FTB is Accepting Comments From Public About Proposed Changes to R&TC 19133 and Title 18, California Code of Regulations, section 23663-1, as well as the potential adoption of Title 18 section 23663-6, relating to Assignment of Credits

I have nothing to say regarding Title 18, but I have a lot to say about Revenue and Tax Code 19133! I have requested two major changes to the law. You can read my requests in their entirety here, but here are the highlights:

Suggestion 1 – Clarification of When a Penalty is NOT to be Imposed

As 19133 (a) and (b)(2) are currently written, it is unclear that Demand Penalties are to be imposed only when a taxpayer’s account has been underfunded. It is my belief that if the FTB genuinely cared about its mission to “…pay the correct amount,” or its value “We exemplify honesty, credibility, and accountability” or its goal to “Fairly administer the law to ensure taxpayers file and pay the correct amount,” then FTB would make it clear to the taxpayers about when penalties and fees are not to be imposed….

As you may be aware, I have recently filed an Accusation in the CA Supreme Court against FTB employee Eric Yadao. In the Accusation, I clearly laid out that FTB exploits this unclear wording of R&TC 19133 to falsely impose penalties and fees on taxpayers.

On page 23 of the (Supreme Court ) Accusation, I explained how one of the tactics Mr. Yadao used to cover up FTB’s federal crimes of embezzling and racketeering was via omission of critical portions of R&TC 19133. In his ROB, Mr. Yadao omitted portion (2) from R&TC 19133, which states: the FTB has proposed an assessment of tax under the authority of Revenue and Taxation Code section 19087… in hiding this portion of the law, he hid the fact that penalties are only to be imposed on delinquent accounts. Mr. Yadao does not deny that we were never delinquent on tax years 2010 – 2016. By hiding this portion of the law, he hid that the NPA and Demand Notices were falsely issued and the Demand Penalties falsely imposed…

Given FTB’s history of exploiting this vague wording to falsely impose penalties and fees, and their reluctance to fully disclose the portions of the law that disclose this, I am insisting that this flaw be corrected immediately.

Suggestion 2 – Opportunity to File a Dispute

I am also requesting that FTB’s wording of “prescribed manner” in portions (b)(1) and (b)(2) to be altered. The current policy is that only a tax return is an acceptable response to a Demand Notice/Request for Information… FTB should instead change their policy to include disputes as an acceptable response to a NPA and/or Demand Notice and/or Request for Information for avoidance of Demand Penalties. 

It is my belief that imposing Demand Penalties on taxpayers who have disputed an NPA and/or Demand Notice and/or Request for Information goes against FTB’s missions, values and goals… I documented in my OTA case that I called FTB 33 times and sent 38 letters to dispute the inaccurate NPAs and the Demand Notices that would not have been issued had the NPA’s been accurate. My disputes were disregarded and, as documented above, Demand Fees and penalties were improperly imposed in violation of R&TC 19807. 

If FTB genuinely cared about being fair to taxpayers, there would be a hold placed on a disputed account until the review of the dispute was completed. If the dispute was denied by FTB, a new Demand Notice would be issued based on the dates of the denial. It is my belief that not affording the taxpayers the right to dispute is a violation of state and federal laws.

If you are interested in providing comments or suggestions on either matter, here is a copy/paste of the emails FTB sent out to “interested parties” on the topics. The links have all the pertinent info and directions on how to submit comments:

10/08/2020 — Announcement of Notice of Proposed Rulemaking

The Franchise Tax Board hereby gives Notice of proposed amendments to Title 18, California Code of Regulations, section 19133, relating to Penalty for Failure To File Return Upon Notice and Demand. 

The Notice of Proposed Rulemaking will be published in the California Regulatory Notice Register on October 9, 2020.  The Notice, Initial Statement of Reasons, and Proposed Draft Language are now available on the FTB Regulatory Activity page.  Written comments will be accepted until November 23, 2020, by mail and email to the contact identified in the Notice. 

Please click on the link below to the FTB Regulatory Activity page and scroll down to the Draft Regulations to view the Notice, Initial Statement of Reasons, and Draft Language. https://www.ftb.ca.gov/tax-pros/law/regulatory-activity/index.html

and:

10/08/2020 — Announcement of Notice of Proposed Rulemaking

The Franchise Tax Board hereby gives Notice of proposed amendments to Title 18, California Code of Regulations, section 23663-1, and the potential adoption of section 23663-6, relating to Assignment of Credits – Eligible Assignees and Reorganizations. 

The Notice of Proposed Rulemaking will be published in the California Regulatory Notice Register on October 9, 2020.  The Notice, Initial Statement of Reasons, and Draft Language are now available on the FTB Regulatory Activity page.  Written comments will be accepted until November 23, 2020, by mail and email to the contact identified in the Notice. 

Please click on the link below to the FTB Regulatory Activity page and scroll down to the Draft Regulations to view the Notice, Initial Statement of Reasons, and Draft Language. https://www.ftb.ca.gov/tax-pros/law/regulatory-activity/index.html