DICON FIBEROPTICS, INC. v. Franchise Tax Bd.

RUBIN, Acting P. J.—

Dicon Fiberoptics, Inc., appeals from the trial court's judgment sustaining without leave to amend the demurrer of the Franchise Tax Board to Dicon's complaint seeking refund of a tax credit for employing disadvantaged workers. To receive the credit, Dicon submitted vouchers to the board certifying Dicon had employed disadvantaged workers. After auditing the vouchers, the board partially denied the tax credit to Dicon. Dicon contends the board has no legal authority to audit its vouchers, a contention we reject. We nevertheless conclude Dicon states a cause of action that the board exercised its audit power improperly, and therefore the trial court erred in sustaining the board's demurrer. Accordingly, we reverse and remand.

Certain areas and localities in California suffer from persistently high unemployment, poverty, and anemic economic growth and activity. Hoping to remedy these problems, the Legislature enacted Government Code section 7070 et seq., which is known as the Enterprise Zone Act (Act). The Act's purpose is to reduce obstacles the Legislature believes impede private investment and business in economically depressed areas in California. (See…