IA Eligibility Requirements

Who is eligible to pay back taxes to the California Franchise Tax Board via an installment agreement?  It can be a little complicated.

It’s difficult not to compare FTB and IRS collection tactics.  Both almost always first demand/request payment in full.  The collection notices are worded in a way that if you don’t read beyond the first sentence, it will appear that full payment is your only option.  And when you call them up, that’s the first thing out of their mouth.  IRS will usually say “Do you have the ability to pay your tax bill in full?” If you cannot write them a check, then the discussion typically shifts to what is required for an installment agreement.  However, the FTB will often (at least at first) demand full payment without regard for your ability to pay and then very reluctantly tiptoe around the option of paying back your taxes in installments.

The eligibility requirements for an FTB installment agreement are more stringent than the IRS requirements.  First and foremost, it is very difficult to obtain an installment agreement with FTB if you have an active earnings withholding order (EWO).  An EWO is just another word for “wage garnishment” or “wage levy.”  Once the FTB has brandished this collection tool, and they have a steady stream of payments coming in, it is very difficult to convince them that they should trade these “guaranteed” payments for a promise to pay from the taxpayer.

Like the IRS, the FTB does require that all back tax returns have been filed so there is no question as to how much is owed.  Also, like the IRS, FTB requires that the entire tax debt be paid off within a specified time frame.  They give as much as 60 months for some tax debts, but only 36 months for others.  The IRS will allow a full 72 months for tax debts under $50,000.

Both FTB and IRS recognize certain events that will cause an installment agreement to default.  Some of these events include (a) failure to make timely payments, (b) failure to timely file a future tax return, and (c) incurring a new tax debt.

Whether you owe FTB or IRS (or both) it would be a mistake to think that you can always just request an installment agreement to avoid enforced collection action.  It’s not always that simple.

 
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OPR: The Standard-Bearer for Integrity?

We know the IRS has a habit of making outrageously stupid decisions from time to time.  But moral decay over the past few decades is swiftly converting into a full-blown moral nosedive.   The debacle this week in the Office of Professional Responsibility (OPR) is ridiculous enough to cause poor Johnnie Walters to turn over in his grave.

You have to understand the role of OPR in order to appreciate the irony of what has happened.  OPR is a department within the IRS responsible for regulation of tax practitioners.  They enforce the rules of practice before the IRS, investigate misconduct, and discipline those who have violated the rules.  The top executive at OPR is Director, Karen L. Hawkins.  She sent Takisha McGee, knowing that McGee’s law license was suspended and that she was in the middle of disbarment proceedings, to give a speech to Florida tax attorneys.  The topic of her speech?  Oh, just “When your license to practice before the IRS is on the line” that’s all.

Even the best fiction writers couldn’t make this stuff up.  I haven’t seen so much irony since 9th grade English Lit class.  McGee is also part of OPR Management and is listed 5 spaces below Hawkins on the very first page of OPR’s website in case you care to look her up.  And while you’re there, you might notice OPR’s vision:

To be the standard-bearer for integrity in tax practice.

And OPR’s mission statement:

Interpret and apply the standards of practice for tax professionals in a fair and equitable manner.

Oh, and Hawkins is also on the record for similar hypocrisy of her own:

I expect nothing but absolute integrity out of both myself and my staff because I just don’t see how you can justify disciplining others for lack of integrity if you aren’t demonstrating integrity-plus on your own behalf.

What a joke.  There’s not much integrity left in government, particularly the IRS.  No, McGee hasn’t officially been disbarred, and yes she is appealing the disbarment recommendation.  But even if we assume she wins in the end, she is still suspended right now!  Any attorney will tell you how unethical it is to practice law with a suspended license; if you got caught, you would certainly be disbarred.  And maybe OPR can make an argument that lecturing other attorneys does not constitute the practice of law, but they had to consider how this might look and how it might be completely contrary to their office’s “vision.”  They had to consider the fact that state bar disciplinary decisions are public information.  Anybody can look up Ms. McGee on the D.C. Bar website (as long as they can figure out that her maiden name is Brown) and see that her membership status is indeed “suspended.”  Were they never concerned that one of those Florida attorneys would think to do that?

To top it all off, McGee seems to think that her own ethical challenges give her some kind of advantage when it comes to empathizing with tax professionals who are being investigated by her office.  That’s assuming she’ll be keeping her job, which is doubtful.  Whatever personal lesson she has learned, I don’t think it is appropriate to learn at the expense of every taxpayer in the country who relies on the IRS and all its departments to administer taxes in a fair an honest manner.

 
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Rolling Stone on Taxes

I read a lot of tax-related articles and they come from a variety of sources, but it is not every day that I find one in Rolling Stone.  I have to say that the article entitled “The Biggest Tax Scam Ever” by Tim Dickinson is very good; a very detailed scholarly piece about big corporations avoiding billions of dollars in taxes right under our noses.  I enjoyed the story, but I didn’t love that it came out of Rolling Stone.

I can tell I’m feeling the urge to do one of those “When I was a kid…” rants, but I’ll try to refrain.  I know that Rolling Stone has always published political-type “news” stories.  In fact, some would probably say its political writers are more skilled at what they do than their music staff is at picking the best music (here I refer specifically to the fact that Rolling Stone did not initially give Led Zeppelin favorable reviews — obviously a serious mistake, and one that cannot really be forgiven, even after all these years).  However, when I used to read Rolling Stone (in the 1980s) I seem to remember it being mostly a music and pop culture magazine with serious topics scattered here and there.  These days the publication looks like it is being written for an audience that is well, MY AGE!  *facepalm*

I tend to think of it this way.  When a Burger King employee gets off work and goes out to dinner, the last thing that person wants to eat is Burger King.  And the last thing I want to read about when I pick up a music magazine after work is taxes.  Am I the only one!?

 
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Manteca Tax Cheat Files Lien Against IRS Commissioner

There was a story I saw in the Modesto Bee recently about a Manteca woman who pleaded guilty to defrauding the IRS out of about $313,000.  It is not really your typical refund fraud case in the sense that the more popular strategy involves preparing a series of false refund returns claiming smaller amounts.  All the returns together may add up to a small fortune, but no single refund claim appears right away to be anything out of the ordinary.  The Manteca woman wasn’t patient enough for the “slow drip” method apparently; she went all in.  And she lost big time.

Esther Robertson, 57, faces up to 5 years in federal prison and a fine of $250,000.  It is not mentioned in the Modesto Bee story, but typically the fine is in addition to the restitution aspect of the sentencing, which involves the taxpayer paying back what was stolen.  Robertson will have a lot of time to stress about the possible outcome since her sentencing is not expected until September 2015.

Court papers also indicate that, in February 2009, after the IRS was onto her, they issued a bank levy to try to recoup at least some of what was taken.  Then Robertson did something that I’m not sure I quite understand.  Presumably in an act of retaliation, she filed a lien against the property of the IRS Commissioner!  This certainly shows her contempt for the IRS, or the federal government, or both.

There are a number of questionable websites and online sources that claim to cite legal authority for filing a criminal suit against the IRS for taking one’s property.  I won’t link to any of these sites because I don’t really have a beef with them but, trust me, there are hundreds of them.  These are the same sites that are managed by tax protestors who believe taxation is illegal and the IRS has no legal authority to collect taxes.  My guess is that Robertson found  something online about filing a lien against the Commissioner of the IRS and she thought she would give it a try.  She probably didn’t have much to loose at that point either, knowing that the IRS had discovered her foul play and it was only a matter of time before she would be getting a visit from Criminal Investigations.  For Robertson’s sake, I hope this doesn’t count against her during sentencing.

 
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IRS Phone Scam Complaints top 90,000

The IRS has long warned taxpayers to be on the look-out for deceptive phone calls from criminals posing as IRS agents.  These scams were once thought to target the elderly, those within specific socioeconomic groups, or those who recently immigrated to the United States.  However, based on the anecdotal evidence I have gathered over the past several years, I don’t think these criminals go through the trouble of targeting specific groups.  Perhaps they did at one time, but now they appear to be just “shooting from the hip” hoping to deceive even a small fraction of the taxpayers that they contact each day.

I have seen how prevalent these phone scams have been in Sacramento, and now with our new office location, I can see that the scams are no less of an issue in the Central Valley towns of Modesto, Ceres, and Turlock.  I was recently privileged to hear a recording of one of these calls and, I must say, the caller’s voice was very confident and convincing.  Of course, the content of what he was saying was laughable, but the tone of the call was professional and authoritative.  I say that about the content because I know what the IRS will and will not say in a phone message.  First of all, the IRS is reluctant to provide details of anyone’s confidential tax account in a voice mail message unless you have previously given them permission to do so.  Second, the IRS does not, in their first contact with a taxpayer, jump right into statements about criminal liability, subpoenas, and arrest warrants.  And the IRS never asks for payments to be made immediately over the phone.  Furthermore, if you do have a tax problem of some kind, such as owing back taxes or missing tax returns, the first contact from the IRS will be by way of a letter, not a phone call.

My anecdotal evidence seems to confirm what the IRS is reporting about phone scams: 90,000 complaints and growing. The best way to report one of these phone calls is to complete an online scam reporting form which is accessible from TIGTA’s website.

 
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Valley Braces for Hidden Gas Tax

There is something ominous coming our way in January 2015; something that has been called a “hidden gas tax.”  Those are three horrifying words.  Most consumers would agree that fuel is taxed enough already and fuel prices are certainly high enough already.  But that is what Californians have to look forward to in January 2015 if nothing can be done to delay it.  It sounds awful, and I think it really could be awful, but is it really a tax at all?

The Modesto Bee describes a cap-and-trade rule “that would require energy companies to purchase greenhouse-gas emission credits for transportation fuels beginning Jan. 1.  The costs of those credits will likely cause the price of gasoline and diesel to go up 12 to 17 cents a gallon – and potentially more, depending on demand for credits in state auctions.”  It sounds like the price of gas is anticipated to go up as a consequence of the mass purchase of emission credits.  Ok, but that’s not a tax!

Assemblyman Henry Perea of Fresno is requesting a three-year delay on said rule as it applies to transportation fuels.  He says that the constituents in his jurisdiction (the Central Valley) would be particularly hard-hit by an increase in fuel prices.  The Bee article states that residents of towns like Modesto often have to drive farther for their business or trade and they have older, less fuel-efficient vehicles compared to folks on the coast.  Also, valley residents spend a larger percentage of their income on gasoline, according to studies.  I don’t dispute the studies, and I certainly would support any reasonable initiative aimed at curbing gas prices, but have you been to San Francisco lately?  Don’t they burn almost as much gas sitting in traffic as we do driving down highway 99?

 
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IRS Doesn’t Hire 20-year-olds Because They’re Used to Stuff that Works

One of the most hilarious things for IT people is to hear non-IT people try to talk about computers and technology.  By no stretch of the imagination am I an IT person, but I do see the humor in that sort of thing as well.  Here is 75-year-old John Koskinen in a recent interview with Tax Analysts’ William Hoffman:

[W]e have a huge turnover in people under 30 because we’re not hiring that many. But when we’re hiring them, we’re obviously not keeping them at the rate that we would like….Part of that is because our technology is so abysmal. You take people, young people coming in at 23, 25, 27, and they’re used to….stuff that works. You know, they’re at the high end and they Twitter and they do all of that stuff. When you come into an organization still moving people onto Windows 7 from Windows XP, that’s not exactly a cutting-edge technological group….Now, on the other hand, we’ve proved technological, technology people because we are doing great things. We don’t have enough resources, and we’re way behind what we’d like to do. But, you know, the apps we’re doing — Where’s My Refund, Get Transcript, and that — so we’re pushing various state-of-the-art stuff, which is why I refer to our IT as a Model T with a great GPS and wonderful sound system….And so that’s some extent, so we’ve got some state-of-the-art apps and, you know, really ancient — you know the average age of our IT equipment is 15 years. So we have to be the only serious large organization of a financial institution running with average equipment age of 15 years. So our computers are too old, our servers are too old. You know, we still got stuff in COBOL programming….So that’s the problem at the front end.

I’m not 27 any more and I feel like I am used to stuff that works too.  It would absolutely drive me crazy to work with 15-year-old computer equipment.  I couldn’t work there for 1,000 other reasons, but that would be a big one.

This quote is so full of awesome lines I don’t even know where to start.  My favorite line: “You know, they’re at the high end and they Twitter and they do all of that stuff.”  It is funny to me that the head guy at the IRS says things like this.  I mean, it’s fine, we don’t need a spry young kid at the high end who Twitters or anything.  As long as he can manager other high end people who Twitter, things should be fine.  The IRS definitely has proved technology people and they’re doing apps and pushing various state-of-the-art stuff.  Oh boy, don’t even get me started on the IRS apps, Mr. Koskinen.  They aren’t that good.  After all, it doesn’t make much sense to put a GPS in a Model T if the Model T can’t go 99.99% of the places shown on the GPS.

 
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Modesto Grand Prix not so Grand for Everyone

I was hoping to find something positive to blog about today.  It does get a little old constantly reading about the problems at the IRS, including the issues with Lois Lerner, their ongoing struggles with customer service, lack of sufficient funding, etc., etc.  It’s impossible to avoid stories about tax refund fraud, phishing schemes, and phony IRS calls meant to trick taxpayers into giving up their private information and their money.  So when I saw that Modesto had hosted its first ever “Modesto Grand Prix” over the weekend, I thought I had found the perfect “feel good” story as a topic for today’s blog entry.  What’s not to love about folks gathering for a good old fashioned street race?  Even better: folks pouring in from all over the Central Valley, filling up hotels and ringing up registers at local eating establishments.  If that had happened.

People came to the event, but not in the numbers that the city had expected.  Downtown business owners had spotty success; some recording higher-than-average sales, and others lamenting a big drop in sales.  Mark Smallwood, owner of a downtown restaurant called Harvest Moon, is most likely not going to be supporting a return of the Grand Prix to Modesto next year.  He said that his business suffered this weekend because the sidewalks were blocked to the extent that it prevented some pedestrians from passing by his store front.  He complained about fencing and banners blocking many from even seeing his restaurant.  This resulted in revenues of less than half what he would bring in during a normal weekend.  He even plans to file a lawsuit against the city.

So much for a positive, feel-good story.  In a few weeks we’ll know if the city lost money on the event.  The mayor, Garrand Marsh, is on record saying that he will not consider bringing the Grand Prix back next year if they did.  I do hope that the mayor and city officials give it another chance.  Modesto needs this type of thing to boost its economy a bit.  It really needs events like this throughout the summer to get things moving financially.  It sounds like with some adjustments the Grand Prix could have been a big success for the city and its downtown businesses.

 
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Lerner Emails not so Benign

There are just as many “crazies” in Sacramento as there are in Modesto, you just have to know where to find them.  And there are just as many Democrat crazies as there are Republicans.  After all, craziness knows no race, religion, or political preference.   Same with “—holes.”  In fact, that group may be more common than crazies.

Of course what I’m referring to here is the content of a couple emails that the now-famous Lois Lerner sent to a friend from her government issue Blackberry in 2012.  Her friend brought up the topic of right-wing radio shows and Lerner referred to the hosts and listeners of such shows as “crazies” and “—holes.”  The emails were released on Wednesday and Republican lawmakers see them as proof of Lerner’s disdain for conservatives and proof that she was targeting conservative groups’ tax-exempt status applications for extra scrutiny.

This new evidence clearly demonstrates why Ms. Lerner not only targeted conservatives, but denied such groups their rights to due process and equal protection under the law.

~ Rep. Dave Camp, chairman of the House Ways and Means Committee

Just to play the devil’s advocate, because that’s what I like to do, there are a number of ways to rebut the accusation that Lerner is biased against conservatives.  For example, maybe she loves conservatives but dislikes the “whacko wing” of the GOP, as her friend put it.  Maybe she specifically dislikes the small faction of radio whackos in the whacko wing of the GOP.  Maybe it’s only the radio wackos in the whacko wing who actually call in and talk apocalyptically about our beloved ‘Merca and the need to protect her borders, hunker down, buy ammo and food, and prepare for the end.  Maybe that’s who she thinks are the crazy assholes that don’t deserve tax-exempt status.  But even so, I think these emails suggest that she was most likely not being fair and impartial in the discharge of her official duties.

 
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