2019 Annual Taxpayer Bill of Rights Requests
1. End the policy of withholding estimated tax payments made via credit elects.
This policy violates R&TC 19363, which says “Any amount paid as estimated tax for any taxable year shall be deemed to have been paid on the last day prescribed for filing the return for the taxable year (determined without regard to any extension of time for filing the return),” which in simple English means that no matter what date you filed the previous year’s return, the credit elect payment must be credited on tax day, which is usually April 15 or 16.
However, the FTB does not apply these payments in accordance with the law; instead, the FTB puts the credit elect money into “suspense,” which is a fancy word for the general slush fund. The credit elect money does not get moved from the slush fund until the taxpayer files that year’s return. The FTB claims this policy is in line with federal practices, but that is a lie; the IRS does not withhold payments made via credit elects.
Demand Notices are only sent to taxpayers whom the FTB believes have underpaid their tax liability as estimated by the FTB. The accompanying Demand Penalty is a crippling 25% of extra additional taxes beyond what the taxpayer actually owes.
By withholding the credit elect payment, it appears that the account was underfunded and thus a Demand Notice is issued and a Demand Penalty assessed. However, had the credit elect payment been applied in accordance with the law, the account would not have been underfunded and the Demand Notice and Penalties would not have been applied.
This practice of withholding credit elects in order to improperly assess Demand Penalties is the Federal Crime of Racketeering per the RICO Act.
The FTB has recently updated their policy so that if a taxpayer is single, the FTB will apply the credit elect to the taxpayer’s account AFTER the Demand Notice has gone out, so they are only on the hook for the erroneous penalties.
However, married taxpayers get double racketeered. The FTB refuses to apply monies to married people’s account until the return is filed. The FTB then demands additional payments of monies for estimated taxes that would not have been due had the money been applied in accordance with the law. This second ploy to collect extra funds from married people is also the federal crime of racketeering per the RICO act.
I have been asking for legal justification of this policy since 2016. Each year, the FTB offers up a different inapplicable tax code taken out of context in their efforts to try to deceive me into believing this scheme is lawful. They have yet to provide one valid legal code. Please see the attached letter to Governor Brown from 2018 that details previous attempts at deceit on this topic.
In January 2019, the FTB committed yet another count of Collusion to Cover Up Racketeering in their 2018 Annual Taxpayer Bill of Rights Response, which was issued. They cited Commissioner v. Lundy, 516 U.S. 235, in which the Lundys’ filed their tax year 1987 return in 1990. The payments were made via income taxes withheld from Mr. Lundy’s employer, and they had overpaid by $3,537. Their refund of $3,537 for 1987 was denied due to the statute of limitations expiring on refunds.
This has nothing whatsoever to do with applying a credit elect from one tax year as an estimated tax payment on the following year.
In my OTA appeal that was heard in August of this year, the FTB never denied that this withholding practice is unlawful. Had the above legal case been a valid justification, the FTB would have brought it up in the hearing. The FTB was apparently less willing to attempt to deceive the judges than they were in trying to deceive me.
It is worth noting that Susan Maples staunchly refused to sign the 2018 Annual Taxpayer Bill of Rights Response when I pointed out to her that her signature was missing.
2. End the policy of withholding estimated tax payments from married couples.
It is not only estimated tax payments made via credit elects that are withheld from married couples — ALL estimated tax payments made by married couples are withheld. If a married couple files late, they are double-racketeered as I just described.
The FTB claims this policy is in line with federal practices, but that is a lie; the IRS does not withhold estimated tax payments made by married couples.
The FTB’s reasoning is: “we don’t know how much to apply to each spouse so we won’t apply any money at all!” This is ludicrous, especially since the tax code that the FTB uses to justify this policy clearly says that joint estimated tax payments can be apportioned in any manner that the spouses agree upon. By not giving the spouses the opportunity to designate how much of the money is to be applied to each spouse, and instead withholding the payment altogether, the FTB is clearly violating federal law.
In the Response to my 2018 Annual Taxpayer Bill of Rights Requests, the FTB committed a second count of Collusion to Cover Up Racketeering by again misrepresenting what the law says. This time, they didn’t even try to pull new laws out of thin air. They simply provided the same legal codes that have already been debunked. As such, I am re-sending the letter that I sent to Governor Brown and the FTB Board of Directors dated April 9, 2018, in which I detail how the FTB cherry-picked words out of context to justify these policies; but when read in context, the laws say the exact opposite of what the FTB claims.
3. Implement a policy whereby fees may not be assessed when the fee was implemented as a result of FTB breach of duty.
In addition to withholding estimated tax payments, the FTB also seems to have a problem with frequently “misapplying” estimated tax payments. The net result of these “mistakes” is the same as with the withholding scenarios. If a taxpayer files late, the current year’s tax liability appears to be underfunded, and thus a Demand Notice is issued. The taxpayer is on the hook for the Demand Fee, even though the fee would not have been assessed had the FTB correctly applied the payment.
The FTB is currently being financially rewarded for their “errors,” and thus are incentivized to make “mistakes.” We must eliminate that incentive to err.
4. Disclosure that the Annual Taxpayer Bill of Rights Meeting Requests Can Be Submitted Online
This Annual Taxpayer Bill of Rights Meeting that we are at right now is a California State Right, pursuant to Revenue and Taxation Code section 21006(b)(2). I am pleased to see that as a result of my request last year to disclose the meeting to the public, the FTB added a tiny blurb about the meeting on their website in a place where it could actually be found. However, I don’t believe this small gesture was good enough.
First of all, the blurb is deceptively worded to make it sound as if you have to appear in person to submit a request. Attending this meeting is impossible for the majority of Californians; most people don’t have the luxury of enough free time or discretionary income.
It will cost me $350 to attend this year’s meeting for the plane tickets, parking at San Diego Airport, rental car in Sacramento, and a babysitter for my son. If I had a job, I would have had to take the day off work and lost the day’s wages – and that is assuming that my employer would even let me have the day off. When I worked in the retail and catering industries, day off requests were not granted in the month of December.
By hiding the fact that attendance is not required, the FTB is discriminating against the middle and lower classes.
What makes this response especially disconcerting is the fact that the FTB also acts as a debt collection agency for over 500 California Agencies. It is safe to assume that if someone is in debt collection, they probably don’t have an extra $350 to attend the meeting. I have heard many complaints about the FTB erroneously imposing debt collection that is virtually impossible to get resolved. I’ve also heard many complaints of unfair debt collection practices by the FTB.
This lack of disclosure of ability to submit requests online ensures that this huge Collections “customer base” is denied the opportunity to ask that the FTB end predatory behaviors. Denying the Collectees’ this opportunity to address these unfair practices is a clear violation of CA State Rights.
Second, last year, I also stated that FTB agents are trained to tell people who complain about a FTB policy or procedure that the FTB cannot do anything to change such policies; they must contact their State Level Legislators. This is a violation of California’s disclosure laws. In their response to me from last year’s meeting, the FTB did not say anything about retraining staff to disclose the meeting to people who complain. Please address it this year.
5. Create a public, online database of all of the FTB’s Policies and Procedures that is searchable by key word.
As I documented in my OTA appeal, the reasons I wound up filing my tax years 2011 through 2015 returns late was because the FTB created the delays by giving me erroneous and conflicting information. Even the FTB’s Disclosure Department sometimes gave me incorrect information – that is, when they answered my requests.
Several of the requests that I made to the Disclosure Department were not answered because they said I needed to better identify exactly what I was looking for. Many of those “we don’t understand” responses were to requests that were unmistakably clear, so claiming they didn’t understand was a tool to deny transparency of information.
Had an online database of policies existed, I could have simply looked up the information for myself by typing in assorted keywords until I found what I was looking for, gotten the correct information, and filed timely.
The FTB claims that their goal is to have everyone file timely; if this is true, then the FTB should be eager to implement this tool.
6. Clear guidelines of what constitutes an abatement and claim for refund requests
At last year’s meeting, I made this same request. I explained that I had been turned down for my tax year 2013 and 2014 Abatement Requests before I had even applied. When I asked Ms. Ms. Maples how this could possibly be legal, she explained that I was turned down because I told GovOps that I was going to submit an Abatement Request to the FTB. Ms. Maples said this turn down was considered “reasonable” thanks to the FTB’s “loose guidelines” of what defines an abatement request.
This policy of “loose guidelines” is a tool to deny due process for Taxpayers. The law states that documentation must be provided along with the request, but the FTB pre-emptively issues denials before the taxpayer has had a chance to submit a formal request along with documentation.
In the FTB’s Formal Resolution, they wrote “in the FTB’s website, the FTB has a webpage entitled “Claim for Refund” which provides information to taxpayer regarding their rights and responsibilities in submitting a claim for refund.”
The referenced page simply provides instructions on how to submit a claim for refund. This did not answer my request. I want some sort of assurance that the FTB will end the unlawful practice of pre-emptively issuing denial letters.
7. Post the Questions Submitted to the Annual Taxpayer Bill of Rights Meeting Along With the Answers:
For the 2017 Annual Taxpayer Bill of Rights Meeting, I made an online request to end the policy of withholding estimated tax payments made via credit elect. In their Formal Resolution, the FTB did not respond to my question – instead, they answered a completely different question altogether. But I was the only one who knew that because the question itself had not been posted along with the answer.
When I asked Ms. Maples why questions weren’t posted, she responded that many people put personal information in the questions, so it was necessary to leave the questions out. That answer is ridiculous; personal information can be redacted. Clearly, the real reason to not post the question is so the FTB can evade accountability by not answering the questions which were actually asked of them.
8. Timely re-application of misapplied payments.
During my OTA appeal, I noticed in the FTB’s accounting ledgers that there is a six-week lag between the date that a misapplied payment is located and the date the money is moved to the correct tax year/account. I am requesting that these misapplied payments be immediately applied to the correct tax year/account upon location of the funds.
9. The FTB should only utilize standard-use English
The FTB utilizes a strange internal vocabulary that does not match standard use English. Here are three examples:
- To the FTB, the word “transfer” means “tell the customer to hang up and call an entirely different phone number.”
- To the FTB, when someone responds to a Notice of Proposed Assessment disputing the amount that the FTB claims is owed, as per the instructions listed on the NPA form, that response is called a “No Response.”
- At the FTB, when they ignore written correspondence, they call it “turning down” the correspondence.
This confusing vocabulary makes it harder for taxpayers to comply. No one at the FTB explains that many of the critical words used in letters and conversations are not standard-use English. Due to the language barrier, taxpayers often do what they believe they were told, only to find out later they did the wrong thing.
Besides confusing taxpayers, these odd vocabulary words also deceive regulators. In response to a complaint letter that I sent to Betty Yee’s office before I filed my OTA appeal, Christopher Calhoun of Executive and Advocate Services sent letters to me and my husband dated July 10, 2017, claiming that we had never responded to any notices. In my OTA appeal, I documented that I had responded 71 times.
Eventually I found out that the FTB didn’t view Mr. Calhoun’s letter as a lying… Mr. Calhoun simply utilized the FTB’s strange vocabulary words and omitted pertinent facts about all the responses that I did send. Had Mr. Calhoun utilized standard-use English, he could have never attempted to deceive Betty Yee and smear my credibility.
If the FTB is genuinely interested in “transparency” and “a better customer experience,” they will choose vocabulary words that are in line with standard-use English so that all parties clearly understand what is occurring.
10. Issuing of Denial Letters
Over the years, I have submitted many requests to the FTB. The FTB never responded to the majority of these requests. In my OTA appeal, the FTB claimed that not responding to my requests was the same thing as issuing a denial letter for said request. This practice is unprofessional and creates confusion for taxpayers. I am asking that the FTB establish a policy that all denials must be sent in writing.
11. Move the Taxpayer Advocates to Work Under GovOps.
Having the Taxpayer Advocates employed by the Taxation Agencies they are supposed to be protecting taxpayers from is a conflict of interest.
Susan Maples is employed by the FTB. “Protecting the revenue” is her employer’s number one priority. While the Taxpayer Advocate does have the power to make changes to favor the Taxpayers, doing so would reduce the revenue that her employer generates. It is not fair to her to be in a position of divided loyalties.
I understand that this Request requires a change in legislature. I am requesting that Ms. Maples and the FTB Board of Directors work together with my State Representatives, Assemblyman Brian Maienschein and Senator Toni Atkins, to put together a bill to propose in the next legislative session with the following structural changes:
A. Instead of one Advocate per Taxation Agency, there should be one Advocate per district that works with all the Taxation Agencies. Then, the Advocate would clearly be working for the Taxpayers, with no divided loyalties.
B. The Advocates should work under GovOps. The Advocates should each have a support staff.
C. The Tax Appeals Assistance Program (TAAP) should stay with the Advocates at GovOps. Currently, this crucial free student attorney program is being administered by the Agencies that they are fighting against in court. This is an inherent conflict of interest.
D. GovOps needs to be given some “teeth.” I have complained to GovOps many times about the various unlawful practices. GovOps tells me that, even though they are the FTB’s oversight agency, they are unable to make the FTB do anything at all — even stop illegal practices!
E. The Advocates must have authority and power to make changes to unfair policies. The assorted Advocates would have to regularly meet to discuss potential policy changes and vote on whether to make said changes
12. FTB staff should only sign letters they wrote themselves
As all the Board Members know, I received a letter signed by Executive and Advocate Services employee Christopher Calhoun dated July 28, 2017, in which he committed two counts of Collusion to Cover Up Racketeering — a federal crime that carries up to twenty years in federal prison for each count — by misrepresenting what the law said regarding the credit elect withholding practice. I am willing to bet that Mr. Calhoun didn’t write that letter himself.
In the 2017 Formal Resolution that I mentioned above, which was issued in January 2018, Susan Maples also committed two counts of Collusion to Cover Up Racketeering. One of her employees in the Advocate Office, Chris Smith, claimed that Ms. Maples did not author that letter herself. However, because she signed it, she is the one on the legal hook.
Ms. Maples got smarter last year and refused to sign the 2018 Annual Taxpayer Bill of Rights Response, issued in January 2019 and also containing two more counts of Collusion to Cover Up Racketeering. But because the letter is not signed, it’s also not a valid legal document. The FTB should not be issuing unsigned letters under any circumstance.
The resolution to this dilemma is simple: create a policy where only the true authors sign their own letters. In collaborative documents such as the Annual Taxpayer Bill of Rights Responses, everyone who worked on it should identify the portion that they wrote and sign the letter. My guess is that if the true authors know that they themselves would be the ones held accountable for the contents, they probably won’t be as willing to evade the law.
In the FTB’s June 2019 Board Meeting, the FTB did a presentation on how great of a place the FTB is to work. I find that hard to believe. To me as an outsider, it looks like an environment where no one wants to be held accountable and everyone is eager to throw one another under the bus to evade accountability.
If the FTB truly wants to be a great place to work, then the FTB will eagerly implement this policy as a personal accountability tool.
13. Stop harassing people online
In May 2019, a new account named XXXXX appeared on a popular website called Reddit. He offers advice to people who post questions about tax issues. Based on his expertise in all matters FTB, how quick he is to respond, and how much time he spends online, he appears be a full-time FTB employee paid to answer these queries. Unfortunately, XXXXX also harasses people who say anything critical about the FTB. If it’s an especially critical statement, he will switch to an alternate account called XXXXXXX to call people obscene names.
I am disappointed to see that the FTB has not learned its lesson about harassing people from the Gilbert Hyatt debacle. Please remember that it is likely that I will file a case against the FTB in Superior Court. The judge and jury are not going to react well to seeing your marketing person call me “an entitled bitch,” “an asshole,” and “an absolute, unbridled cunt.” It looks even worse that he is doing this official FTB bullying from an account in which he posts adult content (see attached screenshot).
I know the FTB is going to try to deny that XXXXXX is a FTB employee (since he denies it himself). In that thread, he discloses that he is aware that the OTA judges rendered their verdict early and that I already had it in hand. In the bottom of the screenshot you can see him pestering me to post it online. Since the information about the early verdict will not be publicly available until December 5 or later, there is no way he could know that unless he was an FTB insider.
While I think having an online marketing person helping people with tax questions/issues is a fantastic idea, trying to stifle online complaints is a bad plan. I am asking that you fire XXXXX and train his replacement to be polite and respectful. Instead of stifling complaints, he should be a liaison that reports negative feedback to the FTB to help the FTB improve its overall customer service.
Needless to say, it is disconcerting to be harassed by someone who has access to my home address, social security number, bank account information, and other private data. And let’s face it, there are probably many people who may be tempted to retaliate against me for pointing out the numerous unlawful activities and violations of State Rights that I have encountered. I would like to know what kind of protections you have in place to make sure this private information is not inappropriately accessed and/or abused by your staff, consultants, and other affiliates.
I appreciate your attention to these matters and look forward to your response.
Regards,
Christine Grab
Since the speech had a time limit, this written submission is longer and more detailed than the speech that I made. Video of the speech is here, text of speech is here.