My writing partner lives in Youngstown, Ohio. The last time I checked a map it was over 2000 miles from the Bronze Golden State. However, the Board of Equalization must look at different maps.
According to this column in the North Lake Tahoe Bonanza, the BOE ruled that if the managing member of an LLC is a California resident, the LLC must pay California taxes solely for this reason. I can’t find the ruling online, so I do not know any of the other details.
But on its face this ruling seems ridiculous. Consider a hypothetical Ohio LLC, Youngstown Tubing, LLC. The business is located in Youngstown. The LLC has no sales effort in California. Its managing member resides in California, but he travels to Youngstown for all of the LLC’s business. Yet (supposedly) because of the BOE’s ruling, this Ohio LLC would owe California franchise tax and the (previously ruled unconstitutional) LLC fee tax. I can’t see how this ruling can survive a challenge in federal court; then again, I was shocked that the Supreme Court declined to hear the Huckaby case (where a Tennessee telecommuter was forced to pay New York income tax).
I have requested additional information from the BOE; perhaps I’ll be surprised when I read the ruling and find that this ruling makes sense. I’ll keep you informed.