Town Square

Setting a CA tax penalty precedent - help please!

Original post made by California Citizen, Another Palo Alto neighborhood, on Aug 16, 2007

I had an appeal before the State Board of Equalization, because my husband and I were assessed a very large demand penalty for filing late, even though we had overpaid our taxes on time, and tried requesting extensions throughout. (We have reasonable cause for late filing.)

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Posted by qq
a resident of Barron Park
on Aug 16, 2007 at 3:54 am

I suggest you contact Dewey, Cheatem & Howe.

Web Link

They advertise on Car Talk every Sunday.

Good Luck!


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Posted by Bebe
a resident of Midtown
on Aug 16, 2007 at 6:32 am

You seem to know the issues well, and obviously are engaged in the matter enough to spend a lot of time researching the matter.

If you can't fing a lawyer, why don't you do the work yourself. There's no bar to representing yourself in california, and if the facts of the matter are as you state them, you might find a sympathetic judge willing to listen to you.

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Posted by California Citizen
a resident of Another Palo Alto neighborhood
on Aug 16, 2007 at 9:17 am

I wish I could do it myself, unfortunately that's not in the cards. The clarity of the facts I think are why the tax clinic was willing to give it a go in the request for rehearing.

qq, do you know anyone at Dewey, Cheatem & Howe ;-) - put in a good word for me!

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Posted by Danny Kumano
a resident of another community
on Apr 17, 2008 at 10:55 am


Just wondering if you reach any resolution with this case. I have a similar situation with my client and am looking for a way to argue the "demand penalty" with the FTB. Please email me at to discuss. Thanks

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Posted by Tap
a resident of Menlo Park
on Dec 31, 2011 at 11:22 am

I plan on fighting my demand penalty. What was the outcome of your case?

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Posted by John
a resident of Midtown
on Dec 31, 2011 at 1:19 pm

These situations are inevitable examples of the tyranny of the income tax. Replace the income tax with a consumer tax, paid to the seller, at each purchase...a sales tax at point of sale. Then move on with you life, without any tax worries.

The income tax is an inverse trojan horse, where we allow it through our gates, with the knowledge that it will kill us, one by one, but we agree, because it promises a general welfare.

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Posted by KatieJ
a resident of another community
on Jan 5, 2012 at 1:37 pm

I've hunted for the original poster's case but can't identify it. The SBE publishes very few decisions nowadays, and although many unpublished decisions are available on RIA or CCH, and the SBE's hearing agendas for that time frame are available on its web site, I haven't been able to identify the poster's case. She argues that the SBE does have the power to decide constitutional issues because it is a "quasi-judicial" agency. The 2004 California Supreme Court case that she references, I believe, is Lockyer v. San Francisco, 33 Cal. 4th 1055; 95 P.3d 459; 17 Cal. Rptr. 3d 225, Aug. 12, 2004. That's the case in which the court held that Gavin Newsome did not have the authority to refuse to enforce the California Defense of Marriage Act (by directing the county clerk to issue marriage licenses to same-sex couples) because he determined that it violated the federal or California constitution. The decision notes that BEFORE the passage of Proposition 5 in June 1978, quasi-judicial state agencies such as the Public Utilities Commission could make such a determination, based on Southern Pacific Transportation v. Public Utilities Com. (1976) 18 Cal.3d 308, 134 Cal. Rptr. 189. Proposition 5, which added Article III, Sec. 3.5 to the state constitution, was placed on the ballot for the purpose of overturning Southern Pacific. Article III, Sec. 3.5 provides that NO state agency has the power to declare a statute unconstitutional. This is the provision the SBE cites to support its inability to decide constitutional issues, such as the poster's due process argument with respect to Sec. 19133.

So I think the poster misunderstood the court's observation in Lockyer, which is dictum in any case because the court also determined that the mayor was not a "state agency" that would have qualified under Southern Pacific even if it had still been in effect. The bottom line is that if the Sec. 19133 penalty is challenged on due process grounds, it will have to be in court. The only alternative would be to get it repealed through the legislature or an initiative petition.

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Posted by Another Victim of FTB
a resident of Stanford
on Jul 29, 2013 at 11:12 am

The Government and State of California imprisoned Al Capone, so that they can institute Franchise Tax Board instead.

In my view, FTB is the epitome of how Institutionalized Taxing Authorities can victimize taxpayers at will. I truly wish that hte state would go bankrupt and all FTB personnel are either fired, or lose their money sucking scam, and be forced to get real jobs instead of being such blood-sucking leaches that they are,... Amen!!!!

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Posted by alan
a resident of another community
on Jun 25, 2016 at 2:20 am

I just received a "deferral letter" that has given me a date of August 15, 2016 to file my 2014 CA taxes, or be assessed a "demand to file penalty." Yes I have been behind filing my taxes due to the complexity derived from the real estate crash etc. The IRS gave me a three year period to file so I did file 2012 taxes which was originally due April 2013. I filed by March 2016. I also recently filed 2013 taxes in June 2016. CA told me it will take four months to even process my returns. Ideally I would prefer to get 2012 and 2013 completed first in case I have amendments, before proceeding to 2014. It does sound like CA overstepped their authority penalizing tax payers a steep usurious fee when the taxpayer owed tax, but had overpaid or had credits that showed no additional tax was owed. Hence the State of California had free use of their money.

The irony of it all is, the IRS does not do anything for at least three years from the initial due date, and they don't have a "demand to file penalty", however to complete the CA return you have to attach a completed federal return! In other words, CA has required you to complete a Federal return less than three years from the due date, whereas the IRS had no such requirement. Seems the state overstepped their authority.

The old saying "you can't fight city hall" seems to apply here after reading prior posts. I've read so many articles that CA is one of the five worst states in the USA when it comes to taxing its citizens. Seems the most logical solution is to MOVE OUT, and to settle in a state that really accepts you, and treats you with respect. I would start with the states that have NO state tax, and go from there. Moving would be especially attractive to fixed income people or retirees. I am seriously considering this myself.

Not only is CA wrong for penalizing us citizens for taxes not owed after credits were applied, they threatened to put liens on my assets for not paying a tax they said I owed, based on critically missing information that they INTENTIONALLY omitted. For you stock traders out there, the state of CA will only look at stock proceeds to determine your income, and will omit the cost basis when determining your tax. In my case the state said I owed them $1.3 MILLION dollars in 2013. In reality my gross taxable income was about $30k resulting in a tax of under $1k after applying deductions. Beware! If you don't file timely with CA you are asking for trouble. I've learned my lesson. After I catch up I am hoping filing 2016 taxes in CA will be my last!