On this blog we often report about individuals who were caught avoiding paying their taxes and punished. Sometimes, however, the Internal Revenue Service (IRS) and the Franchise Tax Board (FTB) get it completely wrong. For instance, recently a Nevada-resident woman, age 65, received notices from the Franchise Tax Board stating that she had not paid her California taxes, and that she now owed them the tax, plus penalties, plus interest since 2003. Because the woman had not lived or worked in California, she thought the letter she received was a scam and ignored it. Not too long after that, the State of California emptied her bank account.
Steve, the founding partner of Moskowitz LLP, after reviewing the above scenario said that,
In over 30 years of practice as a tax attorney, so often, this is when clients come to see me – after the taxing authorities, in this case the FTB, take aggressive action. My advice is do not ignore the letters you receive; call me as soon as you receive them. The more of a head start a defense attorney can get, the better. Here you might think that you do not need a tax attorney because you do not think you have done anything wrong. Remember, the IRS (or in this case, the FTB) thinks that you have, and you need to prove your innocence. (Not the other way around).
In this woman’s case, it turned out that the State of California’s Franchise Tax Board was indeed incorrect, and eventually returned the money that they levied but only after it was proven that she was not in the State and was not required, otherwise, to file a State of California tax return or pay California State income tax.
The take home here is: if you receive a tax notice from the Internal Revenue Service or the Franchise Tax Board you need to contact an experienced tax attorney, such as the attorneys in our tax law firm, who are assisted by our CAs, immediately.