In cases deemed appropriate by the Franchise Tax Board, itself, it may elect to hear and decide petitions filed pursuant to Section
instead of having this function performed by the Franchise Tax Board staff. Consideration of said petitions by the Franchise Tax Board, itself, shall be in open session at a regularly scheduled meeting.
(1) Definitions. For purposes of subsection (d) the following definitions apply.
(A) "Brief" means a written document containing an argument or arguments supporting a party's position.
(B) "Ex-parte communication" means any communication concerning a petition to or from the Franchise Tax Board, itself, or Franchise Tax Board member staff, outside the presence of either Franchise Tax Board staff or the taxpayer without notice to all parties.
(C) "Franchise Tax Board member staff" means staff employed by any of the three members of the Franchise Tax Board.
(D) "Franchise Tax Board staff" means staff employed by the Franchise Tax Board and does not include any Franchise Tax Board member staff.
(E) "Open session at a regularly scheduled meeting" means the open session of a regularly scheduled meeting of the Franchise Tax Board.
(F) "Petition" means a request by a taxpayer for the Franchise Tax Board, itself, to consider an alternative apportionment methodology pursuant to Section
25137 at an open session at a regularly scheduled meeting.
(G) "Variance action" means a taxpayer's request for Franchise Tax Board staff to allow the taxpayer to use an alternative apportionment methodology pursuant to Section
25137 or a Franchise Tax Board staff imposed alternative apportionment methodology.
(2) Petitions. The following shall apply to petitions filed pursuant to subsection (d):
(A) Any records submitted to the Franchise Tax Board, itself, by either the taxpayer or the Franchise Tax Board staff, as well as the decision of the Franchise Tax Board, itself, shall be open to public inspection pursuant to the California Public Records Act, Government Code sections 7922.505 through 7922.545 and the Bagley-Keene Act, Government Code section 11125.1. Any records of the Franchise Tax Board staff that are not submitted to the Franchise Tax Board, itself, shall remain confidential pursuant to Revenue and Taxation Code section 19542.
(B) The taxpayer shall file its petition with the Chief Counsel of the Franchise Tax Board explaining why its requested alternative apportionment methodology pursuant to Section
25137 is appropriate or why Franchise Tax Board staff's imposed alternative apportionment methodology is not appropriate. Such petition shall be filed within:
1. Sixty (60) calendar days from the date of a written adverse variance action determination by Franchise Tax Board staff;
2. One hundred twenty (120) calendar days from the date of a claim for refund filed pursuant to Revenue and Taxation Code section 19301 in which the alternative apportionment methodology is relevant to the taxable years in the claim for refund;
3. Sixty (60) calendar days from the date of a protest filed pursuant to Revenue and Taxation Code section 19041 in which the alternative apportionment methodology is relevant to the taxable years being protested;
4. Five (5) calendar days from the date of an appeal filed with the Office of Tax Appeals in which the alternative apportionment methodology is relevant to the taxable years on appeal;
5. Sixty (60) calendar days from the date of a letter of rejection by the Settlement Bureau of the Franchise Tax Board in which the alternative apportionment methodology is relevant to the taxable years at settlement; or
6. Sixty (60) calendar days from November 3, 2023.
(C) Within sixty (60) calendar days from the date of the taxpayer's petition, the Executive Officer of the Franchise Tax Board, or the Executive Officer's designee, shall notify the Franchise Tax Board, itself, of the receipt of the taxpayer's petition.
(D) Within sixty (60) calendar days from the date of the taxpayer's petition, or the date of Franchise Tax Board staff's determination as specified in subsection (d)(2)(E), whichever is later, the Chief Counsel of the Franchise Tax Board shall notify the taxpayer of the receipt of the taxpayer's petition in writing, which shall include a briefing schedule as specified in subsection (d)(2)(H).
(E) If Franchise Tax Board staff have not previously made a determination on the request to use an alternative apportionment methodology which is the subject of the taxpayer's petition before the Franchise Tax Board, itself, the Chief Counsel of the Franchise Tax Board shall ensure Franchise Tax Board staff determines whether the alternative apportionment methodology is appropriate.
(F) If the taxpayer files an appeal with the Office of Tax Appeals for the taxable years in which the alternative apportionment methodology is relevant to the taxable years on appeal, the taxpayer and Franchise Tax Board staff shall file a joint request to defer proceedings with the Office of Tax Appeals pending a decision by the Franchise Tax Board, itself.
(G) If a notice of proposed deficiency assessment, within the meaning of Revenue and Taxation Code section 19057(a), has not been mailed to the taxpayer with respect to the taxable years pertaining to the petition, the taxpayer shall agree in writing to an extension of the statute of limitations for the mailing of the notice of proposed deficiency assessment, until one-hundred and eighty (180) calendar days after the Franchise Tax Board, itself, has made its decision during an open session at a regularly scheduled meeting.
(H) The taxpayer shall submit its opening brief to the Chief Counsel of the Franchise Tax Board within sixty (60) calendar days from the date of the document notifying the taxpayer of the receipt of the taxpayer's petition.
After the taxpayer has submitted its opening brief, Franchise Tax Board staff shall have thirty (30) calendar days to submit its opening brief. Thereafter, the taxpayer shall have thirty (30) calendar days to submit a reply brief. Further briefing may be required by the Franchise Tax Board, itself. All briefs are subject to the following requirements:
1. Opening briefs are limited to double-spaced thirty (30) pages and twelve (12) point font per inch of paper.
2. Reply briefs are limited to double-spaced fifteen (15) pages and twelve (12) point font per inch of paper.
3. All briefs must be filed by the parties with the Chief Counsel of the Franchise Tax Board.
(I) Upon completion of briefing, the Franchise Tax Board, itself, may schedule a hearing during an open session at a regularly scheduled meeting to consider the taxpayer's petition. The taxpayer shall be notified in writing by the Chief Counsel of the Franchise Tax Board of the hearing date.
(3) Hearings. The following shall apply to hearings on petitions filed pursuant to subsection (d):
(A) The parties shall each have twenty (20) minutes to present their respective positions and an additional ten (10) minutes for the taxpayer's reply. The Franchise Tax Board, itself, has the discretion to allow additional time. Presentations of the parties at the hearing shall occur as follows:
1. The taxpayer shall make its opening presentation.
2. Franchise Tax Board staff shall make its opening presentation following the taxpayer's opening presentation.
3. The taxpayer shall make its reply presentation following Franchise Tax Board staff's opening presentation.
(B) A party seeking to have an expert or percipient witness testify must notify the other party to the proceeding in writing no later than fifteen (15) calendar days after the filing of the taxpayer's reply brief, of the identity of the witness, the general nature of the expected testimony, and the expected duration of the testimony at the hearing. The Executive Officer of the Franchise Tax Board, or the Executive Officer's designee, shall notify the Franchise Tax Board, itself, of any witness, the general nature of the expected testimony, and the expected duration of the testimony at the hearing.
(C) The Franchise Tax Board, itself, shall render its decision on the taxpayer's petition during an open session at a regularly scheduled meeting.
(4) Ex-parte Communication Rule. Except as provided by this regulation, there shall be no ex-parte communication regarding any substantive issue in the petition without notice and opportunity for all parties to participate in the communication.
(A) The ex-parte communication rule beginning with the notification to the taxpayer and the Franchise Tax Board, itself, of the receipt of the taxpayer's petition, continues while the petition is pending with the Franchise Tax Board, itself, and terminates when the Franchise Tax Board, itself, renders a decision. The Executive Officer of the Franchise Tax Board, or the Executive Officer's designee, shall notify the Franchise Tax Board, itself, of the applicability of the ex-parte communication rule to the petition.
(B) The ex-parte communication rule does not apply during the pendency of a variance action that is before Franchise Tax Board staff.
(C) The ex-parte communication rule does not apply to communications between the Franchise Tax Board, itself, or Franchise Tax Board member staff, Franchise Tax Board staff, and the taxpayer or its representatives during the pendency of a petition if the communication only relates to the scheduling of a future discussion of the petition, and which only involves one member of the Franchise Tax Board, itself, at a time. In such case:
1. The Franchise Tax Board member or Franchise Tax Board member staff shall invite all parties or their representatives, but no other Franchise Tax Board members, to participate in a scheduled telephonic discussion or in-person meeting as soon as practicable.
2. Any communication for purposes of arranging this scheduled discussion or in-person meeting shall only concern the scheduling and not the substance of the petition.
3. All parties or their representatives and the Franchise Tax Board member or Franchise Tax Board member staff shall coordinate to make a reasonable effort to arrange a mutually agreeable date, time, and place to hold the telephonic discussion or in-person meeting. If the parties cannot agree on a date, time, and place to hold the telephonic discussion or in-person meeting by five (5) calendar days before the scheduled telephonic discussion or in-person meeting, then the meeting shall not occur.
4. If the telephonic discussion or in-person meeting has been scheduled and one of the parties does not participate or attend, then the telephonic discussion or in-person meeting may proceed and will not be considered an ex-parte communication.
5. Regardless of whether all parties actually participate in the telephonic discussion or attend the in-person meeting, the Franchise Tax Board member or Franchise Tax Board member staff participating in the telephonic discussion or attending the in-person meeting must:
a. Document in writing substantive matters discussed at the telephonic discussion or in-person meeting.
b. Provide to all parties or their representatives to the petition, but not to other Franchise Tax Board members, within ten (10) calendar days from the date of the telephonic discussion or in-person meeting, the documentation pertaining to the substantive matters addressed and copies of any materials distributed by any of the parties participating in the telephonic discussion or attending the in-person meeting. If any party does not participate in the telephonic discussion or in-person meeting, that party shall have twenty (20) calendar days from the date of the telephonic discussion or in-person meeting to respond to the substantive matters discussed and the materials distributed. Such written response shall be provided to the opposing party.
(D) In the event an ex-parte communication occurs, the Franchise Tax Board member or Franchise Tax Board member staff shall document in writing the substance of the ex-parte communication and shall provide it to the other Franchise Tax Board members and the parties to the petition during the open session at a regularly scheduled meeting when the petition is considered by the Franchise Tax Board, itself.