FTB Updates Top 500 List

The California Franchise Tax Board (FTB) updated its “Top 500 Delinquent Taxpayers” list this week.  And to dispel any doubt about the effectiveness of this program, FTB also announced that the list shrunk to only 350 before it went live on their website.

Two times a year, the FTB publicizes a list of individuals and corporations with the biggest state tax debts.  Those on the Top 500 list are identified by name, city/state/zip, amount due, tax lien filing date, and information about state-issued licenses.  The license information is relevant because one of the consequences of being in the Top 500 is the FTB has the authority to suspend state-issued licenses such as drivers license, contractor license, state bar membership, medical board, bureau of real estate, department of insurance, etc.

There are several doctors, attorneys, real estate agents, and contractors on the Top 500 list.  There are about 14 individuals shown to be licensed by the State Bar of California and, interestingly, all but one of those licenses are still active.  The one that is no longer active bears the status of “disbarred,” which leads me to believe that the bar itself revoked the license, not the FTB.  Perhaps the FTB understands that suspending a bar license would severely restrict its ability to collect what is owed.

At the top of the list is the individual with the largest state tax debt on the books — the one I like to call “the winner” — Mr. Mon Bill Hom of Los Angeles.  Hom happens to be an attorney with an active bar license.  He owes $6.3 million, with tax problems dating back at least to 1995 (the year the tax lien was filed).  In looking at his state bar profile, it appears that he was suspended for two years back in 1999 after the IRS cleaned out his client trust account and he didn’t have the money to replace it.

I started this post by saying that the Top 500 list is an effective enforcement tool.  Back in August the FTB sent out letters to the potential Top 500 candidates explaining to them that they can avoid being publicly named by resolving their accounts before October 15th.  And in a span of about two months, 150 of them came forward and resolved their accounts with the FTB by either paying in full, entering into an acceptable installment agreement, or settling by way of Offer in Compromise.  I’m sure some of them appealed their cases or filed bankruptcy (which also results in removal from the list), but FTB stated that it was able to collect $5.3 million specifically from debtors trying to avoid the Top 500 list.  I’d call that a success.