California Revenue and Taxation Code 23101.5 – (a) The Franchise Tax Board may determine that a corporation is …
(a) The Franchise Tax Board may determine that a corporation is not doing business in this state for purposes of this chapter or deriving income from sources within this state for purposes of Chapter 3 (commencing with Section 23501) if its only activities within this state are either or both of the following:
(1) The purchase of personal property or services solely for its own use or use by its affiliate outside this state if:
Terms Used In California Revenue and Taxation Code 23101.5
- board: means the California Department of Tax and Fee Administration. See California Revenue and Taxation Code 20
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Personal property: All property that is not real property.
(A) The corporation does not have more than 100 employees in this state, whose duties are limited to solicitation, negotiation, liaison, monitoring, auditing, and inspecting the personal property or services acquired, or providing technical advice with respect to its requirements, and
(B) The corporation does not have more than 200 employees in this state, whose duties are limited to solicitation, negotiation, liaison, monitoring, auditing, and inspecting the personal property or services acquired, or providing technical advice with respect to its requirements, and the personal property or services purchased by the corporation or its affiliate are used for the construction or modification of a physical plant or facility located outside the state, and
(C) The combined number of employees in this state pursuant to subparagraphs (A) and (B) does not exceed 200.
(2) The presence of employees in this state only for the purpose of attending a public or private school, college, or university.
(b) A corporation may petition the Franchise Tax Board for a determination in accord with procedures established by the Franchise Tax Board. The filing of that petition shall be deemed a waiver of the confidentiality provisions of Section 19542 with respect to the facts alleged in the petition and any additional evidence produced with respect to those facts.
(c) If the determination is made, it shall remain in force for five years as long as the corporation continues to meet the above criteria. However, with respect to corporations meeting the above criteria on or before January 1, 1978, the determination shall remain in force indefinitely so long as the corporation continues to meet the above criteria.
(d) The corporation shall annually confirm with the Franchise Tax Board within two months and 15 days after the close of its fiscal year, in the manner as the Franchise Tax Board may prescribe, that the facts relevant to the granting of the determination then in effect remain unchanged or shall state and explain any changes that have occurred since the preceding report was filed.
(e) Where a corporation applying for or relying on the determination is engaged in a unitary business, the limitation of 100 or 200 employees, as applicable, that is specified in paragraph (1) of subdivision (a) shall apply to the aggregation of all corporations within the unitary group.
(f) Each taxpayer that sells property or services to a corporation with more than 100 employees in this state, with respect to which the determination has been made, shall file annually with the Franchise Tax Board, in the manner as the Franchise Tax Board may prescribe, a report identifying the number of its employees within this state directly attributable to the construction or modification of a physical plant or facility located outside the state.
(g) This section shall become operative on January 1, 1994.
(Repealed (in Sec. 37.2) and added by Stats. 1993, Ch. 877, Sec. 37.5. Effective October 6, 1993. Section operative January 1, 1994, by its own provisions.)