The statute for the FTB to make the assessment is four years
from the time the IRS made the assessment. There is NO
collection statute of California taxes. For years, there
have been many arguments over the reach of California to
collect taxes from assets outside of the state of
California. My belief and that of one of my colleagues is
that the FTB MAY collect from assets outside of California.
One of my other colleagues disagrees. The official position
of the state is that they can collect from banks and
employers outside of the state.

The argument that he didn't receive notice won't go very
far. As far as the amount owed goes, the penalties are
dropped, not the interest. It's questionable as to what the
state can and will do to non-compliant individuals after the
amnesty is over. It's doubtful they would do much to collect
given that the amount owed is very small.

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"G. Chilcote" wrote:
- quote -


My sole exp with the CA FTB concerns my 87 year-old mother. She
similarly moved from CA, and the amount they claim she owes for the
year of move has been provably paid. Their last attempt in 1996 to
collect was through a private collection agency, and quizzical
correspondence to FTB in 1994 and 1996 was never answered, and no
further notices. Those old notices said she owes tax of zero, but
hint at some odd surcharge of $231, plus penalties for not paying it.

Now an amnesty notice says similar: a no-amnesty balance due now of
$300.17 -- with no pmts it's actually gone down, but the am't "with
amnesty" is an asterisk, footnoted to please call their 800-number.
Which I now just did out of nagging curiosity; talked to 2 people, but
I still have no clue what the $300.17 is. I have several theories now
of my own, 2 of which could be penalty. They were professional and
tried to be helpful...except for refusing to mail HER a transcript of
the 1992 account, unless she requested it herself -- unauthorized
disclosure one actually said, though the first assister told ME what
the computer screen said.

Refusing at the time to call about a bizarre asterisk in a stale, 12
year-old matter (statute of lims?), I sent a letter about the amnesty
notice to their Taxpayer Advocate Office 30 days ago. No response
yet; today they told me they're real amnesty-busy; be patient. The
only practical effect on mom is a tax lien sitting on her credit
report, but at her age she cares not. Maybe they don't bother
responding to out-of-staters on small am'ts, being interested only in
that % of t/ps who'll just send them a check. IOW, you only might
have better luck on 1-800-689-4776. Ask for that guy who's an expert
on disclosure. :-)

Fred F.

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G. Chilcote wrote:

- quote -

That might be a valid argument. Obviously, the bankruptcy
could not explicitly discharge a debt that it wasn't
notified of, but an implicit discharge could have happened.

- quote -

The FTB has a 4 year statute from the due date. There is an
exception for a "final federal determination" that can
extend up to 4 years beyond the date of the federal
assessment. Note that a careful reading of the R&TC states
that the Notice of Proposed Liability can be issued, but I
have yet to find a specific extension to the assessment
authority behind the notice - i.e. they can issue the notice
but it is meaningless since the assessment authority itself
wasn't extended. Unfortunately, the BoE didn't accept that
position (in January 2004 - involving a case where the FTB
did give notice within 6 months of the alleged federal
change but kept the "protest status" open for more than 4
years, thus not meeting the extension of time caused by the
NPL issuance. That taxpayer had to pay the tax and file a
claim [both a claim of the tax and of the interest
assessment due to FTB delay] - of which it just met its 6
month presumed denial date. A further action hasn't yet
been taken).

- quote -

Check to see if there is a requirement (like the federal
one) that the NPL must be to the taxpayer's current address
(but I don't remember seeing such in the R&TC). If such a
requirement exists (to parallel the federal 90-day letter),
it may be via case law.

- quote -

If you reduce the tax, so would the interest and some
penalties (those which are percentage based) be reduced
also. Note that the amnesty closes March 31.

- quote -

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I'm not a California CPA and haven't had a chance to review
applicable law. I am hoping someone can point me in the
right direction.

My father-in-law received notice from the CA Franchise Tax
Board offering him amnesty for 1993 income tax they say he
owes. Total $582.

He called and found that the amount now due was $175 in tax
and the remainder interest and penalties.

Now more of the facts:
He was audited in 1995 by the IRS. Which resulted in an
increase in capital gains of roughly $3,000 and the
resulting tax which he paid.

He did not amend his 1993 Calif return, which was filed
timely in April 1994.

The FTB claims they were notified in 1998 of the change and
sent a notice at that time. He moved from Calif to Nevada in
1995 and never received the notice from the FTB. FTB says
they just discovered his new address. Father-in-law filed
Chap 13 Bankruptcy in 1999, discharged in 2003.

The questions I have come up with are:

Is there a statute of limitations on collecting the tax
(especially considering the bankruptcy)?

Isn't there a limit on when the FTB can assess taxes -
re:IRS 3 year from the time of filing. FTB said they didn't
assess tax until 1998. That's 4 years after return was
filed.

I realize in hindsight we should have amended his return
-but I was a newbie and didn't think about it. The
penalties and interest are due to the FTB not notifying him
- they say he needed to file a change of address with the
FTB. Shouldn't they have tried just a little harder to find
new address, ie. they share info with the IRS which had
current address.

What is the purpose of the tax amnesty if not to waive
penalties and interest?

Thank you in advance for any thoughts you may have!

Greg Chilcote, CPA (NV & UT)

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