California – Taxpayer Was Not Entitled to Reductions in His Liability


A taxpayer in California was not entitled to any reductions in his personal liability because he failed to establish a basis to reduce the car dealership’s unpaid liabilities.

 In this matter, the taxpayer argued that the amount of his responsible person liability should be lesser. However, the taxpayer failed to submit any evidence to support its claim. Moreover, the Office of Tax Appeals (OTA) found no error in the California Department of Tax and Fee Administration’s (CDTFA’s) calculation of the taxpayer’s liabilities.

The taxpayer argued that CDTFA lacked statutory authority to require retailers to reduce the allowable deduction by the wholesale value of the repossessed vehicle. Instead, the taxpayer contended that retailers were statutorily authorized to deduct the entire contract price. 

However, the OTA concluded that it was an administrative agency, not a court, and therefore it was precluded by the Constitution of the State of California from declaring a statute unenforceable or refusing to enforce the clear and unambiguous provisions of a statute, unless an appellate court had determined that the statute was unconstitutional. 

Based on this right, the OTA concluded that the CDTFA was within the scope of its delegated authority by specifying the allowable methods for computing losses and making clear that a deduction was not allowable for amounts collected by a retailer and providing that tax must be paid on such amounts. Accordingly, there was no basis to conclude that the CDTFA’s regulation was invalid and it was concluded that the taxpayer was not entitled to any further deductions.


For more information visit: ota.ca.gov

California Office of Tax Appeals
May 19, 2020