Articles Posted in California Franchise Tax Board

The California Franchise Tax Board’s Financial Hardship Programs
The California Franchise Tax Board (FTB) encourages taxpayers facing a financial hardship to work with the FTB to find a way to pay off their tax debt. The FTB can give California taxpayers more time to pay, or settle tax debt for less than the full amount in some cases. Each method of solving your California income tax problems has its own requirements and benefits, so ask a California tax attorney which program can help with your situation.

Delay Collection Activities Due to Financial Hardship

The FTB will delay collection activities for taxpayers that are facing financial hardship. This is similar to being put into currently not collectible status by the IRS. The FTB does not advertise this option much, because it does not bring them any closer to collecting money from you to pay off your California tax debt.

Can a California Tax Lawyer Help Me with Tax Problems in Other States
Tax laws vary greatly from state to state, and in fact, nine states don’t even charge a state income tax. With such diversity of tax laws, it isn’t feasible for a tax lawyer to be fully versed in the statutes of all the other 41 states. However, federal tax laws apply to all 50 states, and a tax attorney with experience dealing with the IRS may be able to assist you with federal tax problems even if you live or do business in another state.

A California Tax Lawyer for State and Federal Tax Problems

For federal tax problems, it’s important to find an attorney that specializes in tax matters. The United States Tax Court will admit attorneys that are members of the bar in any state or Washington D.C. without requiring an examination. If you have a case before the Tax Court, an attorney from another state can help you if they are admitted to practice before the Tax Court.

If you or your clients have tax problems and owe California State income taxes, the Tax Man Cometh! The California Franchise Tax Board (FTB) is collecting delinquent tax debts through the Financial Institution Record Match (FIRM) program. FIRM uses automated data exchanges to locate bank accounts held by Californians who have tax debts. The FIRM program will match records on a quarterly basis in order to collect tax debts from both individuals and businesses. No financial institution doing business within the state of California is exempt from participating in the program. However, in rare cases temporary exemption or suspension of participation may apply. Banks that chose not to comply are subject to large fines each year. Accounts that are eligible for tax levies include checking and savings accounts, as well as mutual funds. FIRM is similar to the Financial Institution Data Match (FIDM) program, which is used to collect delinquent child support debt.

The FIRM program allows the FTB to use data obtained from banks to find assets and garnish bank accounts up to 100 percent of the amount owed. As of April, the FTB began to serve tax levies on the bank accounts of individuals who have delinquent balances, including penalties, interest, taxes and fees that have been identified through FIRM. With the help of the FIRM program, the FTB expects to issue 475,000 tax levies this fiscal year, a 75 percent increase from last year.

In order to avoid tax levies you or your tax lawyer should consider possible alternatives including installment agreements, offers in compromise and bankruptcies.

Data between FTB and FIRM can be exchanged in two ways. In the first method, information regarding open accounts is given directly to the FTB for the Board to match accounts with delinquent taxpayers. This method is only available to institutions that are unable to match the information against their own records. Institutions that do not qualify for the first method must match taxpayer information against their own records. Banks can choose to hire a third-party transmitter to aid in matching the data. Because the accuracy of the data is of the utmost importance, banks must verify matches from third-party services before submitting them to the FTB.

A 10-day holding period follows the issue of the tax levy to the bank. During this time, the taxpayer or a tax attorney on the taxpayer’s behalf may negotiate the amount due or, if financial hardship is creating tax problems, discuss payment options. If the FTB levied an account in error, they will delay the garnishment while they verify the mistake and then issue a garnishment release notice. If the bank has already issued the payment, the Board will return the payment.
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The Detroit News is reporting that Hollywood actress Teri Polo, perhaps best known for playing alongside Robert De Niro and Ben Stiller in “Meet the Parents,” has a tax lien for $433,736.

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The former Playboy pinup landed the role after a string of TV show appearances, including “The West Wing.” She is also appearing in “Little Fockers,” which is in theaters this year.

-The Internal Revenue Service filed a tax lien against Polo in August in Kent County Delaware in August 2009, claiming she owes $114,843.95 in income taxes from 2007.

California claims she owes $91,748 for taxes in 2005 and 2006, according to a tax lien filed in Los Angeles County in 2008.

-A second IRS tax lien in Delaware also claims she owes $227,144.48 in back taxes for 2005 and 2006.

Polo blames her tax problems on a costly divorce and being unable to work while raising two young children. She reportedly has reached a deal with the IRS to repay the tax debt.
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The California Franchise Tax Board (FTB) has arrested an individual for felony income tax evasion. According to the FTB Phillip Leech was the CFO of In & Out Desighns, Inc. which allegedly earned more than $1.3 million over a three year period, but didn’t file corporate income tax returns. There are a couple of interesting things about this tax fraud case. One is that Leech was apparently not the owner of the corporation; nevertheless because he was the CEO and CFO the FTB pointed out that he had a duty to file the income tax returns, and was charged with tax evasion. The amount of tax alleged to be owed by the corporation was not huge, $122,000, but the FTB still brought a criminal tax fraud case.

Another interesting point is that the criminal tax fraud case was brought only after the FTB issued notices to the corporation requesting tax returns. Sounds like Mr. Leech should have paid more attention to his mail!

If you have a tax problem with the California Franchise Tax Board, the Internal Revenue Service, or another California tax agency call the tax litigation lawyers at Brager Tax Law Group, A P.C.

Beginning January 1, 2004 the California Franchise Tax Board (FTB) was required, with some limitations, to grant innocent spouse relief to individuals who had previously been granted innocent spouse relief by the Internal Revenue Service (IRS) pursuant to Revenue and Taxation Code Section 18533(h). The idea was that someone who had gone through all of the expense and trouble of obtaining innocent spouse relief from the IRS should not have to go through the same process with the FTB again. After all, portions of the California innocent spouse statute are identical to the federal innocent spouse statute Internal Revenue Code Section 6015. Unfortunately the Revenue and Taxation Code Section 18533(h) expired at the end of 2008.

The California Franchise Tax Board, however, announced that it would apply the same rules as existed under former Section 18533(h) in determining whether or not innocent spouse relief should be granted. However, since there is no longer a statutory basis for doing so if the FTB were to decide for any reason that the old statute didn’t apply a person could no longer appeal to the California Board of Equalization (SBE or BOE) or the courts on the basis that the FTB hadn’t followed Revenue and Taxation Code Section 18533(h) in applying the innocent spouse rules.

If you think that you are an innocent spouse, and would like to arrange a consultation with one of our tax litigation lawyers please contact Brager Tax Law Group, A P.C. Alternatively, if your spouse is requesting innocent spouse relief, and you don’t believe he or she should qualify, our tax attorneys may be able help too.

An article in the California Franchise Tax Board (FTB) November 2008 Tax News publication highlighted the other tax problems that can arise from a tax audit by the California State Board of Equalization (SBE or BOE). Many sales tax audits by the BOE result in a changes to a company’s gross receipts. The BOE tax auditors have instructions to provide the FTB with audit reports which show that not all sales were reported. In turn the FTB may open an income tax audit resulting in additional state income tax due.

Although not mentioned in the FTB Tax News article, when the FTB is done with its tax audit it routinely provides that information to the Internal Revenue Service (IRS), and the IRS may, in turn, begin a federal income tax audit. With all of these tax audits, and with potential tax penalties and interest there is the possibility that a business could wind up paying more to the taxing agencies then it took in.

For these and other reasons it is important to have a qualified tax attorney represent your business; especially if you believe that there are any significant issues on your California Sales tax returns. Feel free to call the tax problem attorneys at Brager Tax Law Group, A P.C.

The California Franchise Tax Board (FTB) joined with the California Tax Education Council (CTEC) to warn taxpayers about unregistered tax return preparers. In California only certified public accountants (CPA), attorneys, Internal Revenue Service enrolled agents, and CTEC-Registered tax return preparers are legally permitted to charge for preparing tax returns. According to the FTB it is believed that there are 3,000 to 4,000 tax return preparers throughout California breaking the law. The FTB then set forth some signs that should set off alarm bells. For example if a tax preparer:

Claims to be a registered tax preparer but is not listed on CTEC’s Website.

Fails to give you a name, address, phone number, and bond information.