(2009-2011) CALIFORNIA ASSESSES $34,000 TAX AND INTEREST BASED ON 2008 IRS AUDIT OF 2005 TAX RETURN, THEN REVERSES
In mid-2009 I received a notice from the California Franchise Tax Board that it was assessing me a tax of $27,277 plus interest of about $7,000. The State also withheld the $1,440 refund I was due for the 2008 tax year, which would have been credited. The Franchise Tax Board is the State’s taxing agent for personal and business income tax. This assessment was a result of the IRS’s reporting of its change to my 2005 return resulting from the 2008 audit. My CPA explained to the State about my pending IRS 2005 1040X refund claim that I filed April 14, 2009, which caused the State put a temporary hold on demanding the money. I received another billing in October 2009, at which time my CPA got the state to continue to hold off on its demand. In January 2010 the Franchise Tax Board sent me a notice that it had put a lien on my house. I contacted the State and again explained about the pending refund claim. The State representative replied that the lien on my house would remain until I either paid what they demanded or the IRS changed the audit conclusion. As I was confident that the IRS would reverse the tax conclusion and refund my money, I did not pay the tax I clearly felt I did not owe.
I heard nothing more from the Franchise Tax Board until Friday, October 22, 2010, at which time a representative came to my home unannounced. When I answered the door, the representative identified herself and demanded payment of the 2005 tax assessment. I told her about the IRS’s drawn out review of my 2005 refund claim, and that it had informed me on October 18 that it had reversed its disallowance of the deduction, and would be refunding me the tax it assessed me in 2008. This would also reverse the tax the State assessed me in 2009 based on the IRS’s notification. The representative then asked me if I had something in writing, to which I responded that the IRS told me it was mailing a confirming letter that I hadn’t received yet, but the case wouldn’t be finalized until the Revenue Agent who conducted the review returned from training on November 8. I offered to call the Agent’s manager who had written the confirming letter and let her talk to him, but she refused.
The representative continued to demand payment, which I continued to refuse. I explained further to her that the IRS’s original tax assessment appeared to be fraudulent based on collusion with GM, and that a Treasury Department investigation of the conspiracy was currently being conducted. Disregarding this information, she gave me a blank financial statement to fill out, and asked for three months bank statements, utility bills, etc. I continued to resist due to the fact that I did not owe the tax, but she continued with her demands. After further discussion that became contentious with her pushiness, she finally agreed to let me fax the information the following week.
After the representative finally left, I called the IRS Revenue Agent’s Manager and explained to him about the Franchise Tax Board representative’s visit, and asked him to fax me a copy of the letter confirming that the IRS had reversed its original disallowance decision. He did so, and I then faxed it to the Franchise Tax Board representative that same day.
On the following Monday, October 25, I called the Franchise Tax Board representative to confirm that she had received my fax of the IRS letter. She said she had, but said she still needed my financial statement and bank statements, etc. With her refusal to acknowledge anything I told her, as well as the IRS’s statement that I do not owe the tax, I asked her to call the IRS Manager to confirm. Again, she refused.
I called the IRS Manager again and asked him to call the Franchise Tax Board representative to confirm that I do not owe the State the money it is demanding. He then called the representative, explained the IRS’s reversal of the tax assessment, and then called me to confirm that he had done so. I then called the State representative, and left a message. After not hearing back, I left additional messages the next day and the following day. She finally returned my call on October 29 and said that she is putting the case on hold pending receiving the final documents from the IRS, and that I do not need to sent the financial information to her. After I received the closing information from the IRS in November, I faxed it to the State representative.
On January 28, 2011, the Franchise Tax Board sent me another notice of the tax they had assessed. The balance had now grown to $36,415, including additional interest and a new $230 collection fee. After I received my IRS refund checks, I contacted the Franchise Tax Board representative to again tell her that the IRS had reversed the tax assessment and refunded my money. She said that the State hadn’t been notified, and for me to send a copy of the documentation I had from the IRS, which I subsequently did. I asked her what happened to what I had faxed her last November, to which she repled that she threw it away because she couldn’t read it. I asked about the lien on my house, to which she replied that it will remain until the State is satisfied with IRS documentation. Apparently now satisfied that the IRS reversed its 2008 tax assessment, on May 27, 2011, the State paid me the $1,440 (plus interest) refund it had withheld for nearly two years.
As the California tax assessment was a result of the 2008 IRS tax assessment, my time spent, aggravation endured, and credit rating negatively affected by the unjustified tax lien, appear to be yet another adverse result of the alleged GM/IRS conspired actions in prior years.
