We represent clients from all U.S. and International locations regarding Federal Tax and California Issues.
Many states take an aggressive approach to tax enforcement. California and its myriad of tax agencies including the Franchise Tax Board and Board of Equalization take a highly aggressive approach even among states known for their enforcement rigor. In California, the failure to pay or otherwise satisfy your tax obligation can be punished by an array of penalties. One of the most disruptive and life altering penalties is license suspensions authorized by state law. License suspensions can apply not only to the ability to drive a car but also to professional licenses held by doctors, lawyers, and other professionals. Furthermore, for sellers of alcohol, tobacco, and other goods unpaid taxes can lead to the suspension of one’s ability to sell the same.
California Assembly Bill 1424 (AB1424) sets forth the rules regarding California’s list of the top 500 tax-delinquent individuals. AB 1424 was most recently amended in 2011 when the list of delinquent taxpayers was expanded from 250 individuals to 500 individuals.
Under the provisions of the law, the Franchise Tax Board and Board of Equalization are required to publish a list of the 500 individuals having the greatest tax debts over $100,000. Aggregation of tax debts includes all types of tax debts including income tax, sales tax, and employment taxes. The law also requires every state board plus the Department of Insurance to provide state tax agencies with relevant information about license holders.
Professional licensing boards, such as the Medical Board of California, are obligated to deny an application submitted by an individual on the list. Furthermore, currently licensed physicians and medical professionals who appear on the list are required to be suspended. Generally, upon notification by the medical or other licensing board of a tax delinquency, the taxpayer has 90 days to satisfy the debt. If the debt is satisfied, the person will receive a release from the FTB or BOE. If the debt is not satisfied, the individual’s license will be suspended. If a license is suspended, California law prohibits the refund of fees for license issuance or renewal.
Agencies that can revoke or suspend a license include:
There are numerous other provisions that set forth license suspension and denial procedures for individuals who appear on the list of the top 500 tax-delinquent individuals. For instance, Rule number 1489.1. Suspension of License Due to Delinquent Tax Debt sets forth license suspension and denial provisions applicable to licensees under the California Horse Racing Board. Furthermore, California Business and Professions Code Sections 24200-24211 set forth the rules regarding the suspension and revocation of liquor licenses. Similar provisions exist for licenses to sell cigarettes and other tobacco products. For bars and stores that derive income from liquor sales or other goods requiring a license to sell, loss of this income can spell the end of the business.
Generally, once a license is issued in California, the holder of the license is generally entitled to due process before the license can be legally revoked. California courts have broadly recognized this right. In Enna Berjikian et al v. Franchise Tax Board et al., the judge cited U.S. Supreme Court precedent holding that, “Once driver’s licenses are issued, they may become essential in the pursuit of a livelihood” and cannot be taken away without due process. Thus, an opportunity to appeal a license suspension is often available. Appeal opens the possibility that your suspension will be set aside and can also provide for additional time to satisfy the tax debt.
California and its tax agencies take a remarkably aggressive approach to collecting unsatisfied tax debts and obligations. If you are accused of being one of the top 500 tax delinquents in the state, you are likely to face difficulties brought on by a license suspension and may come to face an experienced and strategic prosecutor. The tax attorneys and tax professionals of The Tax Law Offices of David W. Klasing can level the playing field and protect your livelihood and have successfully represented several California top 500 tax debtors in the past. To schedule a confidential, reduced rate initial consultation, call 800-681-1295 today. We have tax law offices conveniently located in Los Angeles Country, Westwood and Orange County, Irvine.