The Office of Tax Appeals held just one tax appeal hearing this month, a November 27 hearing in Sacramento on a dispute over personal income taxes for tax years that occurred more than 25 years ago.
In the Appeal of Harry Taub, the taxpayer argued that the 20-year statute of limitations on the Franchise Tax Board’s collection authority for the 1992 and 1993 tax years expired years ago.
The FTB testified that the statute remains open for one of the years because it has been suspended several times, including when Taub went through bankruptcy, and again after he filed a request for “innocent spouse” relief in October 2014. The FTB testified that there are approximately 16 months left before the statute of limitations expires.
Taub, who represented himself, argued that his case is “a classic case of why statutes of limitations are important.” He said he is unable to obtain copies of the tax returns he and his then-wife filed in 1992 and 1993, because she has ignored all requests for the information, and the FTB destroyed the returns during one of its periodic purges of old documents. His bank also destroyed records for the years in question, Taub said, leaving him with no documentation to refresh his memory of what happened, or to rebut the FTB’s claims.
“Documents to this matter are non-existent,” Taub said. “I don’t know what the income was on the tax returns, or who signed what and when.”
Taub added that witnesses who could have testified two decades ago no longer remember details.
Another issue in the appeal was whether Taub qualifies for innocent spouse relief. He alleged that the taxes sought by the FTB are owed by one of his ex-wives, in relation to income from a business she operated without his input. He said he doesn’t recall receiving notices from the FTB, and knows for sure he didn’t receive any during a three-year period when, after being disbarred, he was imprisoned for grand theft from clients. He said it is possible his ex-wife received the notices, but since there were no addresses provided in the FTB’s exhibits, he has no way of knowing where they were sent.
The FTB responded that Taub hasn’t provided documents showing that his ex-wife owned a business or that the tax liability is attributable to that business. Taub said a divorce court recognized that he never had dominion and control over any of the assets that his ex-wife could have used to pay the FTB, but the records from that proceeding no longer exist.
An additional issue – raised not by either party to the appeal, but by the OTA itself during a pre-hearing conference – was whether the OTA has jurisdiction to consider the statute of limitations issue. Taub said the OTA raised the jurisdiction issue “at the eleventh hour,” and argued that the OTA has authority to find in his favor. The FTB argued that the OTA lacks jurisdiction.
The 70-minute hearing was led by OTA Administrative Law Judge Jeff Angeja, with ALJs Linda Cheng and Michael Geary filling out the three-member OTA panel.
Taub called himself as a witness, and the FTB did not call any witnesses. Angeja said the panel would swear in Taub because he is a witness, but would not swear in the FTB’s attorneys because they were there to present arguments, not to serve as witnesses.
The hearing was broadcast online, but with technical difficulties. A camera focused on the OTA panel worked well, but a second camera apparently focused on the taxpayer and FTB lawyers did not work at all, so a blank screen was shown during much of the hearing, leaving viewers to rely solely on the audio feed.
Another November hearing had been scheduled in Fresno, but was canceled when the taxpayer prevailed prior to the hearing. The agenda for the meeting indicates the case involved the taxpayer’s head-of-household filing status for the 2013 tax year, and states: “During OTA review the FTB conceded the entire amount at issue.” No details were provided to describe what facts came to light during the OTA review, or why they were not discovered by the FTB earlier in the process.
The agenda for a December 12 OTA hearing also includes a note about a hearing that was canceled after the California Department of Tax and Fee Administration conceded all issues during a pre-hearing review.
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