1. (a) Generally. If a Panel determines that a franchise or income tax appeal is frivolous or has been filed or maintained primarily for the purpose of delay, or that the appellant unreasonably failed to pursue available administrative remedies, OTA shall impose a frivolous appeal penalty pursuant to Revenue and Taxation Code section 19714.

2. (b) Factors considered. OTA may consider any relevant factors in determining whether to impose a frivolous appeal penalty in a franchise or income tax appeal. Factors which may be relevant in determining whether to impose a frivolous appeal penalty, and in what amount, include, but are not limited to:

   1. (1) Whether the appellant is making arguments that OTA, in a precedential Opinion, or the State Board of Equalization, in a precedential Opinion, or courts have rejected;
   2. (2) Whether the appellant is making the same arguments that the same appellant made in prior appeals;
   3. (3) Whether the appellant submitted the appeal with the intent of delaying legitimate tax proceedings or the legitimate collection of tax owed;
   4. (4) Whether the appellant has a history of submitting frivolous appeals or failing to comply with California's tax laws; or
   5. (5) Whether the appellant has been notified, in a current or prior appeal, that a frivolous appeal penalty may apply.

Note: Authority cited: Sections 15676.2, 15679 and 15679.5, Government Code; and Section 19714, Revenue and Taxation Code. Reference: Sections 15606, 15670, 15672, 15674, 15679 and 15679.5, Government Code; and Sections 20, 18533, 19043.5, 19045, 19047, 19048, 19084, 19085, 19087, 19104, 19324, 19331, 19333, 19334, 19335, 19343, 19345, 19346, 19714 and 20645, Revenue and Taxation Code.

History

1. New section filed 1-3-2019; operative 1-3-2019. Pursuant to Government Code section 15679(b), this action is exempt from OAL review. Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2019, No. 1).

2. Amendment of subsection (a) and amendment of Note filed 3-1-2021; operative 3-1-2021. This action is exempt from OAL review pursuant to Government Code section 15679(b). Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2021, No. 10).

3. Amendment of section heading and subsection (b) filed 6-26-2023; operative 6-30-2023. This action is exempt from the Administrative Procedure Act pursuant to Government Code section 15679(b). Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2023, No. 26).