Shiseido Cosmetics (America) Ltd. v. Franchise Tax Board

—In these cases consolidated for appeal, plaintiff Shiseido Cosmetics (America) Ltd. (SCA) sought refund of franchise taxes resulting from defendant Franchise Tax Board (FTB) assessments applying the unitary tax method of worldwide combined reporting (WWCR) (Rev. & Tax. Code, § 25101 et seq.) based on the determination that SCA was engaged in a unitary business with Shiseido Co., Ltd. (Shiseido), its Japanese parent company, and Shiseido’s subsidiaries and affiliates located throughout the world. SCA claimed the application of WWCR violates the United States Constitution.

Both lawsuits involve tax years 1971 through 1975. In the first action, the trial court granted summary judgment in FTB’s favor on the ground that SCA failed to exhaust administrative remedies by failing to file a post-payment administrative refund claim before filing suit.

SCA filed the second action after submitting a “perfected” refund claim to FTB for the same tax years that were at issue in the first lawsuit. The trial court granted FTB’s motion for judgment on the pleadings in the second suit, on the ground the refund claim was untimely.

SCA appeals from both judgments, contending (1) exhaustion…