This will be a verbatim transcription of a third letter from the California FRANCHISE TAX BOARD:


STATE OF CALIFORNIA [tabbed right]{seal}



FRANCHISE TAX BOARD
P.O. Box 1468
Sacramento CA 95812-1468
March 31, 2000 [delivered April 1, 2000] [tabbed right] In reply refer to:
[tabbed right] 765:rtf:RDL : MS F200
[tabbed right] Account No. : [omitted]
[tabbed right] Tax Year : 1997

THOMAS M THORNHILL III
PO BOX 1755
NEVADA CITY CA 95959

This letter is in reply to your LETTER DATED 3/14/2000.

An undocketed hearing may only be granted, when the request for a hearing is received within the period of time allowable as a protest (Revenue and Tax [sic] Code Section 19044). The protest of the assessment must conttain a written request for an oral hearing; otherwise in the absence of a properly filed protest, the proposed assessment becomes final and due in 60 days after the mailing of the proposed assessment, pursuant to Revenue and Taxation Code Section 19041.

Since there is no pending assessment, your request for this hearing is denied.

You contend that our Letter form 4744a is not fair on its face; obviously we disagree. Revenue and Taxation Code Section 17041 imposes a tax on every resident (including persons and individuals as defined by Section 17004, 17007, and 17014), who are in this state for more than a temporary or transitory purpose, and those individuals who derive income from sources located in this state. This is our authority to impose a tax on your client. As a taxpayer, defined under R&T Section Code 17004, your client will be held liable for state taxes. His dominant presence within this state is sufficient to create the potential tax liability (Appeal of Beldon Katleman, SBE, Oct. 17, 1980). Any claim of exemption from personal state income taxes based on arguments against taxation and self described as protester in nature is void.

Under the Revenue and Taxation Code Section 18501, every individual, whether a self proclaimed non-taxpayer, nonresident alien, state citizen, Sovereign resident or domiciled inhabitant, subject to the code's filing requirements, is required to file a valid tax return.

Internal Revenue Code Section 61 defines gross income as all income from whatever source, including compensation for services. Revenue and Taxation Code Section 17071 provides that Secton 61 shall define gross income for state purposes. The assertion that compensation is not subject to taxation is merely another time worn protester type argument. The Section 61 definition of gross income has been upheld in Commissioner v. Kowalski (1977) 434 U.S. 77, 98 S. Ct. 315, 54 L. Ed2d 252. The claim that wages are not includable within gross income has been repeatedly been held a frivolous, groundless claim (Lonsdale v. United States, 90- 2113 (10th Cir. 1990); similar court decisions have been reached on other related gross income issues also (Eisner v. Macomber, 3 AFTR. 3020, 252 US 189, 40 S Ct. 189, 64 L Ed 521, 1 USTC P 32 (U.S. Supreme Court 1919);, Turner v. Secretary of Treasury, 54-57-C (S.D. Ind 1984), United States v. Connor, Jr., 898 F. 2d 942 (3rd Cir. 1990),Schiff v. Commissioner, T.C.Memo 1992-183,Snyder v. Internal Revenue, F 84-211 (N.D. Ind. 1984),United States v. Ferguson, 85-1688 (7th Cir. 1986), (cert. denied 479 US 933 11/3/86 T). Thus Form 1099 income as paid to you by your employer is subject to federal or state taxation, and must be included in a validly signed tax return.

Employees of Franchise Tax Board do not have a "Delegation of Authority".


[note: page 2]

Your citation of legal and signed contracts refers to the Uniform Commercial Code. As stated earlier such a contract is not required of this department so that we may enforce the tax laws of this state.

Form letter 4744a should have stated tax year 1997 rather 1998; it was a clerical oversight. The issue being pursued is the filing of a valid 1997 tax return. Attach a copy of this letter to your corrected tax returns for proper handling.

/s/[R L]
Roger Lubiens
Filing Compliance Bureau
Telephone: (916) 845-4068


END

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