The California Franchise Tax Board (FTB) administers and collects various California taxes, fulfilling at the state level a similar function to the Internal Revenue Service (IRS) at the federal level. In addition to processing tax returns, issuing tax refunds – and in some cases, conducting tax audits – the FTB also performs a function that may surprise some readers: under state law, the FTB is required to publish a public online list displaying select information about California’s “top 500 delinquent taxpayers,” including full names and amounts owed. The FTB is required to update this list, which is available on the FTB’s website, a minimum of twice per year. Not only is inclusion on the list a potential source of distress and embarrassment – it can also have serious professional consequences, like the suspension of various occupational licenses. To make matters still more difficult, even a driver’s license can be suspended. In this article, our FTB tax audit lawyers take a closer look at the Franchise Tax Board’s most recent list of tax debtors – and the California law behind this requirement.
Our IRS tax attorneys frequently discuss provisions of the Internal Revenue Code (IRC), such as federal laws prohibiting tax evasion (26 U.S. Code § 7201) and willful failure to file a return (26 U.S. Code § 7203). In this case, however, it is not federal but state law which governs delinquent taxpayer listings. The pertinent statute, contained within the California Revenue and Taxation Code, is Cal. Rev. & Tax Code § 19195 (public disclosure of tax delinquencies), which provides the following under Cal. Rev. & Tax Code § 19195(a):
“Notwithstanding any other provision of law… the Franchise Tax Board shall make available as a matter of public record at least twice each calendar year a list of the 500 largest tax delinquencies in excess of one hundred thousand dollars ($100,000)…”
Cal. Rev. & Tax Code § 19195(c) provides various details that must be featured on the list, which include, but are not limited to, the taxpayer’s name (Cal. Rev. & Tax Code § 19195(c)(1)), the outstanding amount (Cal. Rev. & Tax Code § 19195(c)(2)), and what type of tax is owed (Cal. Rev. & Tax Code § 19195(c)(4)).
Though the list is required by law, the FTB must follow certain procedures before naming to it individual taxpayers. Pursuant to Cal. Rev. & Tax Code § 19195(d), the FTB must supply the taxpayer with a written warning (“preliminary written notice”). This creates a 30-day window in which the taxpayer may pay off the debt or, as an alternative, “make arrangements with the Franchise Tax Board for payment of the amount due,” such as an FTB installment agreement. Note that the taxpayer must meet various requirements in order to qualify – including having filed all of his or her tax returns.
According to the FTB website, its list of delinquent personal income tax debts was most recently updated on October 30, 2018. (Note that lists of delinquent corporate income tax debts, which name business entities and various executive officers, are maintained separately by the FTB.)
Sorting by totals, the taxpayers with the greatest debt loads are Nancy L. and James P. Baldwin of Chula Vista, California, who owe nearly $272 million. The second-largest debt belongs to Eve Baldwin of Hillsboro, Oregon, who owes more than $102 million. At the opposite end of the spectrum, the smallest debt on the list, owed by Paul S. Mead of Sonoma, California, is slightly above $182,300.
While most of the taxpayers on the list have California addresses – Los Angeles, San Francisco, and San Jose are heavily represented – others are dispersed throughout the country in states like Florida, Georgia, Illinois, Maine, Tennessee, and beyond. Some of the addresses are even international, with entries for India, the United Arab Emirates, and the United Kingdom. These out-of-state and foreign entries should remind taxpayers that it is not necessarily where you reside, but rather, whether you earned California source income, that determines whether you must file California tax returns with the FTB.
To view the full FTB list of delinquent taxpayers, simply follow this link. You can sort the results alphabetically, geographically, by amounts owed, or using other criteria.
The bottom line for taxpayers? If you currently owe unpaid taxes, or you’re worried about taxes you might owe because you have unfiled personal income California tax returns, the time to speak with a California tax attorney about reentering compliance is now – before the problem grows any larger.
Unpaid taxes can burden you with tremendous expenses, especially since interest generally continues to accrue – in addition to any penalties that might also be assessed. If you are struggling to pay off existing tax debts, our California tax relief lawyers may be able to lighten your financial burden by helping you arrange a payment plan with the appropriate tax authority, such as the FTB or IRS, depending on the situation.
Don’t let your tax debt spiral out of control. Our experienced tax lien attorneys may be able to help you regain financial stability through strategies such as innocent spouse relief, offers in compromise (OIC), or in some cases involving older income tax liabilities, tax-motivated bankruptcy. Contact us online to discuss your tax debts confidentially in a reduced-rate consultation or call the Tax Law Office of David W. Klasing at (800) 681-1295 today.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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