Topic: California Collection Tools Part Two – Involuntary Compliance
Warrants or seizures of property and levies are actions taken against bank accounts and things like that..
On the involuntary side of things when the tax payer does not get in the compliance or refuses to pay the state can do a number of negative actions so it means against any personal real property or common, earnings withholding orders, garnishments against wages are another common thing and finally, levies and warrants. Warrants or seizures of property and levies are actions taken against bank accounts and things like that.
The state has a variety of collection tools at their disposure that they can utilize tax payers and in the manuals that the collection agent received what you’ll find is you’ll find a list of assets that they have and an appropriate designated action that the representative is supposed to take. For example, when they have a bank account or cash the state will mandate that the collection agent go after those assets first because those are the easiest to reach. Second to bank accounts and cash are wages that are reported consistently by the tax payer. From there they go towards accounts receivable, they go towards sources of independent contractor income and then finally moving on to physical assets or assets that may be a little bit more difficult to seize at a later day.
Key Takeaways
For example, when they have a bank account or cash the state will mandate that the collection agent go after those assets first because those are the easiest to reach.
Second to bank accounts and cash are wages that are reported consistently by the tax payer.
From there they go towards accounts receivable, they go towards sources of independent contractor income and then finally moving on to physical assets or assets that may be a little bit more diffic…
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.
Key Takeaways
So, briefly I’d like to talk a little bit about what procedures are in bound and out bounds for state collection agents.
However, there is a general standard for house state collection agents are supposed to behave. There is a published list of prohibited collection activities. All state collection agents are required to comply with the Federal Fair Debt Collection Practices Act.
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So, a lot of the problems that we’ve been having recently are with some of these identity thefts scams where people will make unsolicited phone calls to individuals and say, “We are with the State of California” or in some cases, “We are with the IRS and we have a warrant out for your arrest.” State collection agents don’t do that. What I tell my clients when I get a panic phone call that’s just saying, “You told me that you were supposed to represent me” is I tell them that, “If they really want to come out an arrest you, they don’t give you the common courtesy of giving you a phone call, where ins what they do instead is they send the guys with windbreakers and handcuffs to your door and just go ahead and pick you up.
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.
Key Takeaways
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.
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 superviso…
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.
The next thing I would like to talk to you about is how the State of California locates taxpayers and their assets.
State collection agents have gotten a lot more creative and have access to a lot more information than they did in the past.
So first, the principal collection tool that the state uses for collections is the internet.
The next thing I would like to talk to you about is how the State of California locates taxpayers and their assets. State collection agents have gotten a lot more creative and have access to a lot more information than they did in the past. Part of the reason they have access to this information is because most of the records now within the state are electronic and there is a lot more information sharing between agencies, both within the State of California government and outside of the State of California. So first, the principal collection tool that the state uses for collections is the internet. So, the very first thing they do is usually run a Google search on you or your business, to try and locate the – they try and locate any information that they can on you. Interesting to note that state collection agents use a lot of social media. So, Facebook is common. Twitter is common. Yelp is common for businesses and some states can pull a variety of information that is publicly available on the internet and use that for collections purposes, which is really interesting. The next source of information that the state usually goes to is the internal databases that both the collection agency itself and the broader State of California main tax. So, for example, you’ve got a Franchise Tax Board state income tax person collecting on a delinquent liability. They can go to the Employment Development Department in California to get a copy of taxpayer’s wages and work information. They can go to the California DMV to get a copy of their driver’s license and last known address. They can look through the California voter registration system. All of this information is really easily available and really easily accessible to state collection agents. The other information they can pull is they can pull information from credit reporting agencies. So, a lot of the times, what state collection agents will do to locate assets in particular is they will pull your most recent credit report. So, if you’ve applied for a credit card recently or listed an address or things like that, the state agent can pull all of that off the credit card information. When state records fail or when the credit report doesn’t reveal anything, a lot of the times, the state collection agent will do a records request through the Internal Revenue Service. So, anything that is reported to the Internal Revenue Service is fair game for state collection agents. This includes wage information. This includes information from 1099s or state tax refunds in other states. It includes interest associated with bank accounts. So, banks will file third party 1099-INTs for interest that is earned; 1098s for student loan information and a variety of – the treasure trove of information that the IRS collects on taxpayers. The state through interagency records requests can get a hold of that information and often uses it to locate taxpayers and their assets. In addition to the IRS and gaining information through them, the state also uses the federal postal system as a means of getting updated addresses and things like that. So, a lot of the times, state collection agents can request to do a mail cover, which is where they – the post office keeps track of any letters that you have mailed with any forwarding address on. The state can obtain updated address information through the post office as a means of tracking you down. In addition, the state has something – has access to something called the Financial Institution Records Match Program. So, the state can send out a request with your first name and your last name or your business name or the last four or your Social Security number and try and run that through a database of banks in order to track down any financial institution accounts that you might have. So, they do that, number one, to locate assets; and number two, to locate you physically and track you down. So, all these sources of information are readily available to state collection agents and it’s one of the ways they help try and close the tax gap. They do pretty thorough asset investigations on most taxpayers and that’s why a lot of the times down the road, even if the taxpayer has moved out of state or hasn’t had any work history or anything like that, that’s how the state is able to locate them and track down their assets for collections purposes. Up next
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.
Key Takeaways
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.
So, if the employer or the financial institution has any nexus with California, then California will try and track down that asset.
Topic: 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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Hi I’m Sam Brotman here with Brotman law in San Diego and this blog post is the good and bad news for Amazon salaries so it’s been any of you got the email and our where California has issued a formal legal demand Amazon and tomorrow Amazon will be turning over its seller information to the state of California so that California can go back and potentially go after people who have not been collecting and remitting sales tax in California so since this email came out last week we’ve spoken with a number of Amazon sellers and I’ve done a number of consulates with people kind of giving them you know the advice that we would give them at a consult based on their particular situation and a lot of the things that come out of those consults are some misconceptions and some misinformation surrounding this process so I wouldn’t take the opportunity to get on with you today and to address a lot of these things because I think they’re important and.
Read the full article below for complete details on this topic.
Good Morning of my name is Sam Brockman I am a sales and use tax attorney with Brotman law here in San Diego and I wanted to do a short video this morning to clear up a lot of common misconceptions among Amazon sellers so I’ve been talking with a lot of people who received notices from California and December and they’re the January 15th deadline to become registered has now passed and in a lot of the conversations with Amazon sellers that I’m having there are some common misconceptions in those conversations as well as some things that I’ve seen that are posted online that are not exactly true or that are misleading, so I wanted to post a quick video to get the right information out there and in helping you guys to make some informed decisions with respect to this so first of all I would just want to give you an idea of where we’re coming from as a law firm with respect to this issue so even though this is a legal issue what is of most importance to most people is the business ramifications of this decision so and really our job as a law firm is to help our clients identify manage and mitigate risk so to the extent that we can’t mitigate a risk we need to manage it in.
