strategies-init

Offshore Voluntary Disclosure Introduction – Part One

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Key Takeaways

  • [1] IRS Offshore Voluntary Disclosure Efforts Produce $6.5 Billion; 45,000 Taxpayers Participate FS-2014-6, June 2014.
  • [2] The Global Elite Are Hiding 18 Trillion Dollars In Offshore Banks.
  • [4] 2009 Offshore Voluntary Disclosure Program.

The Department of Treasury and the Department of Justice have a new mandate – stop offshore tax cheating and bring in billions of dollars of additional tax revenue from non-disclosed foreign accounts. The Internal Revenue Services’ Offshore Voluntary Tax Disclosure Program is designed to encourage non-compliant taxpayers to come clean and bring their tax liabilities current. The IRS began this initiative in 2009 with the Offshore Voluntary Disclosure Program. The Service has now sponsored three voluntary programs. The IRS reports that the efforts have yielded $6.5 billion in back taxes and brought 45,000 tax payers back into the law abiding fold.[1] It is estimated that this represents only a fraction of funds held offshore by U.S. citizens and other required U.S. income tax filers. [2]

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California Department of Tax and Fee Administration – Out of State Retailers

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Key Takeaways

  • • Any retailer maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sa…
  • • Any retailer having any representative, agent, salesperson, canvasser, independent contractor, or solicitor operating in this state under the authority of the retailer or its subsidiary for the p…
  • • As respects a lease, any retailer deriving rentals from a lease of tangible personal property situated in this state.

An out of state retailer “engaged in business in this state” (California) are required to register, collect use tax on taxable sales made to consumers in California, and remit this tax to the California Department of Tax and Fee Administration. Revenue and Taxation Code section 6203 provides that “retailer engaged in business in this state” specifically includes, but is not limited to, any of the following:

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Specific Issues in California Use Tax Audits

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California Use Tax Audits – Use Tax on Leases

Key Takeaways

  • California Use Tax Audits – Use Tax on Leases
  • California Use Tax Audits – Use of Form BOE-1164 by Auditor
  • California Use Tax Audits – Storage of Property Intended for Resale

In general, during California use tax audits, use tax will only be asserted against the lessor since it is difficult to determine from the lessee’s records whether the lease is a “sale” under the Sales and Use Tax Law. Therefore, a review of the lessor’s records will be made to determine if any tax liability exists. Whenever the audit of a lessee reveals that tax has not been collected by the lessor, and the auditor cannot determine that tax was properly due, an audit memorandum (Form BOE–1164) will be prepared and sent to the lessor’s district. During use tax audits, he auditor will not assert tax against the lessee. An exception to the above general policy is that tax may be assessed against the lessee if the lessor is located out-of-state, and the property being leased is not mobile transportation equipment (MTE). If tax is assessed, Form BOE–1164 will be sent to the lessor’s current district showing the amount of tax assessed and the applicable periods.

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Franchise Tax Board Appeals

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Franchise Tax Board Appeals – Process of Appealing FTB’s Decision in Protest Dispute

Key Takeaways

  • The Franchise Tax Board Appeals Process
  • Franchise Tax Board Appeals – Claim for Refund
  • Franchise Tax Board Appeals- Suspended Corporations

The Franchise Tax Board Appeals Process

The protester who wants to appeal the Franchise Tax Board’s decision, has 30 days to file appeal in writing from the day FTB mails Notice of Action letter. If taxpayer does not appeal within 30 days, the decision becomes final. FTB then sends taxpayer written demand for payment, and taxpayer must pay the amount demanded within 10 days from the day the Franchise Tax Board mailed the demand letter.

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Franchise Tax Board Wage Garnishment – Orders to Withhold

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About a Franchise Tax Board Wage Garnishment

Key Takeaways

  • To establish if levy was not complied with the Franchise Tax Board can issue Subpoena Duces Tecum or simply a regular demand for information to any involved party.
  • • Rental, installment, or lease agreements

With respect to a Franchise Tax Board wage garnishment, the Franchise Tax Board can use involuntary means of delinquent tax collection if voluntary means do not work. For example, an Order To Withhold (OTW) is a one time legal order seizing 100% of the available funds from a financial institution or escrow company (also commonly known as a Franchise Tax Board wage garnishment) . Potential payors for an OTW include California banks or escrow companies holding funds (e.g., checking or savings account, or proceeds from a sale of property or another asset) of a business entity. An OTW can not be issued to a financial institution where no branches are located within California. Prior to remitting funds to the Franchise Tax Board because of a Franchise Tax Board wage garnishmen, banks are required to hold funds for 10 days from the date the OTW was received. Miscellaneous payor sources for OTW may be, but are not limited to the following:

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FTB Wage Garnishments – Part Two

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Key Takeaways

  • FTB staff may modify or withdraw an OTW/COTW to ensure the fair and reasonable collection of tax revenue and to assure funds are not over collected.
  • • Account balance indicates liability is lower than amount on the order
  • • Delinquent/amended returns have been processed and decreased original balance due

A Continuous Order To Withhold (COTW) is a legal order seizing funds from a miscellaneous payor and remains in effect for up to a year from the date the COTW was issued. A COTW attaches rents, commissions or scheduled payments from a sale of property or any other type of asset where continuous multiple payments are made. COTW payors do not include funds held by a bank or escrow company. A COTW attaches 100% of the available funds at the time they are received, but does not exceed the amount due on the order. COTW is valid until the amount on the order is withheld in full or the twelve months has expired. The total amount due includes the total tax, penalties, fees and interest to the date of the COTW. Applicable tax years are all tax years with liabilities receiving due process that are due and payable.

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Franchise Tax Board Protests Returned for Further Development

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Key Takeaways

  • If a hearing was already requested by taxpayer in protest letter, then auditor at this stage should inquire if taxpayer still wants hearing.
  • If the auditor has done the necessary additional work at protest, developed all the facts and communicated the legal analysis to the taxpayer and the taxpayer still does not agree with the auditor,…
  • Even if the taxpayer agrees with auditor’s recommendation, except when recommendation stands for withdrawal of the additional tax assessment from FTB, but taxpayer has not waived in writing a heari…

It may be determined that a protest should be returned to originating auditor for further development. Further development implies gathering additional facts about the case. After sufficient facts are gathered, auditor makes his or her analysis and sends the case along with recommendations back to Protest Unit or Technical Resource Section within FTB. If taxpayer agrees with auditor’s recommendations then a Hearing Officer will issue the Notice of Action based on submitted recommendation. If the taxpayer and representative are not in agreement with the auditor’s recommendation, and they still require an oral hearing, the protest will be assigned to a Hearing Officer to conduct the oral hearing and resolve the case.

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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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