California tax problems

Not Just Another Covid-19 Announcement

March 17, 2020 | by Dennis N. Brager

Some of you may be concerned about the impact of the Coronavirus aka Covid-19 outbreak on your taxes, and those of your clients. The news from the IRS has been slow in coming. On Friday of last week President Trump declared a National Emergency. At the same time, he directed Treasury Secretary Mnuchin to provide relief from “tax deadlines” to Americans who are adversely impacted by the emergency. This allows the IRS to extend various deadlines for up to a one-year period. This authority is not, however, self-executing. That is, the IRS must specify exactly which due dates, and for how long they are being extended.

Prior to President Trump’s announcement Secretary Mnuchin had told reporters that most deadlines would be extended for “small businesses” and most individuals other than the “super rich.” Our tax lawyers couldn’t find a definition of super rich anywhere in the Internal Revenue Code. Finally, this morning, Tuesday March 17^th, after partnership and certain LLC returns were already due, Mnuchin stated in a press conference that the filing deadline for the 2019 income tax return would be extended by 90 days. For individuals that would mean July 14^th. Presumably, the IRS will actually extend the date to July 15^th just to make things a touch easier. Individuals living overseas already have an extension to June 15^th so presumably they would have until September 15^th to file.

In addition to stating that the income tax filing deadline would be extended, Mnuchin also stated that the 2019 payment deadline for income taxes owed of less than $1 million dollars for individuals or $10 million for corporations. This would be an interest and penalty free extension. For those who are over the thresholds it is unclear whether the entire amount due would be subject to interest and penalties or just that amount over the threshold. It is also not clear whether the filing extension would apply to those who owe taxes in excess of the cut-off amount.

How to Appeal a Franchise Tax Board Decision

August 3, 2017 | by Dennis N. Brager

To appeal a decision by the California Franchise Tax Board (FTB), you must first attempt to use all of your administrative remedies within the FTB. After you have exhausted these procedures, you may appeal your decision by submitting the proper forms by the appropriate deadline. These procedures were handled by the Board of Equalization (BOE), but a new bill passed in California has changed some of these procedures, with a new Office of Tax Appeals handling FTB tax appeals beginning January 1, 2018.

How to Submit Your Appeal

There are many different types of FTB notices you have the right to appeal, including:

How to Determine Residency for California State Income Tax Purposes

June 23, 2017 | by Dennis N. Brager

The California Franchise Tax Board (FTB) can come after snowbirds and other people who spend time in California, but maintain a tax residence in other states. For California income tax purposes, nonresidents are only taxed on income earned from California sources. Residents, on the other hand, are taxed on all of their income, even if it was earned outside of California, and even if it was earned outside of the country.

The difference between having a status as a California tax resident or nonresident can therefore amount to tens of thousands of dollars in potential tax liability, and tens of thousands of dollars in additional revenue to The Golden State. The general definition of a resident is an individual who is present in California for other than a transitory or temporary purpose, or someone who is domiciled in California, but it located outside of California other than for a transitory or temporary purpose.

The term “domicile” means the place where you voluntarily establish yourself and family, not merely for a special or limited purpose, but with a present intention of making it your true, fixed, permanent home and principal establishment. Determining whether a visit is temporary or transitory depends on the purpose and length of the visit.

How to Get a State Tax Lien Removed

May 1, 2017 | by Dennis N. Brager

The California Franchise Tax Board (FTB) can issue a state tax lien on real or personal property to recover state tax debt. This lien protects their right to the balance owed. It also makes it difficult to sell your property or refinance your mortgage, and can damage your credit rating.

While a state tax lien does not involve seizure of your assets, it can still cause numerous financial difficulties. Getting a tax lien removed can be done in conjuncture with other tax relief strategies to eliminate your California income tax problems.

Reasons for Removal of State Tax Lien

The California Franchise Tax Board’s Financial Hardship Programs

April 24, 2017 | by Dennis N. Brager

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.