Innocent Spouse relief. Innocent spouse relief is a fairly hot topic of conversation particularly among family lawyers and those individuals who are going through separations because oftentimes these people feel that they wrongly injured by their spouse or significant other’s tax liability. Innocent spouse requires several things and I want to be clear about those from the onset. First of all, you must have some sort of understated tax in the return that you had no knowledge to. If your spouse runs a business and they understated their tax liability and you had no knowledge of it, then you could potentially be a candidate for a innocent spouse. You also have to show that when you sign the return you have no knowledge of the liability and do not benefit from it. That is a particularly tricky proposition because oftentimes if one spouse is cheating on their return or understating liability then the other spouse is receiving some indirect benefit of that whether it’s increased cash or to the household or some other financial gain. The IRS will not grant innocent spouse relief in those cases.
strategies-init
Differences Between the Federal Tax System and the California State Tax System
Briefly I want to talk to you about differences between the federal tax system and the state tax system. As I mentioned, due to limited resources state are usually more aggressive in their collection tactics and their examination tactics than the federal government and the principal reason for this is because taxation for the states is the principal source of revenue racing. A lot of times when there is a budget shortfall the state will lean on their self tax and the federal tax bureau will lean on the income tax to help mandate collections priorities and help raise revenues either through collecting past due liabilities or examining returns and finding new ones. In general, the states because of their limited resources will rely more on in voluntary collections actions than field representatives so there’s much greater reliance at the state level for collections processes that are instituted from a remote location so for example in California the main center of operation for the FTV which is the Franchise Tax for the State of California income tax bureau is in Sacramento. Most FTV actions are initiated from the Sacramento office whether they are levis, phone calls, contacts with tax payers, or any sort of collection actions. The states have limited resources at the local level.
California State Specific Tax Issues
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.
California Collection Tools Part One – Voluntary Compliance
Payment arrangements at the state level are a little stricter than they are at the federal level.
California Collection Tools Part Two – Involuntary Compliance
Warrants or seizures of property and levies are actions taken against bank accounts and things like that.
Types of Assets That California Collections Will Seize
The manuals that the collection agent received.
Prohibited Collection Activities for State Collection Agents
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.
Identity Scams and Collections
The common courtesy of giving you a phone call, where ins what they do instead is they send the guys with windbreakers and handcuffs.
What To Do When a Collection Agent Acts Improperly
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.
How the State of California Locates Taxpayers and Their Assets
Read this article to know about how they locate the taxpayers and the assets.