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State of California Franchise Tax Board

Court rules in favor of Franchise Tax Board

On Thursday, May 21, 2009, the Sacramento County Superior Court ruled in favor of Franchise Tax Board in a lawsuit filed by the California Taxpayers' Association (Cal Tax). The suit challenged the validity of Revenue and Taxation Code section 19138, the large corporate understatement penalty. Cal Tax challenged the statute on a number of state and federal constitutional grounds, all of which were rejected by the court. The court did not stay the statute, therefore all aspects of the law are in effect, including the May 31, 2009, deadline to file amended returns and pay any additional amount for prior years.

See the offical court ruling.

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