California Wants Me to Pay Taxes

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nwmnwm

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Jun 18, 2008
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I live in Illinois, have a company based in Illinois, and work with various affiliate networks in California. I received a "Request for Tax Return" stating:

"Our records show that you earned income, reported on federal Form 1099, from ABC Affiliate Network"
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From their FAQ:

Q: I am not a California resident. Why did I get this notice?
A: Even if you're not a resident of California, you must file a California tax return and pay tax on income derived from a California source.
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I contacted my CPA who, at first glance, responded:

WOW, well, all states are looking for Income. Since you are earning Income from the State of California, you might have to file a State of California Income Tax Return on the Income earned in that State. I will look into that fact and advise you.
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This is incredibly alarming to me as I already pay federal taxes and state taxes -- not to mention that California's tax rates can reach 9-10%.


Has anyone received a similar notice? What was the outcome? This makes me not want to do business with any California companies.
 


ouch, have never seen that one. i did however just get informed that as a Los Angeles resident I am paying a 'Franchise Tax' this year.

This tax is 1% - 5% of your GROSS revenue. not net... gross.

California is fucked.
 
nwmnwm said:
I live in Illinois, have a company based in Illinois, and work with various affiliate networks in California. I received a "Request for Tax Return" stating:

From their FAQ:

I contacted my CPA who, at first glance, responded:


This is incredibly alarming to me as I already pay federal taxes and state taxes -- not to mention that California's tax rates can reach 9-10%.


Has anyone received a similar notice? What was the outcome? This makes me not want to do business with any California companies.
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I know a couple of people who got this notice because of earnings from eads. I didn't, but i know a handful who did.
 
So if your home state has an income tax, you're getting hit TWICE for state tax? That is fucked up. I'd immediately stop doing business with any companies in California.
 
A simple version of how this works is you have to pay California income tax on that income and only pay Illinois tax on that income if it exceeds California's(which it of course doesn't) so that part of your income you are going to have to pay California's tax rate. You also are supposed to register as a foreign business if you are doing business in California. This gets even more annoying when you are trying to figure out what your "income" is on that specific revenue.

I'd suggest finding a better CPA that knows about these issues prior to you getting notices in the mail and actually knows the laws to some extent and doesn't have to go look them up.


AffAholic said:
ouch, have never seen that one. i did however just get informed that as a Los Angeles resident I am paying a 'Franchise Tax' this year.

This tax is 1% - 5% of your GROSS revenue. not net... gross.

California is fucked.
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Ouch they caught you? I live in LA(rent) but my business address and residence is just out side of LA to avoid this exact problem. That's a NASTY tax - you gotta move your business out side of LA asap.
 
miketpowell said:
I'd suggest finding a better CPA that knows about these issues prior to you getting notices in the mail and actually knows the laws to some extent and doesn't have to go look them up.
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Yea, if your CPA doesn't know the tax laws/codes of all 50 states and Guam, dump their ass, I mean seriously, what else do they have to do aside from keeping up with laws that change yearly coming in from over 1000 miles away....
 
miketpowell said:
Ouch they caught you? I live in LA(rent) but my business address and residence is just out side of LA to avoid this exact problem. That's a NASTY tax - you gotta move your business out side of LA asap.
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Grrrreat. Just what I needed to hear.
 
AffAholic said:
ouch, have never seen that one. i did however just get informed that as a Los Angeles resident I am paying a 'Franchise Tax' this year.

This tax is 1% - 5% of your GROSS revenue. not net... gross.

California is fucked.
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I think you misread the LA Business Tax. The listed 1-5% rate is per $1,000 in gross recipts/sales; http://finance.lacity.org/pdf/TaxRateTable_2009.pdf. In other words it is actually 0.10% to 0.50% of sales.

As an internet marketer you'll fall under the Professions and Occupations category so you have to pay about $5 for every $1000 in revenue last year.
 
yet to receive anything, and one of the networks I did business was in California. There's going to be some major brain drain from Cali in the next few years when all of these businesses just up and leave
 
leelemons said:
I think you misread the LA Business Tax. The listed 1-5% rate is per $1,000 in gross recipts/sales; http://finance.lacity.org/pdf/TaxRateTable_2009.pdf. In other words it is actually 0.10% to 0.50% of sales.

As an internet marketer you'll fall under the Professions and Occupations category so you have to pay about $5 for every $1000 in revenue last year.
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actually according to that he could be a "multimedia business" and pay $1 for every $1000.
 
Doesn't anyone find this to be a taxation without representation thing? Sure, the people who paid you are out of California, they pay taxes, because they directly benefit from them. You, being a non-citizen of that state, do not benefit in the slightest from your income being taxed, and as such, I feel you shouldn't have to pay a dime. You didn't "earn an income" you were paid for a product, in this case leads and clicks. Fuck the People Republic of California.
 
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