Money-Grubbing California FTB.


D

D. Stussy

One of my clients now has a SECOND letter from the FTB about not having
filed a return (now, 2008). The first letter was for 2007.

What is wrong with the FTB? Not only did the taxpayer in question file,
they (jointly with a spouse) got their requested refund, which means that
the FTB processed the returns. Of course, our reply includes a copy of the
check, deposit slip, and bank statement showing the deposit. However, why
doesn't the FTB have any record of the return being processed in the first
place?

They had to process it in order for the State Controller to issue the
refund check. The checks were for the exact amounts requested on the
procesed returns that I had prepared.


Is anyone else seeing this type of crap coming from the California
Franchise Tax Board?

(I have entered this as a systemic issue into the FTB's Advocate's web
sub-site)
 
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A

Avrum Lapin

D. Stussy said:
One of my clients now has a SECOND letter from the FTB about not having
filed a return (now, 2008). The first letter was for 2007.

What is wrong with the FTB? Not only did the taxpayer in question file,
they (jointly with a spouse) got their requested refund, which means that
the FTB processed the returns. Of course, our reply includes a copy of the
check, deposit slip, and bank statement showing the deposit. However, why
doesn't the FTB have any record of the return being processed in the first
place?

They had to process it in order for the State Controller to issue the
refund check. The checks were for the exact amounts requested on the
procesed returns that I had prepared.


Is anyone else seeing this type of crap coming from the California
Franchise Tax Board?

(I have entered this as a systemic issue into the FTB's Advocate's web
sub-site)
And then there is the poor soul who receives a 1099-B but whose income
level is low enough that they are not required to file either Federal or
State returns (e.g. elderly ladies who show up at our AARP Tax Aide
site).

Sooner or later they will get a nasty letter from the FTB assuming that
their basis in what they sold was zero and why didn't they file. We (at
our site) always recommend that that these people file Federal.
 
D

D. Stussy

Avrum Lapin said:
And then there is the poor soul who receives a 1099-B but whose income
level is low enough that they are not required to file either Federal or
State returns (e.g. elderly ladies who show up at our AARP Tax Aide
site).

Sooner or later they will get a nasty letter from the FTB assuming that
their basis in what they sold was zero and why didn't they file. We (at
our site) always recommend that that these people file Federal.
But that's different. Your situation is that they really didn't file
because they were under the threshold.
 
G

Gene E. Utterback, EA, RFC, ABA

Avrum Lapin said:
SNIPPED

And then there is the poor soul who receives a 1099-B but whose income
level is low enough that they are not required to file either Federal or
State returns (e.g. elderly ladies who show up at our AARP Tax Aide
site).

Sooner or later they will get a nasty letter from the FTB assuming that
their basis in what they sold was zero and why didn't they file. We (at
our site) always recommend that that these people file Federal.
HOLD ON THERE AMIGO - Maybe I'm not reading your post correctly, but I feel
compelled to jump in here.

It is NOT the amount of gain or loss that triggers the necessity to FILE, it
is the GROSS income. The taxing authorities cares not a lick about the
taxpayer's basis - all they see or care about is the gross sale price
reported on that 1099-B. IF that number (plus the other info) is OVER the
threshold amount then a return IS due.

I do agree with you about filing even when not required. As pros - and
volunteers - we need to keep in mind that the statute of limitations doesn't
start until a return is FILED (even one is not required to file). I always
recommend to my fixed incomers that they let me file their returns whether
they are required to file or not (typically I do and file these returns for
free) JUST to start the clock on the statute of limitations.

Many times over the last 30 years I've had clients and children of clients
come in and say "mom/dad passed last year and now we're getting notices from
the IRS/CAFTB/MD/Etc. they can't find a return for them for the last 6 or 7
years. They say they owe taxes, what do we do?". Now its puzzle time. Had
these folks filed those ZERO returns we would have had much less work to do
and we could have saved those stuck with the burden a significant amount of
time, money and grief.

It's too bad our tax system is such that NO ONE wants to file, even when it
doesn't cost them anything.

Gene E. Utterback, EA, RFC, ABA
 
A

Avrum Lapin

HOLD ON THERE AMIGO - Maybe I'm not reading your post correctly, but I feel
compelled to jump in here.
Big snip

It's too bad our tax system is such that NO ONE wants to file, even when it
doesn't cost them anything.
It costs if they have to use a paid preparer.
 
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G

Gene E. Utterback, EA, RFC, ABA

Avrum Lapin said:
SNIPPED

It costs if they have to use a paid preparer.
NOT in my office it doesn't - at least not if they've been a client of mine
for at least 5 years. If someone has used and paid me for at least five
consecutive years and they are no longer required to file, I will prepare
and file their return FOR FREE.

Gene E. Utterback, EA, RFC, ABA
 
A

Avrum Lapin

SNIPPED

It costs if they have to use a paid preparer.
NOT in my office it doesn't - at least not if they've been a client of mine
for at least 5 years. If someone has used and paid me for at least five
consecutive years and they are no longer required to file, I will prepare
and file their return FOR FREE.

Gene E. Utterback, EA, RFC, ABA[/QUOTE]

You are a gentleman - unlike the guys at H&R etc
 
M

Mark Bole

It is NOT the amount of gain or loss that triggers the necessity to FILE, it
is the GROSS income. The taxing authorities cares not a lick about the
taxpayer's basis - all they see or care about is the gross sale price
reported on that 1099-B. IF that number (plus the other info) is OVER the
threshold amount then a return IS due.
See IRC Sec. 61, where gross income is defined. It is *not* the amount
of gross proceeds, as you claim above, rather it is the "Gains derived
from dealings in property". (A loss equals gross income of zero).

Since filing requirements are based on gross income, the amount on the
1099-B form does not determine filing requirements. However, it may
trigger an inquiry that requires an explanation, which some may consider
the same thing as being required to file.

-Mark Bole
 
A

Arthur Kamlet

See IRC Sec. 61, where gross income is defined. It is *not* the amount
of gross proceeds, as you claim above, rather it is the "Gains derived
from dealings in property". (A loss equals gross income of zero).

Since filing requirements are based on gross income, the amount on the
1099-B form does not determine filing requirements. However, it may
trigger an inquiry that requires an explanation, which some may consider
the same thing as being required to file.

But not filing where there is a large reported 1099B sales amount is
sure to generate a CP2000 AUR nastygram, so I advise anyone in that position
to file.
 
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D

D. Stussy

Well, finally something correct: The FTB sent my client a letter
acknowledging they had located the return she had in fact filed and
"corrected [their] records." This came from the Filing Enforcement Section
(mail stop F180).

Too bad they don't say why they screwed up in the first place.
 
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