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California State Tax Offer in Compromise

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Key Takeaways

  • Unfortunately, collection activity by the Franchise Tax Board does not stop even if the Franchise Tax Board and taxpayer enter into agreement.
  • The Franchise Tax Board mails its decision within 90 days of receiving the OPIC application but for complex cases it can take longer than that.
  • After approval of a California State Tax Offer in Compromise, the Franchise Tax Board releases all state lien claims.

Individual California taxpayers without the income, assets or means to pay state tax liability right away or in the foreseeable future can try to use the option of a “California State Tax Offer in Compromise” (OIC). The California State Tax Offer in Compromise program allows taxpayer to offer a lesser amount for payment of a final tax liability, if taxpayer does not dispute it. Generally, FTB approves a California State Tax Offer in Compromise when the amount offered by taxpayer is pretty much the most FTB can expect to collect from taxpayer within a reasonable period of time. FTB look at the following facts:

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Franchise Tax Board Lien Release

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Here is a quick summary of some of the procedure surrounding Franchise Tax Board lien release:

Key Takeaways

  • Here is a quick summary of some of the procedure surrounding Franchise Tax Board lien release: An FTB lien can be released without being satisfied under the following situations:
  • • Franchise Tax Board (FTB) staff determines the amount due is sufficiently secured by a state tax lien on other property or the release of lien will not jeopardize collection
  • • FTB staff finds the liability underlying the state tax lien is legally unenforceable.

An FTB lien can be released without being satisfied under the following situations:

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Franchise Tax Board Assessments – Part Two

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Key Takeaways

  • An assumer differs from a transferee because an assumer voluntarily assumes any subsequent liabilities or responsibilities for a business entity, where a transferee has the liabilities transferred …
  • • An assumer cannot be a general or limited partnership.
  • • The surviving entity of a conversion assumes the converted entities liability without a tax clearance unless they are a domestic or qualified corporations that are converting to another type of e…

Assumer Assessments

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Franchise Tax Board Liens – Part Two

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Key Takeaways

  • It is possible to have multiple statutory lien dates for a single tax year.
  • A nominee lien will be issued if FTB discovers that taxpayer transferred property to a third person but still retains control over it.
  • The lien is valid for 10 years but may be extended by FTB in accordance with internal Lien Extension Guidelines and by taking into considerations factors listed in Guidelines.

It is possible to have multiple statutory lien dates for a single tax year. For example, a self-assessed no pay return is filed (lien date is posting date of return) and subsequently a Notice of Proposed Harassment is issued for the tax year.

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Franchise Tax Board Liens – Part Three

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Key Takeaways

  • Topic: Franchise Tax Board Liens – Part Three
  • Any recording with county recorder becomes a public record and is used mostly for real property.
  • The state tax lien attaches personal property and, consequently, a taxpayer or entity’s interest in a partnership may not be sold, assigned or otherwise conveyed free of a state….

Government Code Section 7171 authorizes both the recording of a Notice of State Tax Lien (NSTL) in the office of a county recorder and the filing of a NSTL with the Secretary of State (SOS) at any time after the state tax lien is created and before it is extinguished. Any recording with county recorder becomes a public record and is used mostly for real property. A Secretary of State lien will be filed to attach consumer goods, fixtures, and bulk sales, as well as when personal property like accounts receivable, chattel paper, equipment, farm product or equipment, inventory, negotiable documents of time or interest in a partnership or LLP. The state tax lien attaches personal property and, consequently, a taxpayer or entity’s interest in a partnership may not be sold, assigned or otherwise conveyed free of a state tax lien. Notice to Taxpayer and Notice to Partnership are used to notify the taxpayer and partners of the force and effect of the state tax lien. Although the state tax lien attaches to a taxpayer’s interest in a partnership, it does not attach to specific partnership distributions of profits and surplus.

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Franchise Tax Board Liens – Part One

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Key Takeaways

  • Here are methods to determine major statutory lien dates:
  • -For returns self-assessed by the taxpayer, it is the posting date of return in the respective department (FTB, EDD, Board of Equalization).
  • – For a Notice of Proposed Assessment by FTB – the date assessment becomes final (the legal effective date).

The FTB is authorized to impose liens on taxpayer’s property to recover tax debts. A lien is a charge on taxpayer’s personal or real property to satisfy tax debt or duty. Once lien encumbers the property, taxpayer generally can not sell it or or transfer through escrow as long as lien exists. FTB files liens if a non-compliant taxpayer or business entity has a delinquent liability. California Revenue and Taxation Code Section 19221 provides that if a tax liability is not paid at the time that it becomes “due and payable” and due process is served; an enforceable state tax lien is created for the amount of the tax liability. Since the lien arises by operation of law, it is called a “statutory lien.” Revenue and Taxation Code Section 19221 also defines when a tax liability becomes “due and payable” for purposes of creating a state tax lien also known as the statutory lien date. The conditions vary for different types of FTB assessments. The general rule is that state tax lien arises on the date the amount is established on the records of FTB (or other department, like EDD for the amount of any liability disclosed on a return filed before the date payment is due and after payment is due). The state lien can also arise on the date a Jeopardy Assessment notice is mailed to taxpayer for issued amounts determined by the Jeopardy Assessment.

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FTB Lien Release – Part Two

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One way for a taxpayer to satisfy a lien is through the sale or re-financing of real property. Liens discovered during title searches must be resolved before clear title can be conveyed and a FTB Lien Release should be requested. This is usually done by an escrow company, title company, financial institution or attorney.

Key Takeaways

  • One way for a taxpayer to satisfy a lien is through the sale or re-financing of real property. Liens discovered during title searches must be resolved before clear title can be conveyed and a FTB Lien Release should be requested.
  • If the decision is made to issue a partial release, the taxpayer, entity, or requester will be advised of the conditions under which the release may be recorded.
  • Through a subordination of lien, the Franchise Tax Board (FTB) permits another lien on a specific property to take priority over the FTB state tax lien even though the other lien may not otherwise have priority over the FTB state tax lien.

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Franchise Tax Board Assessment

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A Franchise Tax Board assessment are usually made on a tax year basis (i.e. per tax year). A missing Franchise Tax Board assessment is usually defined by which type of entity they are. For non-qualified in California corporation, missing years are created when a business entity does business or derives income during a tax year but doesn’t file a tax return. For California qualified corporations – any time a qualified franchise tax filer doesn’t file a return. Business activity and income do not determine the filing requirement for a corporation who has qualified through the California Secretary of State. Missing year assessments enable the Franchise Tax Board to assess taxes due in the absence of a tax return. Missing year assessments can be set up by Franchise Tax Board’s automated system or manually by its staff. Franchise Tax Board staff must evaluate the cost effectiveness of setting up a missing year assessment if there is no indication of company’s business activity, income, or transferee assessments.

Key Takeaways

  • A Franchise Tax Board assessment are usually made on a tax year basis (i.e. per tax year). A missing Franchise Tax Board assessment is usually defined by which type of entity they are.
  • • Is the business entity actively doing business (in or out of California).
  • • What were the entity’s gross receipts for the certain year(s) of.

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Franchise Tax Board Protest and Appeals – Part Two

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Franchise Tax Board Protest Process

Taxpayers must file a Franchise Tax Board protest with the Franchise Tax Board, Protest Section, Sacramento, CA 95867. The protest can be filed either on FTB’s Form 3531 PROTEST or in the form of a detailed letter.

Key Takeaways

  • Taxpayers must file a Franchise Tax Board protest with the Franchise Tax Board, Protest Section, Sacramento, CA 95867. The protest can be filed either on FTB’s Form 3531 PROTEST or in the form of a detailed letter.
  • The taxpayer can request an informal oral hearing conducted in Sacramento or at one of other FTB’s California offices.
  • In most cases, a Franchise Tax Board protest is undocketed, although some are docketed. Docketed protests are those involving some legal question concerning assessed deficiency amount which has never been decided by court.

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