California Dispute? – Maybe a Settlement is in the Cards

So the California Revenooers have come after you and slapped you down with a proposed audit assessment.  What next?

Well, if you can’t convince the auditor of the error of his or her ways, you probably will want to appeal that person’s findings, and move up the ladder within the administrative confines of the Franchise Tax Board (FTB).  And you may even wish to detour over to the “Settlement Bureau,” hoping to find somebody there who’s willing to bargain with you, with the goal of just getting the darned argument resolved.

California’s Revenue and Taxation Code sections authorize the FTB to settle civil tax matters in dispute which are the subject of protests, appeals, or refund claims.  FTB’s Settlement Bureau is generally responsible for the negotiation of settlements of civil tax matters in dispute.

The purpose of the settlement program is to negotiate settlements of civil tax matters in dispute consistent with a reasonable evaluation of the costs and risks associated with the protest, appeal or refund claim of these matters.

Any taxpayer who wants to initiate settlement of a civil tax matter in dispute submits a written “good faith settlement offer” to get the ball rolling.  FTB procedures provide for a goal of resolving these settlement cases within nine months following the acceptance of the taxpayer’s request for settlement consideration.

Interesting stuff, this week, from the Obama bafflegab department, emanating from an Obama mouthpiece testifying before Congress on the “merits” (we use the term loosely) of the recently submitted “budget” (again – loose language).

Recall the inclusion within the “Obamacare” legislation of the so-called individual mandate penalties – payable by folks who choose not to purchase government health care coverage.  Would these exactions be “taxes” or wouldn’t they?

We hear that one of the underpinnings of the administration’s plea currently pending before the Supreme Court is that these items are, indeed, “taxes,” which is an argument designed to grease the skids toward convincing the Supremes of the constitutionality of the health care law, since imposition of “taxes” are within the purview of the government.

At the same time, however, Obama has recently been heard to bleat (repeatedly) that current fiscal policies call for no new taxes on the middle class.  So here comes White House Budget Director Jeff Zients, defending the Obama budget position, in this exchange with New Jersey Republican Scott Garrett who quizzed:

“So if I am part of a family that does not buy health insurance in violation

of the President’s health care program and I got to pay because of that, that is not

a tax increase–that is not a tax on me?”

Zeints:  “Well, this is—”

Garrett: “A moment ago you said there’s no tax increase.”

Zeints:  “There aren’t.”

Garrett:  “So that’s not a tax?”

Zeints:  “No.”

Garrett:  “That’s not a tax.  Okay.  I just want to be clear on that because that’s not

the argument the Administration is making before the Supreme Court.”

Whoops.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He can be reached at 831-7288, welcomes comments at jquinn@ashleyquinncpas.com, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.

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