Justia Tax Law Opinion Summaries

The City of San Diego adopted an ordinance imposing a tax on visitors for occupancy in hotels located within the City. The tax, known as the transient occupancy tax, is calculated as a percentage of the “rent charged by the operator” of the hotel. The City of San Diego issued transient occupancy tax assessments against online travel companies (OTCs) on the basis that the OTCs were liable as the “operator” of every hotel. The OTCs appealed. A hearing officer found that the OTCs owed tax on the amount retained by the OTCs above the amount remitted to the hotels as the agreed wholesale cost of the room rental. The superior court vacated the decision, concluding that OTCs are not operators of the hotels and that the markup the OTCs charge for their services is not part of the rent subject to the tax. The court of appeal affirmed. The Supreme Court affirmed, holding (1) under the ordinance, the operator of a hotel is liable for tax on the wholesale cost plus any additional amount for room rental the operator requires the OTC to charge the visitor under the “rate party” provisions of hotel-OTC contracts; but (2) OTCs are not operators within the meaning of the ordinance. View "In re Transient Occupancy Tax Cases" on Justia Law

Plaintiff filed a class action lawsuit against the City of Los Angeles challenging the validity of a certain tax and seeking a refund of taxes. In 2007, during discovery proceedings in the underlying litigation, the trial court determined that certain documents the City possessed were privileged under either the the attorney-client privilege or the privilege for attorney work product. In 2013, Plaintiff filed a request under the California Public Records Act seeking to obtain copies of documents relating to the tax at issue. The City’s administrative office, in response, inadvertently provided Plaintiff with some of the privileged documents. The City filed a motion for an order compelling the return of the privileged material. The trial court denied the motion, concluding that the production of the documents under the Public Records Act had waived any privilege. The Court of Appeal affirmed. The Supreme Court reversed, holding that Cal. Gov’t Code 6254.5, which generally provides that “disclosure” of a public record waives any privilege, applies to an intentional, not an inadvertent, disclosure. Remanded. View "Ardon v. City of Los Angeles" on Justia Law

In 1974, the state of California joined the Multistate Tax Compact, which contained an apportionment formula and permitted a taxpayer election between the Compact’s formula and any other formula provided by state law. In 1993, the Legislature adopted a different apportionment formula by amending the Revenue and Taxation Code to provide that, notwithstanding the Compact’s provisions, the new apportionment formula “shall” apply. Between 1993 and 2005, six multistate corporations (Taxpayers) paid income tax calculated under the new formula but then sought a refund, contending that they remained entitled to elect between the new statutory formula and that contained in the Compact. The trial court concluded that the Legislature could, consistent with the Compact, eliminate the election provision. The court of appeal reversed. The Supreme Court reversed, holding that the Legislature may properly preclude a taxpayer from relying on the Compact’s election provision. View "Gillette Co. v. Franchise Tax Bd." on Justia Law