The Office of Tax Appeals’ ruling in the Appeal of C. Mitchell, released February 3, involved many routine issues of missed deadlines for filing and paying income tax, but with an interesting twist: The taxpayer won the lottery, only to have some of the winnings intercepted by the FTB to pay his tax liability. The amount of the jackpot is not specified in the opinion, but the opinion indicates that the FTB seized $1,058.
The taxpayer raised several arguments to contest the FTB’s legal authority to collect payments from bank accounts or intercept lottery winnings, contending that the tax agency violated truth-in-lending laws and the Fourth Amendment to the U.S. Constitution.
The OTA ruled that it lacks jurisdiction over the constitutional claims and that its function in the appeals process is simply to determine whether tax liabilities and penalties were properly imposed.