Brotman Law

California State Specific Tax Issues

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So now I’d like to talk to you about some issues with regarding that the states have specifically. In California, we have a number of challenges in dealing with the state taxis that are either less of an issue or non-existent at federal level. The first as I’ve kind of touched down earlier is overside. There is usually less overside on cases than there is at the federal level. And I mean by that, is the auditor or the collection agent is given a lot more latitude in most cases to handle the cases as they see fit as long as it falls within the administrative guidelines. This particularly has an impact on the examinations process so a lot of the times the auditors are kind of given free rein to define the scope of what the audit is in sales tax or in particular they can do a really detail investigation and go through a number steps that you may not find in the federal process. As a result of this and as a result of the states having fewer resources, there is often times administrative delay when dealing with the state cases. For example, the time frame in California right now is if I were to represent a client in a sales tax audit and me and the auditor just agreed on the result and I filed and appeal, it would take anywhere from 8 to 12 months under the current structure to hear that appeal.

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Prohibited Collection Activities for State Collection Agents

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So, briefly I’d like to talk a little bit about what procedures are in bound and out bounds for state collection agents. For the most part, state collection agents are expected to be courteous, they are expected to expeditiously move their cases through the state collections procedures and they are expected to try and work with the tax payer to facilitate a resolution. In practice, some agents are more difficult to deal with than others. It is often times a lot harder to work with an agent who is on a state level because a lot of times there’s not that face to face contact that you have with the IRS or you get a state collection agent who is under external pressures to collect revenue or to enforce the collection action much more severely, that coupled with the fact again, there are very few tax payer rights, makes things a little bit more difficult to do it.

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What To Do When a Collection Agent Acts Improperly

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So, state collection agents are under a very tight guideline for how they are supposed to behave and their behavior is mandated through either statue or through administrative collections manuals or procedures so a lot of the conduct that they have is governed internally. Although you do want to foster a generally good relationship with the agent, some agents are notoriously difficult to deal with or some go off the reservation from time to time. So, if you have a situation where you have a breached of conduct, you’d make sure you want to document the conduct that occurred, you want to get the agent’s name and ID number or station number and then you want to ask the collection agent for a phone conference with their manager. One of the rights that is installed for most tax payers is access to an immediate supervisor so the collection agent – In California, for example, collection agent is supposed to have the supervisor give you a call back within 48 hours. Some collection agents will not do this, they’ll refuse to enter notes in the system, they won’t pass the message along and in which case you are still entitled to that phone call.

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How the State of California Locates Out of State Taxpayers and Their Assets

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In addition to in-state collections actions, I want to talk to you briefly about out-of-state collections actions. So, California specifically is prohibited by and large from seizing assets in another state. There are jurisdictional restrictions from California going into a neighboring state and seizing an asset in that state. It violates federal law and it runs counter to the constitution. However, what the loophole that California uses to get around this is they target financial institutions and any other third parties that may have a foothold in California. So, for example, if I am a Texas resident and I have a Bank of America account in Texas with $50,000 in it, and I owe $50,000 to the State of California, in California, through Bank of America’s contact with California, can request that that money be levied. Any financial institution, any insurance company or retirement account or anything like that or employer that has a foothold within California can be subject to levy.

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What Amazon sellers should do with California’s formal legal demand to Amazon

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Hi this is attorney Sam Brockman here with Robin law in San Diego and we’re doing a special video blog post in order to advise Amazon sellers about what to do with the recent information that California has issued a formal legal demand to Amazon so first a little bit of background about me and our firm we’re located in San Diego California and we focus on state specific tax issues and more specifically over the last few years we’ve been helping Amazon sellers and other online sellers get into compliance with the myriad of state and local sales tax laws and state income tax laws that have affected sellers many people have heard about the recent decision in Wayfarer where the court basically blessed South Dakota’s law of allowing an economic Nexus as opposed to the traditional physical presence test and the significance of this is that it opened the door for California and another number of other jurisdictions who had laws on the books concerning economic Nexus to go forward with enforcement efforts and the recent legal demand is part of a trend that we’ve been seeing with California and California has been getting increasingly increasingly aggressive towards out-of-state sellers who California considers having Nexus in California just by lieu of the fact that they’ve been storing products in Amazon warehouses and using Amazon’s FBA system so in many cases there is sales tax liability, but there’s also potentially state income tax liability as well so now here’s what to do about the recent tube and many Amazon sellers today some of them our clients have gotten an email notification from Amazon stating that.

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