On August 4, 2010, TEI filed a letter commenting on California AB 2498. TEI urged the California Legislature to reject the proposals that would (1) impose strict liability penalties on taxpayers participating in so-called abusive tax avoidance transactions, (2) adopt the recent federal codification of the economic substance doctrine, (3) establish a "tax amnesty" program with heavy-handed penalties and no appeal rights, and (4) unjustifiably put the professional licenses of both certified public accountants and lawyers at risk by encouraging state licensing boards to consider punitive measures for professionals only marginally associated with abusive tax avoidance transactions. TEI noted that these provisions would impose substantial taxpayer burdens without improving tax compliance or administration and undermine the fairness of California's tax system, which is essential more broadly to a functioning self-reporting tax system.
TEI's comments were prepared under the aegis of TEI's State and Local Tax Committee, whose Chair is Cathleen Stevens. Daniel B. De Jong is the legal liaison to the committee.