ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – U.S. SUPREME COURT ALLOWS FTB TO SUSPEND YOUR DRIVER’S LICENSE
By Robert S. Schriebman
Twice each year the FTB publishes a list of 500 of the largest tax debtors. Let’s call them the “Unfortunate 500.” If you are on this list, the FTB has the power to contact the Dept. of Motor Vehicles (DMV) and have your driver’s license suspended. The FTB can also put in jeopardy business licenses such as a contractor’s license by notifying the CSLB. This suspension is done rather summarily. The tax debtor is not afforded any type of due process such as notification and a right to challenge the revocation. If you want your license restored, you will have to pay the FTB what they say you owe and jump through other hoops. The power to suspend your driver’s license also allows the power to suspend an occupational or professional business license.
If you disagree with the FTB, and you and you want to challenge the bill, you will have to go through a complex and time-consuming administrative refund procedure that may end up being litigated in the Superior Court.
I recently I had a client in this situation. His driver’s license was suspended because his name was on the Unfortunate 500 list. The matter was assigned to a very pleasant lady, FTB collector, who was very patient in allowing my client to pay off the FTB, and the license was restored, shortly thereafter. Not everybody is fortunate enough to have a pleasant collector at the other end of the line.
The U.S. Supreme Court Upholds the FTB
On December 10, 2018 the U.S. Supreme Court refused to hear an appeal from a 9th Circuit decision, holding that a taxpayer is not deprived of due process when the FTB had the DMV notify the taxpayer that his license was suspended due to the non- payment of personal income taxes. The Supreme Court ruled that the procedures in place within the FTB to challenge a tax assessment, were sufficient due process in and of itself. The Court further held that the FTB had a reasonable basis for taking such action against a delinquent taxpayer.
The EDD Uses the Same Pressure Tactics
If you owe the EDD, and you have a state business license, the EDD will use the same pressure to get you to pay your taxes. This is true even though the taxpayer has discovered that due process rights were violated by the EDD. This is especially true if you happen to be a licensed contractor. If you do not pay the EDD, you may receive notification from the State Contractors’ License Board (CSLB) that your license will be suspended on a specific date unless they receive word that the deficiency has been satisfied.
Suppose you can show that the EDD never sent a Notice of Assessment (NA) or sent the NA to an improper address. It is usually the EDD collector who notifies the CSLB and requests a license suspension. If you try to argue with that collector, he/she will refer you to upper management. Most likely management will refuse to stop the suspension process even though you can show good cause. You will then have to involve the Taxpayer Advocate, but the Advocate’s hands may be tied because the final decision rests with a member of the EDD’s legal staff who most likely will just sit on your appeal and allow the suspension to take place. The EDD wants their money, whether it is fair or not.
In Franceshi v. Yee, U.S. Supreme Court, Dkt. No. 18-585 (December 10, 2018), the Court refused to get involved with the FTB;’s action allowing your driver’s license to be suspended. I am willing to bet that an EDD matter, involving the suspension of a business license, would be met with the same result.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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