Tetra Pak, Inc. v. State Board of Equalization

California was one of a number of states that during the mid-1980’s enacted an amnesty program which gave delinquent taxpayers a period within which to square unpaid or unreported accounts in exchange for the surrender by the state of its power to seek penalty surcharges and criminal sanctions. One of the issues presented here is whether such a delinquent taxpayer is entitled to make the same election of the basis by which its tax is to be measured that it could have made had it filed a timely tax return. We hold that the election period is extended for the duration of the amnesty.

Another legislative product of the 1980’s is the “California Taxpayers’ Bill of Rights," one provision of which (Rev. & Tax. Code, § 7156) grants trial courts the power to award attorneys’ fees to taxpayers that have prevailed in tax-related litigation where the state’s position was “not substantially justified.” We conclude that this commonly employed statutory language vests the trial court with discretion to make such an award subject to reversal only for abuse.

Background

This dispute is comprehensible only if a certain feature of the sales and use tax system is understood. The lessor of…