I am currently trying to get the following legislative ideas on the table for the 2021 legislative session. I’m just beginning the journey down this road, so I will periodically post updates on my progress and all that I have learned. See the FAQ page for information on how the legislative cycle works in CA, what lobbyists do, and why legislators tend to champion legislative ideas that favor special interest groups with lots of money and influence.
- Create a law that mandates that all payments to Taxation Agencies must be applied timely, no exceptions.
Whenever a taxpayer derives taxable income from a source that does not pay income taxes on their behalf, the taxpayer has to send in estimated tax payments at the end of the quarter in which they were paid. If they don’t pay these estimated taxes, they get hit with hefty late fees, penalties and interest.
In the FTB’s unlawful policies to withhold estimated tax payments, the taxpayer sends in their estimated tax payments on time. The FTB accepts the money, but they do not apply the money to the taxpayer’s account; they hold it in suspense — meaning they put it in a general slush fund. They don’t take the money out of the general slush fund and apply it to the taxpayer’s account until the taxpayer files their tax return for that year. If a taxpayer files their return late, the FTB sends notices saying they have received no estimated tax payments; therefore, the taxpayer needs to send them $X (amount of taxes they believe are owed on this taxable money) + Demand Fees, penalties and interest for “not paying on time.”
While the overpayment of estimated taxes can be refunded once the return is filed, the Demand Fees cannot be. Demand Fees are only implemented when the FTB assess that someone has underpaid their tax liability for that year. So, had the estimated tax payment been applied timely, the Demand Notices would have never gone out and the Demand Fees would have never been applicable. This is a straight up racketeering scheme to assess bogus fees in order to generate extra income into the State’s coffers.
In my OTA appeal, the FTB never denied that these withholding practices are unlawful: Video and Written Transcript. Here is a 10 minute video of me making a speech to legislators in December 2018. Note that Susan Maples, the Taxpayer Advocate, does not deny the allegations of racketeering in her rebuttal to me.
Even though the withholding practices are blatantly illegal, the FTB refuses to stop them. The easy way to put an end to it is to pass a law mandating that all estimated tax payments have to be applied timely, period. No types of payments nor marital status nor anything else can be used to to avoid applying monies timely.
2. Fees may not be assessed when fee was imposed as a result of a Taxation Agency’s own breach of duty.
In addition to the withholding of estimated tax payments, the FTB also seems to have a problem with “misapplying” estimated tax payments. The net result of these “mistakes” is the same as above. The current tax year’s liability appears to be underfunded so a Demand Fee is implemented. The taxpayer is on the hook for the Demand Fee, even though the fee would not have been assessed had the FTB properly 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.
3. 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 an inherent conflict of interest.
In my case, I caught the FTB red-handed committing an assortment of unlawful practices (this speech above details some issues, my OTA case details some more, and there are even more that I have not mentioned in the speeches, including denial of due process, overcharging interest and inaccurate accounting ledgers). I brought all of these issues to the attention of Susan Maples, the FTB’s Taxpayer Advocate. She did not fulfill her job duty of protecting the Taxpayers; instead, she committed multiple federal felonies in trying to white-wash and cover up these crimes.
Ms. Maples’s employer is the FTB, and clearly, her loyalty is to her employer. “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. FTB’s mandate is to “protect the revenue,” so they are unwilling to do anything that reduces revenue. It is not fair to Ms. Maples to be in a position of divided loyalties.
This requires a change in legislature.In their formal written response to my speech, Ms. Maples stated that she would work with my legislators if they want to make this proposal.
The legislation should include the following structural changes:
A. Currently, each of the three taxation agencies has a Taxpayer Advocate who helps Taxpayers resolve issues at their respective agency. Instead of one Advocate per Agency, there should be four Advocates — one for each of the districts. The District Advocate would work 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. GovOps needs to be given some “teeth.” I have complained to GovOps many times about the FTB’s assorted 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 — not even stop illegal practices!
D. 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.
E. The Tax Appeals Assistance Program (TAAP) should still stay under The Advocates after they are moved GovOps. Currently, TAAP is being overseen by the very same Taxation Agencies that they are fighting against in court. These taxation agencies currently have the power to withhold access to free student attorneys, rendering it impossible for most Taxpayers to recover unfair fees (as most wouldn’t be able to afford a regular attorney and/or attorney costs are often more than the amount of money the Taxpayer is trying to recoup). TAAP also has the power to offer bad legal advice so that all of their clients lose their appeals.
In my case, the TAAP supervisor refused to allow me to address any of the FTB’s unlawful practices in my OTA appeal. He withdrew representation when I accused him of trying to protect his boss, Susan Maples, from the crimes she had committed in covering up the unlawful activity. I wound up doing my own legal work and completed the appeal on my own, but most people would be intimidated and just give up the appeal process if their legal representation was withdrawn.
4. Create a Civil Grand Jury System for State Level Agencies Californians need an independent investigative agency to report State Level Agency corruption to; currently, the only agency that deals with State Level corruption is the Auditor’s Office. The Auditor’s Office is under State Controller Betty Yee, so Betty Yee can shut down any investigation she doesn’t want to see happen.
This legislation is imperative for the well-being of our State; it seems like every month there is a major bust or crises at State Level Agencies that somehow never got investigated. Here are a few examples: 1. Oroville Dam cost taxpayers $1.1 BILLION, and it was caused by the maintenance money being embezzled. There were four whistleblowers; all were fired or harassed until they quit and no investigation of the allegations was done. 2. The BOE was so corrupt that they had to be mostly dismantled… again there were several whistleblowers over the years where the allegations weren’t investigated. It took federal involvement for the State to recognize the corruption and deal with it! 3. The UC money embezzlement scandal; and US President Napolitano admitted she interfered with the audit. 4. Serious problems with properly registering people to vote and counting the ballots. 5. The DMV scandal 6. The CA Bar Association Scandal. I could give another three dozen examples of State Level Corruption, but I hope that I have given enough examples to make my point.
5. Legislate that the Taxation Agencies must create an online database searchable by key word that lists all of the Agency’s policies and procedures.
In my OTA hearing (links to video and transcript above), I proved that the FTB continually gave me inaccurate and conflicting information about their withholding practices… including the FTB’s Disclosure Department denying the existence of ANY withholding practices in August 2019… yet here is the FTB’s official letter dated January 2019 where they detail two withholding practices.
I have asked the FTB’s Disclosure Department dozens of other questions that they refuse to answer, which is a violation of The Public Records Act (PRA) Government Code Sections 6250 et seq.
The reason why the FTB gets away with these blatant racketeering schemes is because they create tremendous confusion for taxpayers. The taxpayers get frustrated and give up… or they spend so much time going around in circles that the statute of limitations expires and nothing more can be done.
We can end these games by passing legislation requiring the FTB to create an online database searchable by key word that discloses all of the FTB’s official policies and practices. Then, people can search for themselves instead of relying on the FTB to disclose information. .
6. Revise Revenue and Tax Code 19133 To Be More Fair to Taxpayers
I have requested two major changes to the law: 1. Clarification of When a Penalty is NOT to be Imposed and 2. Provide Taxpayers the Opportunity to File a Dispute.
You can read my requests in their entirety here, you can read the highlights here.