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

snip
- quote -

Shucks. I'm not at home and don't have the letter with me.
Her name is Debbie something.

Katie

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Katie Jaques wrote:
- quote -

{-- snipped --}
- quote -

I bet that the "foreign credit card sweep" is a "fraud
exception" to closing the case of a deployed military
personnel - and that's why it wasn't disposed of.

I only had ONE military case (also navy) in 1991, and
actually had snapped on an 872-A (open ended statute
extension) before the official directive came down. The
taxpayer involved was on board a ship actually in the Gulf
when that war started.

If this was an agent hired originally as an office auditor
in 1988, I probably know her.

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

That's interesting. I can tell you it isn't what's
happening now. My daughter and SIL got caught (mistaken
identity) in the IRS's sweep of Visa and MasterCard accounts
with foreign banks. SIL was deployed last Sunday on the
Stennis, a nuclear carrier, for a six month cruise to parts
unknown (but of course, we know where they are probably
going). We discussed the issue with the revenue agent in
San Bernardino and while she was very nice and helpful,
especially when we told her SIL was about to be deployed,
she certainly never suggested that the file would be closed
or held in abeyance during his absence. In fact she strongly
suggested he leave a power of attorney for my daughter so
that she could act for him in his absence.

Katie in San Diego

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

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Katie Jaques wrote:

- quote -

I think here that CA is taking advantage that much of the
military (including reserves) are currently deployed and
that the FTB can get the entire process going and welcome
home the soldiers with a nice lien. Shame on CA for not
doing what the IRS seems to do:

Back in 1991 when I was still with the IRS, we were actually
ordered that in the absence of (an indication of) fraud to
terminate all audits of the active military deployed to
"Desert Storm" and not to start examinations of those
returns in hand (at the field offices) pertaining to
military. Audits in process were not closed as "no change"
or "deficiency" but as "other disposition" and those files
not started were disposed of as "surveyed before
assignment." (Of course, it wasn't until 3 weeks into that
war before the order actually came down to my office.) I
can only assume that some similar procedure is in place
during this war.

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I learned it many years ago as TWIN CLAWN

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

snip
- quote -

Actually, I think we agree 100%. Obviously the federal law
trumps California, and the FTB is silly to think it "has to"
follow the state law until it is changed. Sometimes they go
off on these wild hairs. I can't believe they are really
going to send bills to people who leave the military
compensation off their 540NRs. Cooler heads surely will
prevail before they do that. (Although some of the cool
heads I've worked with over the years have recently retired
.... so, who knows?)

Here's another egregious example: California law (CRTC Sec.
17302) denies a nonresident any deduction for alimony paid.
In 1998 the U.S. Supreme Court declared a similar New York
provision to be unconstitutional (violation of the Privilege
& Immunities clause). If a state allows a resident to
deduct alimony paid, it must allow a nonresident a deduction
proportional to the taxpayer's AGI from sources within the
state.

The 1998 California legislature passed SB 2234, a technical
corrections bill that would have amended CRTC §17304 to
allow a pro rata deduction to nonresidents. However, the
bill was vetoed for technical reasons unrelated to this
provision. A similar provision was included in the 1999
date change conformity bill, SB 1805; however, it did not
pass before the legislature adjourned in September. In
2001, a similar provision was included in AB 1115 (Ch. 920,
Stats. 2001) but was amended out for fiscal reasons just
before the bill was sent to the Governor. The FTB had
estimated a revenue loss of $5 million the first year, which
was really silly, since in fact there was NO loss of any
revenue that the state was entitled to.

In the current legislative session, AB 612 was introduced
last year to correct this problem. The FTB reduced its
revenue estimate to $250,000 (figuring, according to the
legislative staff analysis of the bill, that everybody who
has any sense is claiming the deduction already, and the FTB
isn't about to spend resources chasing after an issue that
they would obviously lose in court). But the bill died in
February of this year. I hope it will reappear in another
bill before the end of the session, but I wouldn't count on
it. So here we are six years later and we still have an
obviously unconstitutional provision in the state law.

Hello? If the FTB isn't chasing the nonresident alimony
issue because they know they would lose it, why would they
chase the military compensation issue, which they are also
sure to lose? Why on earth didn't they just come out and
say, don't include the military compensation, and save
everybody time and trouble? No, instead they have to
provide a bunch of gobbledegook that suggests that taxpayers
had better follow the state law until it is changed.

You and I are on the same page on this one!

Katie in San Diego

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

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"J-Man" <JMan[at]yahoo.com> wrote:

- quote -

You forgot Wisconsin. So Maybe TWIN CLAN W
or as I do it "the Far West less MOUCH as in
Montana, Oregon, Utah, Colorado, and Hawaii
plus Texas, Louisiana and Wisconsin".

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Katie Jaques wrote:
- quote -

I don't think that's a question: The federal law change
specifically targeted state income tax computations, so it
doesn't matter if CA "chooses" to conform. I see it as the
same type of thing when Congress declared in 1996 the taxing
of a current non-resident's pension by a state that he
resided in when he had the compensation originally deferred.
To say that "CA hasn't conformed" implies that the states
have a choice; I believe that they don't - they were
trumped.

I agree with your conclusion, but not how you arrived at it.

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J-Man wrote:

- quote -

OK, but aren't there NINE states? ;-)

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"J-Man" <JMan[at]yahoo.com> wrote:

- quote -

Well, that used to work, but not since Wisconsin enacted its
community property law, ten? fifteen? I forget how many
years ago.

We used to say you CAN'T WIN in Louisiana (CA, AZ, NV, TX,
WA, ID, NM, LA). Now you CAN'T WIN in LA, or in WI either
<G> .

I have tried and tried to come up with a new mnemonic for
this, without much success. If you were casting a movie, I
suppose you might say CLINT? NAWW! Or a weak star might
give off a WAN TWINCL. If you can improve on those
(shouldn't be too hard <G> ), be my guest!

Katie in San Diego

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

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Easy way to remember the community property states:

TWINCLAN

Texas
Washington
Idaho
Nevada
California
Louisiana
Arizona
New Mexico

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"newera" <newera1080[at]yahoo.com> wrote:

- quote -

Yes. You're misreading something. It's true that NM is a
community property state, and your military compensation is
community income, and half of it legally belongs to your
wife. BUT there is a statutory provision, Calif. Rev. &
Tax. Code Sec. 17140.5, that excludes the resident spouse's
community 1/2 of the military compensation of a nonresident
military member (domiciled in a community property state
other than CA).

You didn't say whether you plan to file jointly or
separately. You are eligible to file separately for
California, because of your active duty military status,
regardless of your federal filing status. If your wife is a
full-year resident, and you file separately, she would file
Form 540 and simply exclude her community 1/2 of your
military compensation from her income (make an adjustment
for it on Schedule CA-540NR). However since she is employed
in CA, and presumably domiciled either here or in NM, her
earnings also are community income, and you would be
required to file your own separate return (540NR) to include
your community 1/2 of her California earnings plus your half
of any other community income from California sources. (That
would generally NOT include income from intangibles such as
interest, dividends, etc., however. Her 1/2 would be
taxable to her, as a resident; your 1/2 is not taxable to
you because it is sourced to your residence, NM.)

If you file jointly you just "moosh" the two separate return
calculatons together into one. Schedule CA (540NR), Col. E
will include (1) none of your military compensation; (2) all
of your wife's California earnings (your 1/2 and her 1/2);
(3) all of any other community income arising from
California sources; and (4) your wife's community 1/2 of
income arising from intangible assets.

A more vexing question is how to handle the disconnect
between California and federal law with respect to the
inclusion of your military compensation in the calculation
of total taxable income from all sources, which determines
the average rate at which your California source income is
taxed. The federal Servicemembers Civil Relief Act was
recently amended to forbid states from including a
nonresident member's military compensation in the
calculation of the tax or rate of tax on source income.
California has not conformed to this federal law change and
the FTB is advising military members to follow the
California law, because until it is changed, they think they
have no choice but to send you a bill if you don't include
it and underpay your tax as a result. Then presumably when
the law is finally conformed, probably by the end of August,
they'll send you a refund. Of course that is total nonsense
and a waste of everybody's time and money. My advice is to
exclude it in the first place and if they send you a bill,
just cite the federal law back at them.

Katie in San Diego

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

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"newera" <newera1080[at]yahoo.com> wrote:

- quote -

I'd guess because California is a community propety state.
But is New Mexico? If so, technically, half of what you
earn belongs to her, but half of what she earns belongs to
you. So if you add half of your earnings to hers, take away
half of hers to get the real number. With luck that
shouldn't be so bad.

Stu

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ok, it's complicated but not really lol,

I'm active duty military, wife is not.

I'm a NM resident, Wife is a CA resident.

Wife works in CA pays CA income Taxes,
I do not Pay CA taxes, I pay NM taxes.

When we file CA, they want to add half of my income
to hers which is going to make us owe over a $1000.00.

Is there a way to avoid this disaster????

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