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California Supreme Court Denies Board of Equalization’s Petition for Review of Lucent Technologies Case

California Supreme Court Denies Board of Equalization’s Petition for Review of Lucent Technologies Case

By Jason C. DeMille.

On October 8, 2015, the Court of Appeal filed its opinion in Lucent Technologies, Inc. v. State Board of Equalization (2015) 241 Cal. App. 4th 19, the follow-on case to Nortel Networks, Inc. v. State Board of Equalization (2011) 191 Cal. App. 4th 1259.  The case came to the same conclusion as Nortel, i.e., copyrighted or patented software transferred pursuant to technology transfer agreements is not subject to sales or use tax.  The State Board of Equalization (“SBE”) requested a rehearing, which was denied, but the Court of Appeal slightly modified the opinion on November 3, 2015.  The SBE subsequently filed a petition for review with the California Supreme Court.

On January 20, 2016, the California Supreme Court denied the SBE’s petition for review, and the Court of Appeal decision is now final. The SBE currently has the dilemma of determining how to handle the large number of refund claims that have been pending since the decision in the Nortel case.  It will likely take some time for the SBE to sort things out. In the meantime, taxpayers who transfer software pursuant to technology transfer agreements should continue to file claims for refund to protect their rights to a refund.

Click here to review our previous article discussing the Lucent Technologies case: Lucent Technologies, Inc. v. State Board of Equalization: A Satisfying Sequel to Nortel Networks, Inc. v. Board of Equalization.

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