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Comparison of California Taxpayers' Bill of Rights to the Federal Law

California – Franchise Tax Board
Federal – Internal Revenue Service
Provides exception to 2.5 percent early withdrawal penalty from retirement plans for amounts subject to levy by FTB. Applies only if plan is levied.
Exception to 10 percent early withdrawal penalty for amounts withdrawn from an employer-sponsored retirement plan or an IRA.
Allows taxpayers to file a joint return even though previous, separate liabilities of either taxpayer have not been paid.
Joint returns may be filed after separate returns without full payment of tax.
Provides relief for innocent spouse treatment when specific conditions have been met.
Similar to California. Except for 19006 – no comparable federal provision.
Requires tax preparers to put an identifying number on all tax returns they prepare.
Alternatives to Social Security numbers to identify tax return preparers.
Requires third parties to include their name, address, and telephone number on information returns.
Phone number of person providing payee statements required to be shown on such statement.
If FTB determines that an employer failed to remit withheld earnings for an employee, the employer shall become liable for funds not remitted.
No comparable federal provision.
Allows taxpayers to request the reason their request for installment payments was denied. It also requires FTB to notify taxpayers when terminating agreements without taxpayers consent.
Prohibits IRS from levying (1) during any period that an offer of installment agreement (OIA) is pending (2) during 30 days after rejection of an OIA (3) during appeal of rejection of the OIA (4) during the period an installment agreement is in effect or 30 days after termination of OIA.

Requires IRS to implement procedures to review all rejections of OIAs prior to notifying taxpayer of rejection and provides for taxpayers to appeal rejections upon request.

Requires FTB to send a notice to taxpayers when terminating an installment payment agreement telling them why the agreement is terminated.
Notification of reasons for termination of installment agreements.
Requires the advocate to establish procedures for a review of terminated installment agreements.
Secretary of the Treasury is required to establish procedures for an independent departmental review of terminated agreements.
Requires FTB to provide last date taxpayer may protest or file an appeal on notices. Protests or appeals filed by that date are timely.
Similar to California.
Allows taxpayers fifteen additional calendar days to pay an amount due without accruing additional interest.
Extension of interest-free period for payment of tax after notice and demand.
Suspends Statute of Limitations (SOL) in absence of resolution when subpoenas are issued to any person.
Similar to California.
Requires FTB to notify the taxpayer of the right to refuse to extend the expiration of the SOL or limit the extension to a particular period of time.
Similar to California.
Requires chief counsel review to approve jeopardy assessment or termination assessment/levy.
Approval by the Secretary of the Treasury needed to make jeopardy assessments or termination assessments and immediate levy.
Allows FTB to abate interest due to unreasonable errors or delays
and provides for review process for failure to abate interest.
6404(e, h)
Allows IRS to abate interest due to unreasonable errors or delays, and provides for review process for failure to abate interest.
Allows FTB to abate interest on an individual’s late filed return due to a disaster loss.
Taxpayers located in a Presidentially declared disaster area do not have to pay interest on taxes due for the length of any extension for filing their tax returns granted by the Secretary of the Treasury.
Suspends accrual of interest and penalties unless FTB sends the taxpayer a notice stating the taxpayer’s liability within 18 months following the later of the (1) original due date of the return; or (2) the date on which a timely return is filed. Where the taxpayers are required to report a federal adjustment, there is a longer notification period.

Interest and penalties resume 15 days after FTB sends notice.

If the Secretary of Treasury does not send a notice to the taxpayer within 1 year (18 months in the case of taxable years beginning before January 1, 2004), stating the liability, IRS suspends accrual of interest and penalties.

Interest and penalties resume 21 days after notice is sent.

Requires FTB to provide a description of the interest computation and the code section imposing the interest. A detailed computation of interest will be provided at the taxpayer’s request.
Notices include a detailed computation of the interest charged.
Requires FTB to include name of the penalty, code section and description of penalty on all notices. Requires the computation of the penalty only at the request of the taxpayer. Requires supervisory approval of all non-computer-generated penalties except failure to file, failure to pay, or failure to pay estimated tax penalties or penalties related to a Revenue Agent's Report.
Notices include a computation of the penalty.
Allows a third party to post cash deposit or bond and obtain release of a lien. The advocate establishes a procedure for departmental administrative review as to the property value upon request of the owner.
Similar to California.
Requires FTB to investigate status of property prior to levy.
Similar to California.
Prohibits seizing and selling principal residences for liabilities of $5,000 or less. Requires levies on taxpayer’s business, personal or nonrental property used in trade or business to be approved by the assistant executive officer for collections.
Similar to California.
Requires FTB to provide the reasons for disallowing a claim for refund.
Similar to California.
Allows FTB’s executive officer or chief counsel to compromise any final tax liability of $7,500 or less and with delegation from the Board, more than $7,500 but less than $10,000.
No comparable federal provision.
Allows FTB 24 months after the enactment of a law to issue a regulation that would be retroactive.
Relief from retroactive application of Treasury Department regulations.
Prohibits FTB from using financial status or economic reality examination techniques unless there is a reasonable indication of unreported income.
Similar to California.

Prohibits FTB from filing a subpoena in a civil action for any portion of computer source code unless certain requirements are satisfied.

Makes it a misdemeanor or felony to willfully divulge or make known software obtained by subpoena to any person.

IRS issues a summons instead of subpoenas and makes it a felony to divulge or make known software obtained.
Requires FTB to notify taxpayers before contacting third parties with respect to determinations or collection of tax liability. Record of contacts would be provided only upon taxpayer request made within 60 days following the 12-month period.
IRS must give reasonable notice to taxpayer before contacting third parties and periodically provide taxpayers a record of persons contacted.
Allows employees or former employees to disclose information to appropriate Legislative committees if they believe the information relates to evidence of possible misconduct or taxpayer abuse.
Similar to California.
Allows reimbursement of fees and costs to the taxpayer for reasonable litigation costs and fees/expenses of an appeal hearing or litigation.
Allows litigation costs to the taxpayer in administrative or judicial proceedings. U.S. must establish that its position in a proceeding was substantially justified to defend against the claim for such costs. Allows for an increase limit on attorney fees.
Establishes taxpayer advocate and allows the advocate to stop collection actions under certain circumstances. Advocate (California) actions can be modified or rescinded only by FTB’s executive officer.
Allows the ombudsman or designee (problem resolution officer) to stop collection actions under certain circumstances. Ombudsman (federal) issues taxpayer assistance orders, which can be modified or rescinded by specified IRS directors.
Requires FTB to develop and implement public education program explaining how to avoid the most common taxpayer errors.
Establishes an Oversight Board to oversee the administration, management, conduct, direction, and supervision of the execution and application of the internal revenue laws or related statutes including plans for training and education.
Requires FTB to prepare annual report to the legislature by 10/1 identifying areas of recurrent taxpayer noncompliance.
Requires IRS Advocate to report on areas of tax law that impose significant compliance burdens on taxpayers or the IRS.
Requires FTB to conduct annual hearing where the public can present proposals on law changes.
The Office of the Taxpayer Advocate identifies areas in which taxpayers have problems in dealings with the IRS and identifies potential legislative changes, which may be appropriate.
FTB must disclose to taxpayers procedures, remedies, and rights during audit, appeal, and collection proceedings. FTB must also disclose taxpayers’ rights with most notices and in tax booklets.
Similar to California. (Section 6227 of the Omnibus Taxpayer Bill of Rights)
Prohibits FTB from evaluating employees on the revenue they generate through additional tax assessed or taxes collected.
Federal provisions apply only to collection activities.
FTB must evaluate employees’ performance with respect to contact with taxpayers.
No comparable federal provision.
FTB is required to develop a plan by 7/1/89 to reduce the time required to resolve protests and appeals.
No comparable federal provision.
FTB may record protest hearings. Taxpayers must be notified in advance and they are entitled to receive a copy of the recording. California provision only provides for state to make recording.
Federal provision allows either side to make recording.
Taxpayers’ reliance on erroneous FTB written advice may result in abatement of penalties and interest. Tax may be waived in the event of an erroneous Chief Counsel ruling.
Taxpayers’ reliance on IRS erroneous written advice may result in abatement of penalties or additions to tax.
Prohibits FTB from conducting investigations for non-tax purposes except when authorized to do so.
No comparable federal provision.
Effective 1/1/96 this section provides FTB with discretionary authority to waive penalties authorized under section 19011 EFT penalty and section 19141.5 Form 5472 Record Maintenance penalty. This section formerly allowed FTB to settle tax disputes under $5,000 and was repealed by Ch. 44, laws 1992.
No comparable federal provision.
Requires FTB to notify taxpayers in writing 30 days before first levy is made on taxpayers’ property or property rights.

Taxpayers can contact the taxpayer advocate to request an independent departmental administrative review during the 30 day period before the first levy.

Taxpayers can raise any relevant issue relating to the unpaid tax or the lien.

Similar to California.
Requires FTB to release any levy issued on property if the levy was not issued in accordance with administrative procedures.

Requires FTB to immediately release a wage levy upon agreement with the taxpayer that the tax is not collectible. Would not apply where FTB has discharged the account from collection.

Similar to California.
Requires FTB to adjust all exemptions from levy to reflect changes in the California Consumer Price Index whenever the change is more than 5 percent higher than any previous adjustment.
Federal provision increased the exemptions from levy for certain types of property and income.

Authorizes FTB to reimburse charges paid by the taxpayer, which were imposed by unrelated third-party businesses because of FTB’s erroneous levy, erroneous processing action, or erroneous collection action.

The taxpayer must meet the following criteria for reimbursement:

  • The erroneous levy, erroneous processing action, or erroneous collection action was caused by FTB error.
  • The taxpayer responded to all of FTB’s contacts before the erroneous levy, erroneous processing action, or erroneous collection action.
  • The unrelated third-party has not waived or reimbursed the charge.

Reimbursed charges and fees are limited to the usual and customary charges and fees imposed by the third-party in the ordinary course of business. Claims for reimbursement of these third-party fees must be made within 90 days from the date of the erroneous levy, erroneous processing action, or erroneous collection action.

Generally requires FTB to notify taxpayers 30 days prior to filing a lien. FTB is required, upon taxpayer’s request, to notify major credit reporting companies of erroneous lien.
Federal provision allows taxpayers to appeal the lien after the lien has been filed.
Requires FTB to notify corporations 60 days prior to suspending rights, powers and privileges.
No comparable federal provision.
Allows taxpayers to sue FTB for reckless disregard of published procedures.
Only applies to collection related activity.
Allows taxpayer to bring suit against FTB for enticing taxpayer’s representatives to give FTB taxpayer information in exchange for settling or compromising the representative’s tax.
Allows civil damages for unauthorized enticement of information disclosure.
Requires FTB to provide certain collection information to taxpayers that file a joint return but are no longer married or living together.
Disclosure of collection activities with respect to joint returns.
Shifts the burden to FTB for proving that items of income reported by third parties on information returns are correct.
Requirement to conduct reasonable investigations of information returns.
Requires FTB to notify the taxpayer if FTB is unable to locate that taxpayer’s account within 60 days of receipt of the payment.
Requires notice to taxpayers of certain payments.
Requires FTB to annually send a notice to taxpayers with delinquent liabilities.
Annual reminders to taxpayers with outstanding delinquent accounts.
Allows FTB to process mail received from IRS-designated private delivery services as though it were mailed with the postal service.
Use of private delivery services for timely-mailing-as-timely-filing rule.
Allows taxpayers the same protections of confidentiality for communications regarding tax advice they receive by any federally authorized tax practitioner that applies to privileged communications between clients and their attorneys.

This privilege applies in any noncriminal tax matter before us and does not apply to written communications related to tax shelters.

Similar to California.

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