Fraudulent Statement By FTB Regarding Demand Penalties

So much stuff has come out recently in my court case. A longer post will come next month, but I wanted to share something that I know is a fraud that is systemically perpetuated by FTB. Below is a copy/paste of an exchange of information with FTB that I submitted as part of my court case (the full document is here). I hope other people currently facing bogus Demand Penalties can use it to help them in their own fight against FTB’s corruption. Here is the list of laws that are referenced below.

SPECIAL INTERROGATORY NO 6A: The attached page 9 is a page from FTB’s standard operations manuals entitled Demand Penalty. It states “a penalty will not be imposed if any of the following are met:… We do not assess the penalty when the return has a zero total tax liability.” Could you please clarify whether this means the penalty won’t be imposed if there was never any tax owed for the tax year or whether this means that the penalty won’t be imposed if there is no outstanding balance on that year’s tax liability.

FTB RESPONSE TO SPECIAL INTERROGATORY NO. 6A: Under Revenue and Taxation Code section 19133, a demand penalty is imposed if a taxpayer fails to timely respond to demand notices in the manner required. Demand penalties are imposed as required by law before consideration of any payments or credits. The demand penalty is computed at 25- percent of the total tax liability before any prepayments or credits are applied to reduce the tax liability. Thus, any payments and/or credits made by Plaintiff are irrelevant in the determination of the imposition of demand penalties under California law.

ARGUMENT FOR COMPLELLING RESPONSE TO SPECIAL INTERROGATORY 6A: FTB has misrepresented what the law says by making two deceptive statements and one false statement in the section above. In the first sentence, Mr. Swank omitted pertinent portions of Revenue and Tax Code 19133. In the second and third sentences, he conflated two separate issues as if they were one and the same. The fourth sentence is false, and only appears to be true as a result of the deceptive and misleading statements that preceded it.

As has already been established, the full wording of R&TC 19133 states that a Demand Penalty is imposed as per the guidelines set forth in R&TC 19087. R&TC 19087 states that a Notice of Proposed Assessment can only be issued if a taxpayer both files late and has not paid their tax liability in full. A Demand Penalty cannot be imposed on a taxpayer who does not meet the criteria to have a Notice of Proposed Assessment issued.

I believe that making it sound like a Demand Penalty is imposed solely if someone files late, but omitting all of the rest of the criteria necessary for the imposition of the Demand Penalty qualifies as lying by omission.

Furthermore, how the Demand Penalty is calculated has no correlation with the calculations used to determine whether or not a Notice of Proposed Assessment should be issued. Mr. Swank has made it sound like the calculations used for determining the amount of the Demand Penalty are the same calculations used to determine whether a person still has an outstanding total tax liability for a given year (for the NPA). These calculations are very different, and I believe that Mr. Swank conflating the two issues in such a deceptive and misleading manner also qualifies as a false statement.

Given the true facts detailed above, the last portion of the statement is completely false: “Thus, any payments and/or credits made by Plaintiff are irrelevant in the determination of the imposition of demand penalties.”

Since Mr. Swank’s job title is Program Specialist III, Filing Compliance Bureau, I believe it is part of Mr. Swanks’s job duties to understand FTB’s policies and Procedures in regards to how it is determined if a NPA should be issued, as well as how to calculate a Demand Penalty. Since there is no doubt that Mr. Swank knew that the statement was misleading, deceptive and false at the time that he made it, I believe that Mr. Swank has committed the federal crime of perjury.

The issue of perjury aside, my question was not addressed. I asked “(FTB guidelines state) ‘We do not assess the (Demand) penalty when the return has a zero total tax liability.’ Could you please clarify whether this means the penalty won’t be imposed if there was never any tax owed for the tax year or whether this means that the penalty won’t be imposed if there is no outstanding balance on that year’s tax liability.”

Instead of addressing my question, FTB changed the subject altogether to make it seem like FTB did nothing wrong. In Mr. Swank’s attempt to make it seem like FTB has done nothing wrong, Mr. Swank committed the federal crime of perjury.

As you know from the CA Supreme Court Accusation that I filed against FTB employee Eric Yadao, I believe that putting payments into suspense instead of immediately applying the money to the taxpayer’s account is the federal crime of embezzlement, and that charging late fees for “paying late” in violation of the guidelines of R&TC 19087 when the taxpayer actually paid by the prescribed due date is the federal crime of racketeering. I believe that the fact that Mr. Swank has not only evaded a simple question about FTB policy and procedure, but perjured himself in his evasion efforts, indicates that he is aware that FTB’s withholding practices are unlawful. I believe that Mr. Swank has committed another count of the federal crime of collusion to cover up his employer’s embezzlement and racketeering schemes.