Discussion:CA Personal Income Tax Return due to nexus
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Discussion Forum Index --> Tax Questions --> CA Personal Income Tax Return due to nexus
| 1 May 2008 | |
| My client operates a successful financial services company in WA. He does NOT have any assets, or employees in CA. He received a 1099-MISC from another financial services company located in CA for services provided in 2006 by my client from WA.
I was just informed by my client that he has received a notice from the CA Franchise Tax Board stating the following: "We received information that you received taxable income during 2006 reported to IRS on IRS Form 1099-MISC. We received information from state or local government agencies that you held an active professional or business license or sales permit, or that you had employees working for you." My client has never set foot in CA, and he does not have any employees in CA. He does not have any license or permits in CA. I don't believe there is nexus. Am I missing something here? Is there anyone out there who received similar notices from the CA Franchise Tax Board? Please post your experience, and how you handled it. As always, thanks for your assistance. | |
| 1 May 2008 | |
| Chill, Sungod! It's not as bad as you think <G>.
What your client received is just an automated inquiry resulting from a computer run matching 1099s from California companies against California income tax returns filed. No match, so the automated notice goes out. All you need to do is respond to the notice explaining the facts. Based on the facts you state, your client has no nexus with California and no California source income. If you explain that, the issue will go away. Failure to respond to such a notice can result in the issuance of a Notice of Proposed Assessment based on the information available to the FTB. Your client could still get off the hook, but it's a lot easier the earlier you deal with it. | |
Michaelstar (talk|edits) said: | 2 May 2008 |
| As KatieJ states - reply to this notice - in a timely manner. Note that the notice gives you most likely 60 days to respond - do not be late and send in your response either certified mail / return receipt or fax it to the number provided in the notice. Remember - do not miss the deadline provided in the notice. | |
| 2 May 2008 | |
| Thanks Katie and Michael. My client was sitting on the notice until today, and the 60-day notice expired yesterday. I'll respond to the notice ASAP. | |
Michaelstar (talk|edits) said: | 2 May 2008 |
| SunGod - then call the FTB at the contact number on the notice in the morning and inform them you are faxing in your reply either later in the day or by Monday. | |
| 2 May 2008 | |
| Sungod, did this notice have numbers on it and a heading, "Notice of Proposed Assessment"? If not, it's just an inquiry, and the 60 days has no legal consequence. You can just call the phone number on the letter and arrange an extension of time to respond.
If it has numbers on it, it required a protest within 60 days. Look at the bottom of the notice: is there a form number with an "FE" there? As Michael suggests, you may be able to get the FTB to back off, but they may not be able to do that. Another way to dispose of the matter is to file a return showing zero tax liability. When the return is processed it will reverse the filing enforcement (FE) NPA. | |
| 2 May 2008 | |
| Katie - the notice says "Notice of Proposed Assessment". As Michael suggested, I called the FTB and got an extension until June 20, 2008. Thanks for your help!! | |
| 2 May 2008 | |
| P.S. Make sure you have a Power of Attorney you can fax to the FTB when you call them, so they will talk to you. You can use the IRS form or FTB Form 3520. You do not need to have a CAF number, although there is a place to enter it on the FTB form. | |
| 2 May 2008 | |
| Thanks Katie. I already faxed them a Form 3520 signed by my client. | |
| 2 May 2008 | |
| We crossed in the ether <G>. By the time I posted that, you had already talked to the FTB. | |
