Where did wealthy inventor live in 1991? California’s taxman wants to know

California is in the wrong here: <a href="https:&#x2F;&#x2F;www.pillsburylaw.com&#x2F;en&#x2F;news-and-insights&#x2F;hyatt-to-make-second-trip-to-the-united-states-supreme-court.html" rel="nofollow">https:&#x2F;&#x2F;www.pillsburylaw.com&#x2F;en&#x2F;news-and-insights&#x2F;hyatt-to-m...</a>.<p>Basically, California contends that this guy owes taxes for 1991-1992 because was still a California resident at that time, despite extensive evidence he changed his residence to Nevada before the relevant date:<p>&gt; During the audit, Hyatt provided FTB with evidence that he had rented an apartment in Nevada, obtained a Nevada driver’s license, opened a Nevada bank account, registered to vote in Nevada, obtained Nevada automobile and renter’s insurance, joined a Nevada synagogue, and sold his California home prior to the date of his asserted residency change. Nevertheless, FTB concluded that Hyatt staged the alleged move to Nevada all in an effort to avoid state income tax liability on his patent licensing income.<p>In the process, the FTB conducted an abusive investigation:<p>&gt; FTB conducted interviews and collected signed statements from various individuals who were estranged from Hyatt at the time, but ignored witnesses with whom Hyatt had good relations. FTB auditors allegedly rifled through Hyatt’s mail and garbage, and made anti-Semitic remarks in reference to Hyatt.<p>Hyatt sued the FTB in Nevada courts. The FTB then invoked California law, which provides it immunity from suit. The Nevada Supreme Court held that the FTB could not invoke California immunity from suit in a Nevada court. The U.S. Supreme Court agreed, holding that the FTB was entitled to no more protection than a Nevada State agency would receive in a Nevada court.<p>Hyatt then won almost $500 million at trial against the FTB on tort and fraud claims.<p>California appealed, arguing that Hyatt couldn&#x27;t win a judgment against the FTB in a Nevada court that exceeded what he could win against a Nevada agency ($50,000). In a real &quot;live by the sword, die by the sword&quot; ruling, the U.S. Supreme Court agreed, knocking his judgment down to $50,000.

The money in question was royalties on a patent (eventually invalidated) covering the idea of a microcontroller (CPU, memory, and communication on one chip). It was a 20 year submarine patent: issued in 1990 but with priority date 1970. It almost certainly could not have been built with 1970s lithography.<p><a href="https:&#x2F;&#x2F;www.google.com&#x2F;patents&#x2F;US4942516" rel="nofollow">https:&#x2F;&#x2F;www.google.com&#x2F;patents&#x2F;US4942516</a>

&gt; <i>&quot;If the state wins, Hyatt would be on the hook for at least $13.3 million in taxes and penalties from 1991 and 1992. At past court appearances, the state has argued that Hyatt owes more than $55 million when interest is tacked on to those initial charges.&quot;</i><p>&gt; <i>&quot;The Franchise Tax Board has already spent $25 million trying to collect the money while defending itself from Hyatt’s lawsuits, department spokesman Jacob Roper said.&quot;</i><p>Is it just me or do the above numbers sound ridiculous. Why is the govt spending $25M on a case, that if it wins, would result in a $13-55M payout?<p>Edit: To put the above numbers in context, the IRS recoups about ~$60B in tax enforcement, on a ~$10B budget. That&#x27;s a 600% return on investment. I would have expected the California state tax enforcers to budget themselves in a similar manner.<p><a href="http:&#x2F;&#x2F;www.huffingtonpost.com&#x2F;2011&#x2F;04&#x2F;28&#x2F;irs-budget-cuts-deficit_n_850243.html" rel="nofollow">http:&#x2F;&#x2F;www.huffingtonpost.com&#x2F;2011&#x2F;04&#x2F;28&#x2F;irs-budget-cuts-def...</a>

&gt;&quot;“The ability to take this to a group of unbiased elected officials is better than taking it to a group of state employees who in the long run benefit from a decision for the state,” Runner said.&quot;<p>Unbiased elected officials is an oxymoron.

Another example of tax arbitrage. I have a friend in Portland, Oregon who owns a multimillion dollar business and lives 20 miles away from Vancouver, Washington. Oregon&#x27;s top income tax bracket is 11%, Washington has no income tax. When it comes time to sell his business, by moving to Vancouver for a year he can increase his net worth by a half million or more and his income for the rest of his live by over 12% a year.

&gt; Hyatt would be on the hook for at least $13.3 million in taxes and penalties from 1991 and 1992. At past court appearances, the state has argued that Hyatt owes more than $55 million when interest is tacked on to those initial charges.<p>That&#x27;s a pretty sweet interest rate they&#x27;ve given themselves. Wish I could get that from my bank.

VB has a perspective on this:<p><a href="https:&#x2F;&#x2F;venturebeat.com&#x2F;2014&#x2F;04&#x2F;01&#x2F;gil-hyatt-has-waited-40-years-for-the-patent-office-to-rule-on-his-inventions-interview&#x2F;" rel="nofollow">https:&#x2F;&#x2F;venturebeat.com&#x2F;2014&#x2F;04&#x2F;01&#x2F;gil-hyatt-has-waited-40-y...</a>

The actual evidence against the man has been lost, so claimed by this man. Go to about 14 minutes in.<p><a href="https:&#x2F;&#x2F;youtu.be&#x2F;FcYbMrS4cVg" rel="nofollow">https:&#x2F;&#x2F;youtu.be&#x2F;FcYbMrS4cVg</a>

No statute of limitations on tax collections in CA?

Patent troll vs the government that enforces patent law, no matter who wins we lose.

What I&#x27;ve realized throughout the last few years is that there are wealthy investors EVERYWHERE within the US and SV is kind of overhyped.

Let&#x27;s hope he pays up because California could use the money for infrastructure and environmental remediations.

where someone lives should have no bearing, for example if you work for an employer the state where you turn up to work should receive taxes, and if you&#x27;re an inventor the state where the patent office resides should get to money.<p>this would solve a lot of cases.<p>and if you live somewhere you also pay property taxes.