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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Court Decisions
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Tetra Pak, Inc. v. State Board of Equalization … (1991)
Amnesty Program Allowed Taxpayers to Make the Same Elections that Were Available to Timely Filers
The Tax Penalty Amnesty Program (Revenue and Taxation Code Section 7070 et seq.) was set up to give delinquent taxpayers a time period within which to square their accounts. It was enacted to expand the tax rolls and revenues with a minimum investment of time and trouble. Taxpayer took advantage of the program by filing a sales and use tax return on tangible personal property that the taxpayer had acquired to lease to others. Taxpayer elected to pay the entire tax based on the purchase price that he initially paid for the property. The Board denied the election as being untimely and assessed tax on the rental amount as continuing sales subject to use tax.
The court of appeal held that the taxpayer was entitled to make the untimely election. The amnesty program was a "collective pardon." To make the program effective, the disincentives that keep many taxpayers from making their tax payments needed to be removed. One disincentive would be the loss of the right to make the election provided for in Regulation 1660: to pay tax on the purchase price of the leased tangible personal property or upon the rental receipts. By enacting the amnesty program, the Legislature surrendered all sanctions except the payment of principal and the running of interest. A remedial statute such as this should be construed to advance and extend the remedy to bring within its scope every case which comes within its spirit and policy. Tetra Pak, Inc. v. State Board of Equalization (1991) 234 Cal.App.3d 1751.