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Tax dispute involving microprocessor inventor centers on issue of residency

| Aug 29, 2017 | IRS |

Gilbert Hyatt, the man responsible for inventing the integrated circuit microprocessor, has been involved in his share of legal disputes over the years. For years, Hyatt was involved in patent litigation concerning his invention. Nowadays, Hyatt continues to be involved in a dispute over tax liability stemming from income he earned from his patent.

The tax dispute goes back to 1990, when Hyatt began receiving payments based on his microprocessor patent. While the state of California contends that Hyatt lived in California in 1991 and 1992, he claims that was already living in Las Vegas when he began receiving most of his money from the patent. This week, the California Board of Equalization is set to make a decision on the matter. 

A lot of money is at stake in the dispute. If a decision is rendered in favor of Hyatt, the state would owe him millions of dollars in legal fees going back to 1993. If the state of California wins, Hyatt would owe upwards of $13 million in both taxes and penalties, potentially as much as $55 million. While the state would have no means of appealing an unfavorable decision, Hyatt would have the ability to appeal the decision in court. In fact, certain aspects of his case has already been to the U.S. Supreme Court twice before.

The heart of the issue in the case is the issue of residency: where was Hyatt’s residence at the time he began receiving income from his microprocessor patent. This simple issue can easily become complicated and can lead to serious tax disputes. In our next post, we’ll say more about this. 

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