Amicus letter to California Supreme Court requesting clarification of rules for determining remedies in state tax cases.

September 21, 2010

On September 21, 2010, Tax Executives Institute submitted the following "friend of the court" letter to the California Supreme Court in a case involving River Garden Retirement Home, urging the court to clarify the framework for crafting remedies when state tax provisions have been found unconstitutional. The letter was submitted under the aegis of TEI's State and Local Tax Committee, whose chair is Linda H. Dickens of Texas Instruments, Inc. Daniel B. De Jong, legal staff liaison to the State and Local Tax Committee, coordinated the preparation of the amicus letter.

On behalf of Tax Executives Institute, I write to urge the Court to grant the pending Petition for Review filed by River Garden Retirement Home in Supreme Court Case No. S185795. The case presents important constitutional and tax policy issues affecting Petitioner as well as other similarly situated taxpayers--namely, the proper remedy when a California tax statute is declared unconstitutional. The current state of the law is confusing and decisions by the various courts of appeal are irreconcilable. A decision by the Court would provide much needed clarity to taxpayers and the government affecting future decisions to challenge constitutionally suspect tax statutes.

Interest of the Applicant

Tax Executives Institute was founded in 1944 to serve the professional needs of business tax professionals. Today, the organization has 54 chapters in North America, Europe, and Asia, including several in California. Our 7,000 members represent 3,000 of the largest companies in the world, many of which are either resident or do business in California.

As the preeminent association of business tax professionals worldwide, TEI is dedicated to promoting the uniform and equitable enforcement of the tax laws, reducing the costs and burdens of administration and compliance to the benefit of both the government and taxpayers, and vindicating the Commerce Clause and other constitutional rights of all business taxpayers. As tax professionals who recognize the states' right to collect properly levied taxes and who respect the legitimacy of state assessments, TEI members have a significant interest in the standards applied in assessing the adequacy of remedies accorded taxpayers for unlawfully imposed and collected state taxes.

Why Review Should be Granted

1. Background

   California provides a deduction in the computation of corporate taxable income for dividends received from...