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Supreme Court rules on California residency case

In our first post of this year, we wrote about a drawn-out dispute between a former California resident and the California tax authorities that went all the way to the U.S. Supreme Court.

In this post, we will update you on the Court's ruling in the case.

The case concerns a computer-chip inventor who moved from California to Nevada way back in 1991. Despite the man's move, the California Franchise Tax Board (CFTB) has been trying to collect California state taxes from him.

As we explained in our January 1 post, the inventor eventually sued the FTB, contending the FTB was harassing him.

The inventor won in state court in Nevada. But the FTB appealed to the U.S. Supreme Court, arguing that the Constitution does not allow such suits against a state in the courts of another state.

The inventor asserted that investigators from the FTB harassed him by taking such egregious actions as sifting through his trash. The violations of his privacy were so out-of-bounds that a jury in Nevada originally awarded him about $490 million. That amount was later cut down to $1 million by the Nevada Supreme Court.

Last month, the Court voted 4-4 to uphold the inventor's right to sue the FTB in the Nevada court system. So California lost on that issue.

The FTB did win, however, on the amount of the damage award that it will have to pay. The Court ruled that the award would be limited to at most $50,000 - a far smaller sum than the $490 million that as originally awarded.

The FTB is also still trying to collect California income taxes from the inventor - -a quarter of a century after his move to Nevada. Taxes on millions of dollars of royalties from a microprocessor patent are still in dispute.

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