Yes, another instance of California thinking of itself as a
*country*.

Here in the DC/MD/VA region we've gotten so used to our
reciprocal agreements that we think they're normal...

LoTax

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"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote:
- quote -

Yep, that's the way it works. If you think about it,
though, it's really a matter of which state gets to keep the
tax. Generally, the residence state cedes the tax to the
source state by allowing the credit. In the reverse
situation, the source state effectively cedes the tax to the
residence state.

Another way of getting the same result (keeping the tax in
the residence state) is by reciprocal agreement between
contiguous states, whereby a resident of State A who works
in State B is taxed only by State A, and vice versa. A
number of eastern and midwestern states have such
agreements.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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- quote -

I got a letter from the CA Franchise Board taxpayer advocacy
group saying they dropped my requirement, so hopefully I'm
in the clear now and everything is okay... thank you to
everyone who posted advice!

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despondent wrote:

- quote -

That's CA State Disability Insurance, AKA (CA)SDI. I
mentioned that as a possible problem in another post.

Your employer needs to file (or may already have filed)
an amended employment tax return for the period in question,
showing you have no CA wages.

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- quote -

I kept the description short to save confusion, but the way
I got on the list as a CA resident was the company collected
some Pasadena locality tax, noted as "CA DISAB". My
assumption is that California had a record of me paying into
this tax but not income tax, which is how they got after me.

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katiej_1958[at]yahoo.com (Katie Jaques) wrote:

- quote -

What California wages? She said that was erroneous. So,
wouldn't her W-2 show all VA income? Unless they actually
withheld some CA tax it shouldn't be on the W-2.

Mike

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Katie Jaques wrote:

- quote -

As I recall, the problem is that each of those states, along
with California, have provisions in their law that allow a
credit for a resident if, and only if, the other state's law
would allow a credit to a resident of their state for taxes
paid to the first state.

So, as I recall, the very language used to define the credit
in California will disallow a credit to a California
resident for taxes paid to a state that *has the identical
provision that California does* <grin> . And, of course,
vice versa (an Arizona resident cannot take a credit for
taxes paid to California). However, each of the states does
then allow *nonresidents* who are residents of those states
to claim the credit, so we end up "backwards" in that regard.

So, for instance, if California changed its law to simply
allow residents a credit for income taxes paid to another
state, it would "fix" the Arizona/California problem for
California and Arizona residents. And, the same would be
true if Arizona did that as I recall.

I may be wrong, but I remember finding the situation
humorous when I traced it out one time.

--
Ed Zollars, CPA
Phoenix, Arizona

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- quote -

I filed a return and did include a W2 that showed 0.00
California wages. The day after I did that I got a call
from the Taxpayer Advocacy group or whatever they call
themselves (linked from the FTB site) and they said I was
all cleared up... I told them I filed a return and the lady
said it won't screw things up and I hope she's right. She
said they would be happy to send me written notice that I
was off the hook (fingers crossed).

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote:

- quote -

Actually there are five other reverse credit states, or more
properly, four states and a possession: AZ, VA, IN, OR, and
Guam.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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- quote -

The only problem with this is that you will have to attach
that pesky W-2 that shows California wages. You'll also
need to attach a statement explaining why that amount
doesn't show up in Col. E of the Schedule CA.

Filing a return generally will reverse a filing enforcement
NPA, even if it has gone beyond the 60-day protest period.
However, if you are within the 60 days, I would still file a
written protest just to be on the safe side. You don't want
it to become collectible due to a delay in processing the
return.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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- quote -

Katie,

Thanks for the response! Actually the note I most recently
got from them (this past week) included this assessment
number and I put an answer in the mail the next day.

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- quote -

You are probably right... I was so focused on not having to
file that it didn't even occur to me to file a form with
zero income. I'll try doing that. I got the assessment
form and they say they sent it because they didn't get a
written response to their last note, which of course they
did. Hopefully the return will settle it.

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despondent wrote:

- quote -

Note: The CA-VA combination is one of those where if one is
subject to income tax by both states, the "other state tax
credit" is claimed on the NON-RESIDENT return. If this
credit wipes out the entire CA liability claimed by FTB,
then suggest to them that even if you were to file, there'd
be nothing to collect, so why are they pursuing it? (Of
course, if it doesn't, then you probably don't want to even
suggest CA jurisdiction....)

[California has the reverse state income tax credit
situation with only THREE other states: AZ, VA, and I
forget the third.]

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- quote -

If all they want is a 1999 tax return, why don't you file
one? Just report your CA income as $0 on the return.

Ira Smilovitz

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"despondent" <the[at]despondent.net> wrote:

- quote -

First I would try calling them. Believe it or not
California FTB does have decent phone service with humans
that have access to your account in their computer. That
might solve the problem.

Next, while I agree it should not be necessary, sometimes
you have to feed a computer what it wants. Why not file a
California 1999 1040NR showing no income from California?

Jo

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despondent wrote:

- quote -

Why don't you file a 1999 540NR showing $0 CA-source income?
CA has a four year statute of limitations, so this return
might even be valid as a refund claim if your employer
withheld CA taxes (although you're probably out any SDI
withheld). It doesn't appear (from what you wrote below)
that CA has created a substitute return, but is just still
demanding your 1999 return, so, why not give them what they
want?

I have no personal experience with this problem, but, if a
large bureaucracy demands something, and there is no effect
on your situtation, why not give them what they want?

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despondent <the[at]despondent.net> wrote:

- quote -

I take it you have never received an actual Notice of
Proposed Assessment (a computer-generated notice that
calculates an amount of tax due), but only requests for a
return. If you did receive an NPA, it requires a written
response within 60 days, or it turns into a collectible
assessment; and the FTB can collect from residents of other
states, so you want to forestall that.

Correspondence with the Taxpayer Advocate office should
resolve this for you, assuming you sent them all the
documentation, including the letter from the employer
stating that you did not work in California and their
reporting was in error.

If that doesn't work, e-mail me (my e-mail address is real)
and I'll help you get it resolved.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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I wanted to get some ideas on how to handle an ongoing
problem I've had with the California FTB.

I'll try to keep the situation brief... I am a VA state
resident and have never worked in California, to include
business trips, visits, etc... I've never done work in the
state borders. I work in my home area but for a time worked
for a company that had a sister office in Pasadena. This
office during 1999 improperly included me in reportings to
California as a member of their California office doing
business in California.

They acknowledged the error to me and wrote California
explaining the error, but it seems every year I get a couple
of notices claiming that I owe them a 1999 tax return.
Every year I write the FTB a letter explaining the above,
and I don't hear anything back for six months to a year or
so when I get a repeat request from FTB.

If they ever decide to try to collect this tax, I'm
wondering what I should do... I recently wrote their
Taxpayer Advocate group but haven't yet gotten a response.
My ideas have ranged from trying to get the Virginia State
Attorney General office involved, to finding a California
tax lawyer, to getting a Virginia lawyer to threaten (and if
necessary sue) my old employer into fixing the problem for
me. Anyone have further suggestions or have this happen to
them before?

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