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Attempt by State of XX (not ORegon) to extort taxes from OR resident/business owner

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Oregon-resident

Junior Member
What is the name of your state (only U.S. law)? Oregon

I've been a resident of Oregon for 35 years, and have filed my taxes as such in Oregon for all 35 years. It appears that State XX got Federal Form 1099 records filed by a XX company to which I bring business for and from which I receive commissions. I received a Request for Tax Return from XX's State Tax Board notifying me that I failed to file XX taxes in 2016 and included a very intimidating form demanding for 2017 most all the info one must provide on a 1040.

The Supreme Court has ruled that two states cannot tax the same income. Oregon is very clear that I live in Oregon, I make all my income from doing business in Oregon and I darn well better pay my state income taxes to Oregon.

My inclination is to provide the state of XX my name, my Oregon address and make it clear I've not lived in nor conducted business in XX for 35 years and feel no obligation to provide answers to questions XX has no legal right to ask of me.

My questions are
- am I obligated by any law to answer to the state of XX at all?
- if I do respond is what I want to provide, noted in the paragraph above, sufficient?
 


Zigner

Senior Member, Non-Attorney
You sure are taking an adversarial position for something that can easily be solved with some simple conversation. Don't ignore this...CONTACT state XX.
 

HRZ

Senior Member
Actually the issue of double taxation is not an absolute black white situation and in some fact patterns if the work comes thru and to state x x may have a tax due nad if you are physically in y y may be untitled to a tax ...probably not in your case,,,but don't assume something is impossible and each state may want you to pay them first .
Around me some issues of who gets credit for what vary all over the place ..even by county .
 

LdiJ

Senior Member
What is the name of your state (only U.S. law)? Oregon

I've been a resident of Oregon for 35 years, and have filed my taxes as such in Oregon for all 35 years. It appears that State XX got Federal Form 1099 records filed by a XX company to which I bring business for and from which I receive commissions. I received a Request for Tax Return from XX's State Tax Board notifying me that I failed to file XX taxes in 2016 and included a very intimidating form demanding for 2017 most all the info one must provide on a 1040.

The Supreme Court has ruled that two states cannot tax the same income. Oregon is very clear that I live in Oregon, I make all my income from doing business in Oregon and I darn well better pay my state income taxes to Oregon.

My inclination is to provide the state of XX my name, my Oregon address and make it clear I've not lived in nor conducted business in XX for 35 years and feel no obligation to provide answers to questions XX has no legal right to ask of me.

My questions are
- am I obligated by any law to answer to the state of XX at all?
- if I do respond is what I want to provide, noted in the paragraph above, sufficient?
I do have advice for you as to how to handle this, but I need to know what state is going after you.
 

Taxing Matters

Overtaxed Member
The Supreme Court has ruled that two states cannot tax the same income. Oregon is very clear that I live in Oregon, I make all my income from doing business in Oregon and I darn well better pay my state income taxes to Oregon.
Understand that the Supreme Court has also held that the state from which the income is actually earned gets the first bite at the income and that it is your home state must provide some way not to double tax that income. States do that in one of two ways: they either provide a credit for the tax paid to the other state (the most common method) or they exclude from their tax base income earned from outside the state (less common).

My inclination is to provide the state of XX my name, my Oregon address and make it clear I've not lived in nor conducted business in XX for 35 years and feel no obligation to provide answers to questions XX has no legal right to ask of me.
State XX has a 1099 from a payor in its state paying you money for the year in question. That suggests you might have been paid for work done in state XX and state XX thus has a legitimate interest in determining if you owe tax on that income to state XX. You can take the confrontational approach if you want, but you may in the end find that you end up spending more time fighting an assessment that state XX makes than you would had you simply addressed the issue and answered the state’s questions up front. For me representing a taxpayer the response I provide would depend on just how burdensome the questions were and what evidence I could readily provide to show the state that no income was derived from that state during that year.

My questions are
- am I obligated by any law to answer to the state of XX at all?
As you did not indicate the state, all I can do is answer generally. Basically the way this works is that no law compels you to answer state XX’s questions. But note failure to do may result in the state simply assessing tax against you because you have not satisfied state XX that the income was not from state XX.

- if I do respond is what I want to provide, noted in the paragraph above, sufficient?
The states I’m familiar with would not accept just that. They’d want more to satisfy themselves that the income was not derived in their state. How much more varies by state.
 

Oregon-resident

Junior Member
What is the name of your state (only U.S. law)? Oregon

I've been a resident of Oregon for 35 years, and have filed my taxes as such in Oregon for all 35 years. It appears that State XX got Federal Form 1099 records filed by a XX company to which I bring business for and from which I receive commissions. I received a Request for Tax Return from XX's State Tax Board notifying me that I failed to file XX taxes in 2016 and included a very intimidating form demanding for 2017 most all the info one must provide on a 1040.

The Supreme Court has ruled that two states cannot tax the same income. Oregon is very clear that I live in Oregon, I make all my income from doing business in Oregon and I darn well better pay my state income taxes to Oregon.

My inclination is to provide the state of XX my name, my Oregon address and make it clear I've not lived in nor conducted business in XX for 35 years and feel no obligation to provide answers to questions XX has no legal right to ask of me.

My questions are
- am I obligated by any law to answer to the state of XX at all?
- if I do respond is what I want to provide, noted in the paragraph above, sufficient?
I do have advice for you as to how to handle this, but I need to know what state is going after you.
Sorry, I have not figured out how this forum works so how to respond to all the helpful answers is less than clear, more like trying to see through mud. So I hope this will work...


The XX= a California located company which is a master agent of communication services, like a broker of multiple insurance or mortgage providers. Their providers/carriers (such as Verizon, Vonage, AT&T, etc) can service businesses across the USA. I find client businesses and pair them with service providers/carriers available to me via this master agent. My clients/users are mostly in Oregon; none is located in California. The Calif. located master agent takes a commission off of what the carriers serving my customers earn from billings to the my clients and pays to me the balance. This is like attorneys take their cut off the proceeds of litigation before paying the balance of wins to their customers. None of the carriers providing the services is head quarted in California. None of the $ receipts comes from payments of companies in California, most are companies in Oregon. So example Verizon bills my OR company customer $500 monthly. That OR company pays Verizon. Verizon reports to my master agent in CA that it received $500 each month and $45 is due to agent of sale = me and master agent sends me the $45 and keeps $5.
 

LdiJ

Senior Member
Ok, then here is what you need to do.

You need to make a copy of your car registration, your driver's license, your lease or a copy of a mortgage bill, and anything else you can think of that shows that you have an Oregon address. In fact, a copy of the 1099-Misc that you received showing that you live in Oregon would work as well.

Then, you need to send those copies along a polite letter to CA explaining that you live and work in Oregon and have done so for more than 35 years and have no ties to CA other than the fact that a CA based company pays you a commission for the work that you do in OR. It might take several times sending the same information before it finally gets through to them, but eventually it WILL get through to them.

The only thing that might trip you up is if there is anything in your name in CA. Perhaps you have a child who goes to college there who is driver a car registered in your name? Or you have co-signed something for a child in CA?
 

Oregon-resident

Junior Member
Ok, then here is what you need to do.

You need to make a copy of your car registration, your driver's license, your lease or a copy of a mortgage bill, and anything else you can think of that shows that you have an Oregon address. In fact, a copy of the 1099-Misc that you received showing that you live in Oregon would work as well.

Then, you need to send those copies along a polite letter to CA explaining that you live and work in Oregon and have done so for more than 35 years and have no ties to CA other than the fact that a CA based company pays you a commission for the work that you do in OR. It might take several times sending the same information before it finally gets through to them, but eventually it WILL get through to them.

The only thing that might trip you up is if there is anything in your name in CA. Perhaps you have a child who goes to college there who is driver a car registered in your name? Or you have co-signed something for a child in CA?
Thank you. I have nothing that I know of in Calif. No kids, no immediate family, not even graves for my dead cremated parents. I think CA is simply attempting to scare folks in giving CA money. CA sent the demand to my Oregon address. I don't have a problem with providing proof that I reside in Oregon and have for decades but I do have a problem with CA asking me what my gross income was for 2017. Does CA have the legal right to ask that of me? Shouldn't CA first have to establish good reason to ask that question? Do I have no legal rights here?
 
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Zigner

Senior Member, Non-Attorney
Thank you. I have nothing that I know of in Calif. No kids, no immediate family, not even graves for my dead cremated parents. I think CA is simply attempting to scare folks in giving CA money. CA sent the demand to my Oregon address. I don't have a problem with providing proof that I reside in Oregon and have for decades but I do have a problem with CA asking me what my gross income was for 2017. Does CA have the legal right to ask that of me? Shouldn't CA first have to establish good reason to ask that question? Do I have no legal rights here?
Ok, just stop with the bashing of the state. The simple fact of the matter is that the way the income was reported triggered an inquiry by California. Review the following and then let California know that none of these things apply to you.

https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents-Part-Year-Residents.shtml
 

Oregon-resident

Junior Member
Ok, just stop with the bashing of the state. The simple fact of the matter is that the way the income was reported triggered an inquiry by California. Review the following and then let California know that none of these things apply to you.

https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents-Part-Year-Residents.shtml
Do you think perhaps providing my Business Registry history from the Secretary of the state of OREGON showing that my business has been registered in Oregon since 1995 will suffice? This combined with the Supreme Court decision of May 2015 stating that two states cannot tax the same income.
 
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Taxing Matters

Overtaxed Member
Thank you. I have nothing that I know of in Calif. No kids, no immediate family, not even graves for my dead cremated parents. I think CA is simply attempting to scare folks in giving CA money. CA sent the demand to my Oregon address. I don't have a problem with providing proof that I reside in Oregon and have for decades but I do have a problem with CA asking me what my gross income was for 2017. Does CA have the legal right to ask that of me? Shouldn't CA first have to establish good reason to ask that question? Do I have no legal rights here?
California has the legal right to ask that question because there is no California or federal law that says California cannot ask it. You have plenty of rights when dealing with this. You are free to refuse to answer the question. But the state may just assess tax against you and then force you to go through appeals or the courts to reverse it, which in the end may cost you far more time, money, and trouble than simply answering a few questions and providing some documenation to satisfy the state that you are not subject to tax there. Your call on which route to take.
 

Zigner

Senior Member, Non-Attorney
Do you think perhaps providing my Business Registry history from the Secretary of the state of OREGON showing that my business has been registered in Oregon since 1995 will suffice? This combined with the Supreme Court decision of May 2015 stating that two states cannot tax the same income.
Did they 1099 YOU or your business?

See, it's entirely possible that you reside in Ohio and that your business is 100% based in Oregon, yet you still did the work in CA. What you need to focus on is not where you reside, but rather the fact that you did the work in Oregon
 

Taxing Matters

Overtaxed Member
Do you think perhaps providing my Business Registry history from the Secretary of the state of OREGON showing that my business has been registered in Oregon since 1995 will suffice? This combined with the Supreme Court decision of May 2015 stating that two states cannot tax the same income.
No, that alone will not do it. Showing where your business is registered tells the state nothing about where you actually performed the work and derived the income you had from the business. Microsoft is organized in Washington but does business nationwide. It is subject to tax in California because it does business in California even though it is organized in Washington.
 

LdiJ

Senior Member
Do you think perhaps providing my Business Registry history from the Secretary of the state of OREGON showing that my business has been registered in Oregon since 1995 will suffice? This combined with the Supreme Court decision of May 2015 stating that two states cannot tax the same income.
That certainly would not hurt at all to provide a copy of that...but that alone is not enough.
 

PayrollHRGuy

Senior Member
That certainly would not hurt at all to provide a copy of that...but that alone is not enough.
It wouldn't hurt but it proves nothing other than he has been registered in OR for 35 years. It doesn't disprove that he has been doing business in CA.
 
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