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Posts Tagged ‘Dicon’

The Dicon Opinion

Friday, April 27th, 2012 | Enterprise Zones, Legislation, Uncategorized
 
Here is the actual Opinion.  The Supreme Court ruled in favor of the FTB based primarily on the FTB’s general audit powers which, as the Court cited, are not supplanted or limited by the regulatory scheme concerning an employer obtaining a voucher. “The FTB may rely upon this certification if it so chooses, and the Attorney General has acknowledged that the FTB likely will do so ―perhaps even in most cases, to the employer‘s benefit.”

“As the FTB explains in its opening brief: ―It is . . . reasonable to conclude that vouchers provide for an additional level of review which may satisfy the Board in some cases, while not in others. For example, in some cases the Board‘s review of a statistically significant sample of an employer‘s vouchers may convince it that the vouchers were properly issued only for eligible workers. In this case the Board may accept the vouchers without demanding the production of specific documentation of worker eligibility, or without any additional investigation. In other cases, though, the review of the employer‘s vouchers may raise concerns with the Board, or even reveal that vouchers were improperly issued. In these cases the Board will prudently demand evidence or documentation of worker eligibility. The Board is not required to audit every voucher in every case, just as it is not required to audit every taxpayer‘s return; in fact, the Board‘s limited budget effectively prevents this as a practical matter. In fact, given budgetary constraints, one would expect that the Board‘s review of employee eligibility would probably occur only in those cases where it has information that vouchers may have been improperly issued. The FTB cites several weaknesses in the vouchering process that could lead the FTB to audit a voucher, noting that ―at the time the vouchers were issued in this case there were no statutory or regulatory requirements regarding the documentation required to obtain or issue a voucher. In addition, there is no requirement for an agency that issues vouchers to communicate at all with the employees for whom it is required to supply vouchers, and vouchers may be retroactively issued years after the employment takes place. [¶] Nor, until new regulations that became effective November 27, 2006, was there even a requirement that enterprise zone agencies keep voucher records. [Citation.]

We find reasonable the FTB‘s view that ―[t]he voucher process complements the review/audit process and enhances its efficiency by allowing the Board to rely on vouchers in those situations where it has confidence in their accuracy, while requiring evidence in those cases where it does not. Because the FTB‘s interpretation of section 23622.7 is reasonable, there is no statutory conflict that requires the certification process to be harmonized with the laws governing the FTB‘s authority in the particular way urged by Dicon and the Court of Appeal.”

 
 

 

Supreme Court Rules In FTB’s Favor in Dicon Case

Thursday, April 26th, 2012 | Enterprise Zones, Tax News

 

In an unanimous opinion today, the California Supreme Court ruled  that the FTB can in fact audit behind the EZ voucher.  The voucher certificate is no longer considered “prima facie” evidence that the worker is qualified for the EZ program.  The opinion states:

We reverse the Court of Appeal’s holding that a certification issued by a governmental agency for purposes of the hiring tax credit under Revenue and Taxation Code section 23622.7 constitutes “prima facie proof of a worker is a ‘qualified employee,’ ” which shifts to the Franchise Tax board the “burden of demonstrating an employee is not a qualified worker for which no voucher should have issued. ” In all other respects, the Franchise Tax Board does not challenge the Court of Appeal’s judgment, and it is affirmed. Majority Opinion by Liu, J. — joined by Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, and Corrigan, JJ.

 
 
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