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FTB Reverses Decision

Franchise Tax Board Reverses Decision on Tax for Publically Traded Partnerships

Monday Morning Report, September 12, 2011.

Unit holders from various publically traded partnerships (PTPs) received notices from the California Franchise Tax Board (FTB) in 2010 indicating that they owed the minimum franchise tax of $800. This change in tax interpretation by the FTB would create a significant burden for many unit holders and likely discourage investments in PTPs doing business in California. Through the National Association of Publically Traded Partnerships, this issue was resolved when a letter was secured from the FTB last fall indicating that the tax bills were sent out in error. 

Unfortunately, the FTB issued another round of inquires recently with several unit holders from different PTPs. After several attempts at contacting the appropriate staff at the Franchise Tax Board, we have now learned FTB is changing their position again and will no longer be seeking an $800 franchise tax from unit holders in publically traded partnerships.

For companies who have unit holders who have received this notice from the Franchise Tax Board, please refer them to Blair Knox at CIPA to help them through the process or to answer any questions.