Andy’s Newspaper column archive
Cooking the books ©
Are you one of those who deal with issues quietly. One of those, who through fear, blind obedience, or lack of knowledge never challenges anything? Or maybe you just don't give a damn.
The truth in this instance is ugly and you can hide from it all you want, but it's like when you were little and your folks put you to bed. They turned out the light, closed the bedroom door and left you all alone in the dark. That's when the 500 pound gorilla that you knew for sure was hiding under the bed, or in the closet, brought fear to your little heart.
Did you slide under the covers, press your back in to the mattress and lay as flat as you could so the gorilla or bogey man wouldn't see you? Then did you lay quiet as a mouse until sleep came?
Today and for many years prior to now, there are those among us, who for their own reasons, have ignored a bogeyman in their bedroom. The one who brings fear and intimidation for real.
With this we now go to California. Not for any special reason other than that it is a semi-perfect example of the real bogeyman in your bedroom.
California has a state board of equalization and a franchise tax board. One of them, The Franchise Tax Board, administers the California income tax program. As I see it, the California legislators have been cooking the books and no one is saying anything about it.
I have had personal conversations with a number of people who have received communication from the California Franchise tax board demanding they file California income tax returns. The surprising thing is that these people are citizens of the great state of Nevada. They may have lived in California at one time, but that was long ago. So why, you may ask, are they receiving requests for income tax returns in California.
Here's a fairly accurate example. You have a license in California to perform a certain service, real estate agent, contractor, doctor etc. You have moved to another state and no longer make income from California but you have maintained your license.
This could be for many reasons such as the possibility that in the you might return to the California Republic, there my be information you receive which is not retrievable any other way other than to have your license active, or you just have pride that you made the grade.
Historically there is this thing called imputed interest, or income, which means you didn't really get it but you could have. Now what California apparently does is to scour their records to see if you have one of these licenses and they match it up with tax returns, filed or not filed. If you have not filed a California return and have no need to file, they take the initiative and file one for you. Their assumption, which you will read when they send you your notice of tax due, is that their statistics show that people in your field earn on average, lets say, $53,000 per year in income. You have not filed a return and since you have a license, they assume you earn that amount in California. They request that you either file a return or the state will file one on your behalf showing an income of $53,000 and calculate the taxes due.
Later you will receive a notice of taxes due. They will attempt to file liens in California and report to the credit bureaus that you have unpaid taxes, interest and penalties due.
OK! So you say why not just give them a return. Well on principle they are not entitled to one and realistically if you do decide to send one, you have opened the door to entanglements with them which can be debilitating.
Here comes the other part. Now you contact them to tell them you have no California income. Their response, and this has actually happened, ...”prove it or pay the tax.”
Oh, this isn't the only scenario. In 1982 a friend had another experience when he went to a convention in New Orleans. He had a booth at the convention to promote a client database program. He filled out the New Orleans seller forms and obtained a sellers permit. He did not sell anything at the show and submitted a zero sales return. He never returned to New Orleans and the form showed he was based in California. It was ten years before they finally stopped sending him an annual request for returns.
Now Nevada University Chancellor, Jim Rogers, is advocating an income tax for Nevada. I can't wait.
Andrew Alberti Jr