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FTB may not impose tax shelter penalty

Thursday, November 10, 2011

The California Superior Court of San Francisco County has ruled that the FTB may not impose the 50% penalty for promoting abusive tax shelters on 2001 activities. R&TC §19177 , as effective in 2001, provided for a $1,000 maximum penalty. The 2003 amendment of that section raising the penalty to 50% of the gross income from the activity did not apply to the 2001 activities because there is no indication that the Legislature intended that the 2003 amendment be applied retroactively. (Quellos Financial Advisors, LLC v. Franchise Tax Board (October 31, 2011) Cal. Super. Ct., San Francisco County, Dkt. No. CGC-09-487540)

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