How To Figure Out If Franchise Tax Board Overcharged You on Interest

I filed a Federal Criminal Complaint against Franchise Tax Board for Overcharging Interest. My goal is to find fellow taxpayers who have also been overcharged interest so that it can be a Class Action Criminal Complaint. So please, check to see if you have been overcharged interest. If you were overcharged and would like to join in on the Federal Criminal Complaint, please email me at: FTBFighter at protonmail dot com (I wrote it like this to avoid spam bots).  

Step #1: Send a letter requesting copies of your Amortization Schedules.

This is a record of how they calculated the principal balance, how many payments you made, how the payments were applied, and how much interest was charged in the interim between each payment that was made. 

You cannot make this request by phone, email or the MyFTB site. You can only request this information via fax or mail from the Disclosure Department. I strongly recommend fax. The Disclosure Department doesn’t have a separate postal address, so your request will likely get “lost in the mail.” The turn-time to process mail is 90+ days, so you won’t know for at least 4 months if your request was received or not. The Disclosure Department’s direct fax number is (916) 845-4849 and you will get a fax confirmation, so FTB won’t be able to claim they never received your request like they often do with postal mail. Your letter must include: 

• The date you faxed the letter 
• Your name and taxpayer ID # (usually social security number)
• Your spouse’s name and taxpayer ID # (usually social security number) 
• Your address 
• You must specify each and every tax year that you want the amortization schedules for 
• Specify if you want the documents mailed or faxed back. If you want them faxed, include a fax number.
• The letter must be signed

Here is a suggestion for what you can write in the body of the letter: “I would like to see a record of all payments made towards those tax years, dates the payments were applied, how penalties were calculated, and complete amortization schedules showing how the interest was calculated.”

2. Check to see if FTB overcharged based on their own numbers.

Once you get the amortization schedules back, there should be at least one page titled: Interest Computation Detail Display.

Under the title will be your taxpayer ID#s and the tax year 

Under that is the type of liability and liability amount. In this example, the top portion says liability: Demand Pen and unpaid liability amount of $3,873

Under that will be a series of lines, each listing the date beginning, date ending, total number of days, rate and total interest charged. 

To figure out interest, you have to check each and every line. Again using our own tax year 2014 as an example:

Line #1

We were charged 3% interest. $3,873 x .03 = $116.19 interest per year

There are 365 days per year. $116.19  / 365 days = .3183 per day

We were charged this amount for 214 days. $0.3183 x 214 = $68.12 total interest due

However, as you can see, we were charged $68.53, which is 41 cents more than what we actually owed.

Line #2

We were charged 4% interest. $3,873 x .04 = $154.92 interest per year

There are 365 days per year. $154.92 / 365 days = .4244 per day

We were charged this amount for 163 days. $0.4244 x 163 = $69.18

However, as you can see, we were charged $71.04, which is $1.68 more than what I actually owed.

Total:

Line 1 overcharge was 41 cents

Plus line 2 overcharge was $1.68

Equals a total overcharge of $2.27

I hand-calculated all the tax years that we paid interest on. From what I can tell, it looks like FTB’s system automatically added about an extra $1 per calendar year to our total interest charges. It’s not much money per person, but considering they are overcharging this $1 per year on thousands of people, it is a substantial amount of illicit revenue to the State of CA.  

3. Check to see if FTB falsified the numbers they are using. 

You will probably need to refer back your own records (ie the bills that FTB sent you) and compare the old records to the ones FTB has just sent you to find the falsification(s). 

I have caught two type of falsifications: tacking on extra interest beyond what they calculate is owed and not crediting all the money you’ve already paid in towards the liability. 

Adding Excess Interest

Going back to the example above, you can see that on the bottom half of the page, FTB listed a second unpaid liability in the amount of $7.04. When I did the calculations, I saw that I was not overcharged interest on the $7.04. 

However, my instincts told me that something was not right with this $7.04. Why would a second demand Penalty be imposed three weeks after the initial Demand penalty was imposed. If FTB had gotten the liability amount wrong, wouldn’t they simply go back and correct it retroactively?

I looked through my old bills and I found that in February 2014, a FTB rep told me to send in $28.20, but the bill stated that I only owed $21.15. Somehow, that representative had manually changed the interest in the system to reflect the higher amount of money that he’d quoted me. 

So for tax year 2014, I was actually overcharged by $9.32: 

$2.27 in systematic overcharges (from section 2 above)

Plus $7.05 in fraudulently added interest

This was actually the second time I caught a FTB representative telling me to send in more than the bill stated was due, so this appears to be an ongoing scheme at FTB. This is the documentation for the first time it happened to us, on tax year 2011. 

Not Crediting All The Money You’ve Paid Towards the Liability

When I was looking through the bills that FTB had sent to us, something that jumped out at me was that for tax year 2014, our bills stated that FTB had only collected $29,388.25 in tax payments from us. Per FTB’s own records, my husband’s employers had collected almost $32,000 in state taxes, plus we’d made an estimated tax payment, so there was obviously something very wrong with the $29,388.25 number on the bill. 

The records that FTB had provided are discombobulated, so I had a hard time figuring out how FTB came up with their number. The full breakdown is here, but the summary is that, for the purposes of calculating interest, FTB only recognized a partial payment from my husband’s employers, FTB did not credit an overpayment of SDI collected by my husband’s employers, and FTB did not credit the estimated tax payment that we’d made via credit elect. 

We had actually overpaid our tax liability for 2014 by so much that we had enough in there to cover the penalties imposed, which means that every penny in interest had been fraudulently imposed because no interest accrues on a zero balance. 

Most people probably won’t have a zero balance when you add the missing payment(s) back in, so you will have to go back and hand recalculate what you should have paid in interest per the instructions above. To help guide you on how to do this, here is an imaginary example:

Let’s pretend that the only money that my husband and I had paid in estimated taxes was the amount of money collected by my husband’s employers for wages: $30,905.

Our tax liability was $26,609

Plus FTB assessed us a penalty of $6,652.25

= Total Tax Liability: $33,261.25

Minus the payments collected by employer: -$30,905

= Total that would have been due to FTB = $2,356.25

Now let’s go back to section 1 to figure out how much we should have paid in interest in this imaginary scenario:

Line #1

FTB charged 3% interest. $2,356.25 x .03 = $70.6875 interest per year

There are 365 days per year. $70.6875  / 365 days = $0.1936 per day

I was charged this amount for 214 days. $0.1936 x 214 = $41.44 total interest due

Line #2

We were charged 4% interest. $2,356.25 x .04 = $94.25 interest per year

There are 365 days per year. $94.25 / 365 days = $0.2582 per day

We were charged this amount for 163 days. $0.2582 x 163 = $42.09

In this imaginary scenario, our total tax interest would have been:

Line 1: $41.44 + Line 2: $42.09 = $83.53 in total Interest.

Just crediting us the full amount of money that my husband’s employer collected made a huge difference in total interest. Now imagine if they had included in the other payments we’d made!