Blog Archives - Page 33 of 51

Penalty Abatement: Eliminating FTB Tax Interest

July 5, 2026March 2, 2016 by Brotman Law

Key Takeaways

On top of this interest, a delinquent penalty rate is charged. The rate is 5% of the total unpaid tax, and a further 0.5% for each month or part of a month over the due date that the tax remains unpaid, up to 40 months.
There are six recognized circumstances under which the Franchise Tax Board will consider tax interest abatement. Each has its own specific rules and requirements which must be met in full when applying for abatement.
This is another case where a mistake by the FTB can mean that you are not liable for interest on your tax liability, and it applies to individual taxpayers and businesses.

If you have an outstanding tax liability owed to the California Franchise Tax Board (FTB) past the due date, your tax bill is at risk of growing much larger over time. By law, the Franchise Tax Board must charge interest on unpaid taxes. This interest is charged from the due date until the date it is paid, is adjusted twice a year, and compounds daily.

On top of this interest, a delinquent penalty rate is charged. The rate is 5% of the total unpaid tax, and a further 0.5% for each month or part of a month over the due date that the tax remains unpaid, up to 40 months. Other penalties for returned checks, understatement, negligence and fraud may also add to the overall total owed to the FTB. There is no “reasonable cause” exception for interest due on your tax assessment. In some specific cases, however, you may qualify for tax interest penalty abatement. This concession from the FTB can make paying your late taxes less of a burden.

Tax Franchise Board Liens: When California Comes for Your Money

July 5, 2026February 24, 2016 by Brotman Law

Key Takeaways

If you have received a notice from the FTB requesting payment in full on a past due balance or informing you that a collection process has begun, you are probably under considerable stress.
The topic of tax liens can be complicated and intimidating the first time you approach it, but the basic principles are not difficult to understand.
In the case of the California Franchise Tax Board, a lien is generally recorded after a demand for payment has gone unanswered.

The repercussions of an unpaid balance due to California Franchise Tax Board (FTB) can be severe, especially for a small business owner with everything to lose. The law allows the FTB to pursue payment of tax debts aggressively through a number of involuntary collection actions. All of these actions are deeply unpleasant, and some can be devastating.

If you have received a notice from the FTB requesting payment in full on a past due balance or informing you that a collection process has begun, you are probably under considerable stress. The first thing that you should do is make sure that you fully understand the situation, and if necessary, find qualified legal representation for the next steps.

Why Hire an Attorney for Sales Tax Representation?

May 25, 2026February 17, 2016 by Brotman Law

Key Takeaways

For small business owners with everything on the line, facing down a sales tax audit is a hugely intimidating prospect.
In theory, reporting and paying sales tax is a simple process, but in practice it can be anything but. There are a thousand small ways that businesses can miscalculate or underpay the sales tax due to the Board of Equalization.
Sales tax audits and the appeals process that follows them are extremely complicated due to the technical nature of how the Board of Equalization assesses sales tax.

For small business owners with everything on the line, facing down a sales tax audit is a hugely intimidating prospect. In spite of all the possible complications during the audit process, we still see many people attempting to represent themselves before the Board of Equalization. When you are facing a frighteningly large sales tax determination and desperately trying to cut the costs associated with handling the matter, the temptation to tackle the audit yourself rather than investing in a qualified tax attorney can be strong. It is an understandable instinct, but it may not be in your best interest.

FAST Act Give IRS Power to Revoke Passports for Tax Debt over $50K

July 5, 2026February 10, 2016 by Brotman Law

Key Takeaways

The recent passage of the FAST Act has some people worried about their ability to travel and live abroad because of their IRS liabilities.
As such, many Americans, both domestic and living abroad, are left wondering what the consequences of the new measure will be and how the government will enforce these new provisions.
Carve-outs in the law exist at the Secretary of State level for emergency situations or humanitarian objectives, but not for economic hardship or any other considerations.

The recent passage of the FAST Act has some people worried about their ability to travel and live abroad because of their IRS liabilities. Although Congress has long toyed with the idea of tying tax compliance to international travel privileges, the new law now codifies the ability of the government to restrict passports of anyone who owes the IRS more than fifty thousand dollars in outstanding and unresolved tax liability.

Opting Out of the Offshore Voluntary Disclosure Program (ODVP) – Part Two

July 5, 2026August 25, 2014 by Brotman Law

Key Takeaways

Here are the steps that IRS examiners take before a taxpayer makes the irrevocable decision to opt out:
1.
3.

Here are the steps that IRS examiners take before a taxpayer makes the irrevocable decision to opt out:

Delinquent FBAR Submission Procedures

July 5, 2026August 24, 2014 by Brotman Law

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Key Takeaways

On the cover page of the electronic filing, you will be required to select from options as to the reason for the late filing.
The IRS will not impose a penalty for the failure to file the delinquent FBARs as long as you properly reported the income on your U.S.
The audit process with regard to FBARs is similar to the selection process in place for tax returns.

Some taxpayers may not need to use the Offshore Voluntary Disclosure Program or the Streamlined Filing Compliance Procedure options, but still may have a delinquent FBAR or Foreign Bank Account Report. FinCEN has established a procedure to address this problem.[1]

Opting out of the Offshore Voluntary Disclosure Program – Part One

July 5, 2026August 24, 2014 by Brotman Law

Key Takeaways

[1] National Taxpayer Advocate report: https://www.taxpayeradvocate.irs.gov/userfiles/file/FullReport/IRS-Offshore-Voluntary-Disclosure-Programs-Continue-to-Burden-Benign-Actors-and-Damage-IRS-Cred…
[2]IRS memorandum regarding guidance for opting out https://www.irs.gov/pub/newsroom/2011_ovdi_opt_out_and_removal_guide_and_memo_june_1_2011.pdf

Opting out of the offshore voluntary disclosure program can be a difficult choice. An opt out is an irrevocable election made by a taxpayer to leave the safe harbor of the OVDP, and have his or her case handled under the standard audit process. This is different from removal, which is a determination made by IRS personnel to remove a taxpayer from the civil settlement structure of the OVDP because the taxpayer or taxpayer’s representative has not cooperated. The IRS has recognized that there are cases were opting out may be the better approach for the taxpayer. In these cases, the results under the OVDP are too severe given the facts of the actual case. If the violation was not willful and there is a low exposure for criminal penalties to the taxpayer, the standard audit procedure may result in a lower monetary penalty making opting out of the offshore voluntary disclosure program logical.

The OVDP Process – Part Four

July 5, 2026August 24, 2014 by Brotman Law

Example of the Penalty Structure in the OVDP Process

Key Takeaways

Under the OVDP Process
Outside the OVDP Process
Case Resolution in the OVDP Process

The Criminal Investigative unit is charged with assessing the penalty structure. The structure itself is nonnegotiable and the examiner lacks discretion to make any adjustments. The following is an example prepared by the IRS[1]:

The Offshore Voluntary Disclosure Process – Part Three

July 5, 2026August 24, 2014 by Brotman Law

Key Takeaways

Offshore Voluntary Disclosure – Interview with your examiner
Offshore Voluntary Disclosure – Waiver of the Statute of Limitations
[1]United States v.

Offshore Voluntary Disclosure – Interview with your examiner

The OVDI Process – Part Two

July 5, 2026August 24, 2014 by Brotman Law

The OVDI Process – After Preclearance is received

Key Takeaways

The OVDI Process – After Preclearance is received If a taxpayer makes all the requisite disclosures and receives the preclearance then they must make their disclosure.
Taxpayers or their representatives should mail their “ Offshore Voluntary Disclosure Letter ”[2] and “ attachment ”[3] to the following address:
Internal Revenue Service Voluntary Disclosure Coordinator 1-D04-100 2970 Market Street Philadelphia, PA 19104

If a taxpayer makes all the requisite disclosures and receives the preclearance then they must make their disclosure. Note these guidelines are subject to change. Consult the IRS’s website for the most recent OVDI procedures. [1] Under the IRS’s guidelines: