When a taxpayer believes that they have had penalties, fees and interest improperly imposed on them by the Franchise Tax Board, the first step is to request a refund. Refund requests are almost always denied.
The next step is to file an appeal in the Office of Tax Appeals, which is an administrative (specialty) court that deals solely with tax issues.
If OTA denies your refund request, you can then file a trial del novo in Superior Court. In English, that means that the Superior Court judge will look at this as a new case altogether, not simply as an appeal of the lower court’s decision. (More info on the process in FAQs)
I had been warned by two different tax attorneys that OTA usually sides with FTB, so hiring an attorney would be a waste of money.
I thought I had made a strong case for why I should get my money back with my Brief and Oral Arguments, so I was disappointed, but not surprised, when I lost. The Opinion (aka verdict) for my case was so blatantly corrupt that it was shocking.
In January 2020, I filed a lawsuit (the trial del novo) against FTB for a refund of my penalties, interest and fees in San Diego Superior Court. In August 2020, I filed an Accusation in the CA Supreme Court. In both cases, I explained why I believed the OTA Opinion was erroneous:
Excerpts from the Supreme Court Accusation
“The three OTA judges, Kenny Gast, Linda Cheng, and Joshua Lambert, omitted the issue of the credit elect withholding practice from their ruling altogether (exhibit 9). This was the heart of my argument, yet they ignored the issue as if I had not raised it. Mr. Yadao had never denied that the practice was unlawful in either of his briefs (exhibits 5 and 10) or in the OTA oral arguments (exhibit 6). Since I had submitted the August 2019 letter from FTB’s Disclosure Department (exhibit 7) as evidence in my OTA case, the judges were aware that this withholding practice was not official FTB policy.
If the credit elect withholding practice was lawful, the judges would have said so in their Opinion (exhibit 9). Failure to deny constitutes admission: Any material allegation in the complaint that is not effectively denied is deemed admitted. [CCP § 431.20(a); see Hennefer v. Butcher (1986) 182 CA3d 492, 504, 227 CR 318, 325]. I believe that by not denying my allegations that the credit elect withholding practice was unlawful, yet nonetheless stating the fees were lawfully imposed, the three judges have also covered up the embezzlement and racketeering.”
“Regarding their statement about the OTA judges findings, I pointed out that in my SCB (exhibit 2, pages 8 – 9), that the heart of Mr. Yadao’s argument was that we filed late due to willful neglect. By exposing all the improper omissions/redactions, I proved to OTA that our late filing was not due to reasonable cause: FTB’s multiple breaches of duty. Instead of ruling in our favor, the OTA judges removed the issue of reasonable cause vs willful neglect from their ruling altogether. As I point out on page 6 – 7 of the SCB (exhibit 2, pages 8 – 9), in their Opinion (exhibit 9), the judges omitted section (a) of 19133 altogether – the portion addressing that fees were not to be imposed if taxpayers were not willfully negligent — as if this portion of the law did not exist.
I also pointed out that on pages 3 – 4 of the SCB (exhibit 2, pages 5 – 6), the OTA judges also did not address the heart of my argument, which was whether it was legal for FTB to unlawfully withhold/misapply payments, then impose penalties and fees that would not have been imposed had the payments been applied in compliance with the law.
I also further pointed out that in their Opinion (exhibit 9), the OTA judges accepted FTB’s accounting records and facts as accurate. I find this unconscionable since I provided proof that FTB’s records and facts were inaccurate via canceled checks, Web-pay receipts, and FTB’s own internal records. FTB did not dispute any of the evidence that I submitted. No explanation was offered for why the judges disregarded my evidence. I had addressed this on page 8 – 9 of my SCB (exhibit 2, pages 10 – 11), as well.”
On page 26 of my SCB (exhibit 2, page 28), I provided evidence which indicates that FTB’s Chief, Legal Counsel, Jozel Brunett, may have coerced the OTA judges into making their erroneous Opinion. Since Ms. Brunett is Mr. Yadao’s boss, it would be logical that Ms. Brunett also coerced Mr. Yadao into hiding FTB’s criminal activities. I can see why Mr. Yadao would be willing to do anything necessary to protect his job.
This is what I wrote on page 28 in my Superior Court Complaint regarding the suspected coercion:
POSSIBLE COERCION OF JUDGES
In addition to Eric Yadao, the legal council representing FTB at the OTA hearing, at least four more Franchise Tax Board employees flew down from Sacramento to personally attend our OTA hearing. Notably, one of the attendees was Jozel Brunett, Chief, Legal Council of FTB (Exhibit 36).
Before the hearing began, the lead judge announced that there was a meeting scheduled immediately following the hearing. He asked that everyone not attending the meeting to please leave the room immediately upon completion of our hearing. The judge did not specify what the meeting was for or who was attending. Please note that the video of the hearing starts with the judge speaking in mid-sentence; the instructions to leave were edited out of the video: https://www.youtube.com/watch?v=MjAaHxFPchI&feature=youtu.be
Upon completion of the hearing, Christine left the room as she had been instructed. Christine did not see Ms. Brunett leave.
Christine called OTA on August 22, 2019 to ask why there was a meeting with Ms. Brunett. OTA claimed that Ms. Brunett did not attend the meeting. However, when Christine made a California Public Records Request for a list of attendees of the meeting and the minutes, the OTA declined to provide them (Exhibit 36).
Even if Ms. Brunett did not attend the meeting, she certainly had a window of time to speak with the judges privately after Christine was ordered to leave.
Christine also asked OTA how many cases OTA has completed since its inception in January 2018, and how many of those FTB won. Their response was “The Office of Tax Appeals (OTA) does not keep statistics regarding the outcome of our cases” (Exhibit 37).