CA Supreme Court Denies BOE Petition in Lucent Sales and Use Tax Case

Posted on January 28, 2016 · Posted in Breaking News, Industry News

1/28/16  The California Supreme Court denied the BOE’s Petition for Review in the case of Lucent Technologies, Inc. and AT&T Corp. v. State Board of Equalization (Lucent) sales and use tax on January 20, 2016. California could owe refunds to 900 technology companies with claims held in abeyance as a result of the Supreme Court Ruling.

The BOE’s petition followed the Second District Court of Appeal’s decision on October 8, 2015, affirming the trial court’s judgment in favor of plaintiffs AT&T Corp. and Lucent Technologies, Inc., finding that charges for the software acquired along with an assignment of patent and copyright rights were not subject to tax.  The Court of Appeal found that the decision in Nortel Networks Inc. v. State Board of Equalization (2011) 191 Cal.App.4th 1259 (Nortel) determined the issues in this case.

Lucent involved the sale of tangible personal property (TPP), and its transfer of a right to use software needed to operate the TPP, by Lucent Technologies to AT&T. The BOE asserted that the software was taxable, while the plaintiffs referred to the state’s technology transfer agreement (TTA) statute (Rev. & Tax. Code, §§ 6011(c)(10) and 6012(c)(10)) and the decision in Nortel, asserting that the software was exempt from tax.

During its February 23-25 Board Meeting, the BOE will consider how best to expedite the administration of the Court of Appeal’s decision, and requests that those with questions contact BOE Assistant Chief Counsel Robert Lambert at 916-324-6593 or 916-708-1030, or Wendy Vierra at 916/323-3173.

Click here to read the National Law Review in-depth article.