Courtesy photo
Courtesy photo

Board of Equalization Chairman Jerome E. Horton announces that the California Supreme Court denied the Board of Equalization’s Petition for Review in the Lucent Technologies, Inc. and AT&T Corp. v. State Board of Equalization (Lucent) sales and use tax case decided on January 20, 2016.  The State could owe refunds to almost 900 technology companies with claims held in abeyance as a result of the Supreme Court Ruling in the case.

The BOE’s petition followed the Second District Court of Appeal’s decision on October 8, 2015, affirming the trial court’s judgment in favor of plaintiffs AT&T Corp. and Lucent Technologies, Inc., finding that charges for the software acquired along with an assignment of patent and copyright rights were not subject to tax. The Court of Appeal found that the decision in Nortel Networks Inc. v. State Board of Equalization (2011) 191 Cal.App.4th 1259 (Nortel) determined the issues in this case.

Lucent involved the sale of tangible personal property (TPP), and its licensing of a right to use the software needed to operate the TPP, by Lucent Technologies to various telephone companies.  The BOE asserted that the charges for the software were taxable, while the plaintiffs referred to the state’s technology transfer agreement (TTA) statutes (Rev. & Tax. Code, §§ 6011(c)(10) and 6012(c)(10)) and the decision in Nortel, asserting that the charges for the software were exempt from tax.

“I have called for a closed session briefing at the February 23-25, 2016, Board Meeting to allow the Board to consider next steps and how best to expedite the administration of this decision and take appropriate action to implement the Court of Appeal’s decision,” said Chairman Horton.