Schwartz stated that “We probably will be seeing a lot of refund claims based on this decision…[it] was somewhat anticipated, but I expected that it would be a much narrower verdict.”  The FTB can petition to have the case heard by the California Supreme Court, but it’s not a given  that  the Court will agree to relitigate the issues.  “As broad as it is, this verdict opens the FTB up to being hit with a lot of refund claims, so I would absolutely anticipate them moving to be heard by the high court,” Mr. Schwartz added.  “Beyond that, you can never predict what the Supreme Court might do or if they will even hear the case.”

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