Someone who doesn’t file income taxes isn’t necessarily trying to evade taxes. After all, there are a lot of people out there who simply procrastinate. Others may not have been required to file.
There are also plenty of people who range somewhere along a continuum from simple procrastination to outright attempts at tax evasion.
In this post, we will discuss how this is playing out right now in California. The Franchise Tax Board has begun to go after more than a million non-filers who did not submit a California return last year.
The Franchise Tax Board (FTB) has been sending out letters to these people. The message is essentially that the non-filers need to either pay taxes or explain why they did not do so.
The tax board identified the people by using information received from various sources and matching it against the tax returns it received in 2013. The information came from the IRS, as well as employers, financial institutions and others.
Non-filers who receive the letters are given 30 days to make their response to the FTB. This response could be paying what the board says they owe. But it could also be providing documentation that they did not have to pay taxes last year.
Whatever the case, it is important for people to take appropriate action after receiving a letter like this. Tax penalties on the amount that a taxpayer owes can reach up to 50 percent, and interest on a tax debt can mount up as well.
Moreover, the FTB knows from past experience that there is revenue to be gained through collection efforts against non-filers. In 2013, those efforts yielded in excess of $727 million for the FTB.
Source: The Sacramento Bee, “Tax board issues pay-up notices to 1 million Californians,” Claudia Buck, Jan. 23, 2014