Market based sourcing amendment clarification November 2018 Tax News

We have received several questions about the applicability of the proposed amendments to California Code of Regulations (CCR) section 25136-2. Here are answers to some of those questions.

First, the proposed amendments are just that, “proposed”.  The proposed amendments are not law and cannot be cited as authority, they are only a draft. On May 18, 2018, we held our third Interested Parties Meeting (IPM) for a second round of proposed amendments to California Code of Regulations, Section 25136-2. For more detailed information, read the draft language handout from that meeting.

Second, if the proposed amendments are eventually made into law, those amendments cannot be applied retroactively.

Third, the current regulation for assignment of market based sourcing issues still applies. Both the public and our staff should rely on it as nothing has changed.

Finally, if taxpayers have a question or need clarification on the law being applied to a particular taxable year, they should address their questions or concerns with the auditor assigned to their case. It may even be appropriate for the auditor to contact the Market Based Rules Task Force in our department for guidance so that we ensure the current market based rules are applied in a clear and consistent manner.