California Franchise Tax Board (FTB) ATTORNEY | Tax Audits and Settlements
The California Franchise Tax Board (FTB) is the agency responsible for enforcing the income tax laws of California. The California Franchise Tax Board is notorious as one of the most aggressive taxing agencies in the State of California. Because income taxes are a significant driver of revenues to the State of California, the FTB aggressively pursues is audit and collection efforts in order to maximize revenue to the state.
Dealing with the california Franchise Tax Board
It is not uncommon for a taxpayer to be uncomfortable in dealing with the Franchise Tax Board on a California tax problem. The Franchise Tax Board collectors and agents are very demanding to taxpayers. Although an IRS audit and FTB audit are similar in many respects, California FTB audits are unique in many significant respects. For instance, the FTB is unique in how it selects taxpayers for audit, especially taxpayers with delinquent tax returns. The California Franchise Tax Board (FTB) has access to DMV registration and driver’s license information, as well as California property tax bills, and will use that information to select taxpayers for audit.
Another major difference between IRS and FTB audits is that California FTB audits tend to be more “theme-based” than IRS audits and the FTB will often select taxpayers for audits based on certain transactions that the FTB has been investigating. For instance, the FTB has recently and frequently audited taxpayers who have executed 1031 like-kind exchanges, taxpayers reported losses from flow-through entities such as S-corporation, partnership, and LLCs, and also capital gain and loss transactions.
Also, under California law, the DMV has the ability to suspend your driver’s license for failure to pay California income tax under some circumstances.
Top 500 Delinquent Taxpayers – serious consequences
What is especially unique about the California Franchise Tax Board is that it publishes, on a regular basis, the top 500 most delinquent taxpayers in California. According to California tax law, the FTB must (1) notify each taxpayer by certified mail 30 days before the FTB intents to post the information on its website; (2) as a taxpayer resolves the case with the FTB through full-payment, a California payment plan, or a FTB offer in compromise, the taxpayer is removed from the list and another added.
The impact of being listed on the Top 500 list is that in addition to pursuing normal collection activities such as file liens, issue wage garnishments and bank levies, and seize assets, the Franchise Tax Board may suspend a taxpayer’s driver’s license and his/her occupational and professional license. Furthermore, if the taxpayer conducts business with the State of California, such a government contractor, State agencies will discontinue doing business with the taxpayer.