FTB Rescinds ‘Tribal Source Practice’

TRIBAL ALERT

April 4, 2013

FTB TO RESCIND ‘TRIBAL SOURCE’ PRACTICE – THOSE WHO FILED 2008 STATE INCOME TAXES HAVE UNTIL APRIL 15, 2013 TO FILE APPEAL & PRESERVE THEIR RIGHTS: Tribal leaders please circulate to all members

The California Franchise Tax Board (FTB) has initiated a practice of collecting state income tax from tribal members who are living and working on their reservation. The FTB’s rational for this practice is that tribal member income is not exempt from state income tax unless it is derived from a “tribal source.” The FTB has not defined “tribal source” or provided legal authority for its practice, which is contrary to federal case law.

The FTB practice was brought to the attention of the Governor’s office and through its efforts the FTB has reconsidered its practice and is prepared to discontinue it and rescind assessments that were issued over the last four years. We anticipate official notice confirming FTB’s position next week. However, because the FTB is only going back four tax years, tribal members who have been wrongful assessed income tax in 2008 will only have until April 15, 2013 to file an appeal with the FTB.

Attached are the necessary appeal forms that tribal members may submit to preserve their claims.
CILS is asking tribal leaders and others to please post and circulate this alert so that tribal members may protect their rights for a refund of improperly collected taxes on their income earned on their reservation. If tribal members need assistance please direct them to the CILS office within their area.

Thank you and CILS will continue to monitor this matter and inform the tribes of future developments.

Click here for a .pdf version of this Alert.