The first step in taxing space starts tomorrow in Sacramento

Have you ever thought about space travel? Or even being one of the first human colonists to Mars? If you have, you should also be prepared to pay a tax. Seriously. That’s right, with the developments in space exploration, the Franchise Tax Board (FTB) is preparing to develop a tax strategy for space travel and commerce.

Taxation strategy of the final frontier begins tomorrow in Sacramento during an interested parties meeting at the FTB’s mother ship. If you didn’t book your tax space voyage in time, you can still attend by phone by calling (877) 923-3149 at 10:00 a.m. Enter the participant pass code 2233420, followed by the # sign.

The official captain’s log for the meeting is to discuss possible regulatory efforts for the apportionment and allocation of income derived from space transportation activities, including the transportation of people or cargo into and from Space. I didn’t think it would be possible, but even the FTB can make this meeting sound boring.

According the news release issued by the FTB, during the upcoming initial meeting, FTB staff members will solicit input from industry and practitioners on issues that may arise in the application of a regulation on such space activities, including, but not limited to:

– How should space transportation activities be defined in a regulation?

– At what point should aircraft or space vehicles be considered as traveling into space?

– How should unsuccessful missions be treated?

– What apportionment factors should be used to apportion and allocate income from space transportation activities? How many apportionment factors should there be, and how should they be weighted? Launch factor, recovery factor, mileage factor, or some other factor?

– Should a regulatory effort address the potential for “nowhere income,” and if so, how should it be addressed?

– What issues might be encountered with combining space transportation activities with a taxpayer’s other trade or business activities?

– Should a regulatory effort distinguish between transporting cargo and people?

– Any other issues that industry believes FTB staff should consider.

Isn’t this exciting!? I do wonder however if a Foreign Bank and Financial Account Report (FBAR) will be required if life is found on Mars, and a human opens a bank account there? I suppose that’s a federal question and the July meeting, I further suppose, is limited California state tax matters.

Board of Equalization is not of fan of Denny’s in California’s central valley

Have you been to one of the Denny’s operated by Abdul Halim? He operates three Denny’s restaurants located in Lathrop, Manteca, and Stockton. If you have a craving for a Moons Over My Hammy and live in the California’s central valley, you may soon be out of luck.

California’s Board of Equalization recently publicized its version of a perp walk. Abdul Halim, of Tracy, California will serve 10 years formal probation, perform 3,500 hours of community service, and pay $790,428 in restitution for pleading guilty to two felony and one misdemeanor count of sales tax evasion. The ordered restitution includes the sales tax, penalties, and interest owed to the BOE.

California’s Board of Equalization is charged with the duty of collecting and enforcing payment of California sales tax. BOE Investigators determined that Mr. Halim failed to pay nearly $525,000 in sales tax collected from Denny’s customers between 2007 and 2011.

If you need help fighting the BOE in California’s central valley or in the greater Sacramento area, call our law firm for a free consultation. We may be able to help save your business and keep you from being the next “perp” publicized by the BOE.

More than half of Stanislaus’ FTB non-filers live in Modesto

The Franchise Tax Board is beginning its annual force filing season. Haven’t heard of force filing season? If you are one of the million plus people that the FTB is currently investigating, you will soon.

Force filing season is where a taxing government seeks to file an estimated tax return for you, when the government did not receive a tax return from you. The procedure is a profitable one. Last year the FTB collected more than $715 million through its force filing investigation and assessment efforts.

Since we’re now in tax season, the FTB knows that you should be thinking about your taxes. So, this is the time of year that the Franchise Tax Board notifies taxpayers that it didn’t receive a tax return from a particular tax payer and that it believes that a tax return should have been filed.

If you live in Stanislaus County, in Modesto particularly, you may need to contact a Modesto tax attorney in short time. Of the 6,696 Stanislaus taxpayers that the FTB is investigating, 3,570 of them live in Modesto. That’s more than half of the Stanislaus taxpayers that will likely need a Modesto tax attorney.

The first step in the force filing investigation is for the Franchise Tax Board to identify social security numbers where a tax return was not received by the tax return deadline. The FTB then compares those social security numbers to information provided by banks, employers, local governments, the IRS, and other third parties. If the Franchise Tax Board believes that you were required to file a California tax return, but did not do so, you will receive a tax return demand letter.

So if you are one of the 3,570 Modesto residents that recently received one of these tax demand letters, or one of the remaining 3,126 who live elsewhere in Stanislaus County, you have a potential tax debt looming. Our Modesto tax law firm may be able to help you. Speak directly to one of our Modesto tax attorneys by calling us at (209) 248-7157.

California FTB frustrated the poop out of someone this week

Are you frustrated with California’s Franchise Tax Board? The Sacramento tax collectors at the Franchise Tax Board must have frustrated, or possibly scared the poop out of someone recently with their collection efforts. For obvious reasons, in a story not widely publicized this week, someone recently took FTB tax relief to a lower level.

Earlier this week a package sent to the Sacramento FTB office containing a brown liquid with a strong odor required the Sacramento Metro Fire Department to be summoned. Franchise Tax Board personnel, possibly working to assess and collect taxes against the sender of the anonymous package, had to emerge from the bowels of their Sacramento taxing office as a level two hazmat emergency caused an evacuation. The cause … dog poop!

Based on the stress and sleepless nights caused by FTB tax audits and Franchise Tax Board tax collections, I’m surprised it was only dog poop that was sent. Apparently, you can order a variety of crap through the internet. Literally, ranging from elephant crap to cow dung.

Obviously, these types of tax relief tactics are not tax relief at all. They’re a useless waste of time and dangerous. The sender will also likely be in more trouble now than they would have been had they used actual tax law strategy to resolve a tax problem and build a collection defense. Using legitimate legal means to resolve a tax debt will often relieve the stress caused by the taxing agency whether it’s the FTB or the Internal Revenue Service.

New Modesto tax relief announced

The City of Modesto recently announced details of a new tax relief and cash incentive program to lure businesses to downtown Modesto. The tax breaks apply variably to new businesses and existing businesses.

The new Modesto tax relief program will be available to businesses located on 10th Street between K Street and H Street; 11th Street between K Street and I Street; and J Street between 9th Street and McHenry Avenue.

New Modesto retail businesses will be eligible for a full refund of Modesto City mill taxes and local sales taxes for the first year of business. Existing Modesto retail businesses that extend their hours will be eligible for a refund of Modesto local sales tax only collected during the extended hours for one year.

The City of Modesto is also promoting cash incentives for job creation in the downtown Modesto area for both retail and non-retail businesses. Other incentives are available for new developments and physical improvements. Full details of Modesto’s business and development incentive program are available on the City of Modesto’s website.

With an overall improving economy it’s good to see local government risk a short-term loss in tax revenue for the long-term impact new businesses may bring. Hopefully for Modesto, the gamble pays off.

Best IRS phone scam – 844-271-8465

I recently received an email from a tax client with a very serious tax problem that my tax law firm has been handling. My tax client was very concerned that the Internal Revenue Service left him a threating message on his home telephone number. The telephone number that my client was to call back to speak with the IRS was 844-271-8465. Since my client actually has a serious tax problem, and since he was smart enough to hire a tax attorney to fight for IRS tax relief, he rightfully contacted me. Based on the stage of his tax problem, he wouldn’t be receiving any calls from IRS collections.

I told him that it was likely a scam. He was adamant that it was not. He said that he called the number and it was definitely IRS collections and he hung up immediately. Out of curiosity I called the number. When calling, the number did sound like the IRS collection line to the untrained ear. The call started with a “welcome to the IRS” prompt. “Push one for a business issue, two for a personal issue” or something of the like. The recording sounded like it was actually recorded from a phone calling the Internal Revenue Service. Then, the phone went immediately to a person without me needing to push a button. Because I didn’t have to wait an hour or two to speak with anyone, this was a huge red flag that this was not an IRS number.

The person who answered my call had a very thick accent, didn’t introduce themselves or provide me with a federal identification number. The person who answered the phone instantly raised his voice and told me that I owed the IRS and I had to pay him. I found this laughable because I was calling from a blocked telephone number and I didn’t tell him who I was. I asked him for his name, identification number and what Internal Revenue Service collection unit he was in. He fumbled a bit and said, “um … you can call me ‘Jack’”. He also told me that he didn’t have to provide me with his identification number and again demanded a payment.

Based on the absurdity of this joker, I’m surprised that anyone would be duped by this scam. But, apparently some people are indeed being scammed. According to the Treasury Inspector General for Tax Administration, they are aware of nearly 3,000 victims who have collectively paid over $14 million as a result of this type of IRS scam.

The IRS has been warning of such scams for the past couple years now. I think I have had a call or two myself, between other scams to update my computer, or lend money to a Nigerian prince. But this is the first scam that I’ve experienced where the voice prompts for the number imitates the actual Internal Revenue Service collection number voice prompt. I’m sure it’s been going on for a while as the IRS reports that the caller identification for these numbers also reveal that the number belongs to the Internal Revenue Service or other law enforcement.

These scammers may be scary and persuasive if you, like my tax client, actually have a legitimate IRS tax matter you are trying to resolve. However, if you know that you don’t have tax issues you should not be swayed by these scammer’s tactics. If you’re not sure if you have tax problems, this may be the time to confirm whether you have any lingering tax issues. Our tax attorneys are located in Modesto, California and Sacramento, California. We can help you determine if you have a real tax issue or help you get the tax relief appropriate for your situation. Please call us at (800) 454-7043 for your free consultation.

New taxpayer Bill of Rights offers no new protections

This week the IRS adopted a “Taxpayer Bill of Rights”. Unfortunately, the IRS admitted that no new taxpayer rights or protections were created. The newly released taxpayer Bill of Rights simply organizes various policies from the tax code and groups them into 10 broad categories.

The thought is that highlighting these already existing protections will make them more visible and easier for taxpayers to understand.

Here are the 10 broad rights the IRS are going to publicize through this version of the taxpayer Bill of Rights:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System

 While poking a little bit of fun at the IRS, I believe this version would be more accurate:

  1. The Right to Be Informed (so long as you still open mail sent to the address you lived at years ago);
  2. The Right to Quality Service (similar to any other poorly structured organization);
  3. The Right to Pay No More than the Correct Amount of Tax (plus the penalties and interest that we will charge you to tell you that we don’t think you paid the correct amount of tax);
  4. The Right to Challenge the IRS’s Position and Be Heard (unless we disagree with your position);
  5. The Right to Appeal an IRS Decision in an Independent Forum (which is funded by the IRS);
  6. The Right to Finality (when you die);
  7. The Right to Privacy (unless you owe us money);
  8. The Right to Confidentiality (unless you owe us money);
  9. The Right to Retain Representation (which you will need);
  10. The Right to a Fair and Just Tax System (similar to the justice system).

The IRS plans on displaying their new Taxpayer Bill of Rights conspicuously throughout their offices. I’m debating whether I should post my version in our law firm’s offices.

Tax debt case is the next frontier for free speech regulation

According to recent news reports, across the pond in Europe, the European Union’s highest court has ruled that people have the right to be forgotten, even on the internet. The case at issue stems from a tax debt once allegedly owed by Attorney Costeja González who wanted the world to forget an article published by La Vanguardia about tax collection efforts taken against him. The tax enforcement efforts included the seizure of his home and resulted in a 1998 Spanish news blurb that was 36 words long specifying that his home was being repossessed to pay off debts. His legal efforts to obtain anonymity have resulted in infamy.

Proof that a tax debt will follow you, the news blurb at issue was a google search result when completing a google search for Mr. González. Apparently microfiche no longer exists in Europe and google lost its battle that search results containing links to the article regarding Mr. González’s tax problems violated his right to privacy and that people have the right to be forgotten. Hopefully the floodgates have not been opened too far to extend to a complete shutdown of the internet. If it does, I’m not shocked to learn that a taxing authority was to blame.  

One month left until tax day; who should prepare your tax return?

There’s about one month left to file your 2013 taxes. You may notice that there are lots of places soliciting to prepare your taxes these days. Every time you pass a strip-mall you likely see some type of gimmick, from air dancers, flags, and a person dancing on the corner with a sign. These gimmicks were formally found at a used car lot to attract your attention, but competition can be tough these days. Just like buying a car, you want to make sure you don’t get a lemon when it comes to choosing a tax preparer.

These strip mall tax centers are virtually everywhere. Just because they are everywhere, does not necessarily make them better. The quality and expertise of these types of tax preparers rests entirely on who specifically within the pop-up shop prepares your tax return. There really is a spectrum in the quality and experience you may encounter at one of these shops because these companies are often so big and/or individually owned and franchised.

On the one hand, you may be trusting your taxes with a seasoned tax preparer who’s a licensed accountant, really knows what they are doing, and will work closely with you to ensure your returns are accurate. On the other hand, you may be risking doom with someone using the franchise’s own do it yourself software, who’s simply answering the Turbo Tax type questions for you. So the key when trusting your returns with these types of tax preparation shops is to consider the complexity of your tax returns and to ask about the experience and qualifications of the specific person who is actually going to prepare your tax return.

Beware of the “Turbo Tax audit”

With advancements in tax software and technology, it’s rare to find tax returns that are filled out by hand; without the assistance of a tax preparer or tax preparation software. These advancements have given rise to a whole market of self-preparation software. The most popular is Turbo Tax, but there are others.

With the popularity of these self-preparation tools and software, have come the aftermath, the Internal Revenue Service (IRS) tax audit. I personally like self-preparation tax software tools, like Turbo Tax, because they have led to business for me in what IRS examiners refer to as a “Turbo Tax Audit”. The key with the do-it-yourself software is whether you, the tax preparer, know what you’re doing because you don’t get the professional representation you didn’t pay for.

The software is advertised as easy to use and typically uses question and answer formats. To prepare your tax return, you answer questions posed by the tax preparation software, and plug in your data, and then your taxes are done. When there is trouble, it’s usually rooted in whether the tax preparer (you), answered the questions correctly for the purposes of the tax return. Because the computer software doesn’t know you or your situation, this is where you need to have some knowledge of taxes in general to ensure that you’re not taken on a path that will lead you to an appointment with my office, and eventually the IRS.

The self-preparation software sometimes offers “audit protection.” However, be sure to read the fine print as to the limitations and conditions of such “protection” should you want it, as there may be circumstances where your audit “insurance” is not covered. And, you’re again in my office or facing the IRS alone.