Tuesday, July 6, 2010
On 19 June 2010 I got the California State Board of Accountancy's Spring 2010 Update. From page 18, "Do you presently live and work out of state, but continue to maintain an active California CPA license? The CBA has some important tax-related information for you. Required by law, the CBA must provide the FTB, upon request, specific information including your name, address, social security number, and license status. The FTB may then use its authority under the Revenue and Taxation Code to generate a request for tax return information from any California-licensed CPA who does not file a California tax return, regardless of his/her state of residence, and require you to provide proof that you did not earn income in California. Failure to respond to the FTB request for tax return information for any reason, including non-receipt of the request, can result in the FTB filing a lien against you. The CBA does not receive any notification when such a demand letter is generated by the FTB and the CBA does not have access to any information in this regard. if you have any questions, regarding this process or want information, please contact the FTB at (916) 845-7057", my emphasis.
The FTB is desperate. Imagine, shifting the burden of production to an out-of-state resident. Is the FTB kidding? The FTB may wind up in federal court over this. Would the FTB knowingly and wilfully mail "requests" for "tax return information" to wrong addresses then file liens? Will the DOJ then pursue the FTB for mail fraud, 18 USC 1341? Don't hold your breath. What would the FTB accept as proof? An affidavit from a Texas Ranger that I did not set foot in California during 2009? Should each California CPA who lives out-of-state CPA have a "cop" follow him around all year to provide the affidavit? This is another FTB abuse. If you are financially solvent and can leave California, do. Why doesn't the CBA get notification? The CBA claims among other things to protect the interests of CPAs. Good luck.
One of my tax clients is in a dispute with Massachusetts about interstate tax allocation. Taxachusetts wants to tax his earnings in New Hampshire and Texas. He may wind up in court over this.