California Is Taxing Nonresidents Who Never Even Visited — Really

Forbes ^ | July 7, 2022 | Robert W. Wood

[grundle]

In the Matter of Blair S. Bindley, OTA Case No. 18032402 (May 30, 2019), a sole proprietor performed all of his services outside of California, but some of his customers were in California. Is that enough for the poor guy to attract California tax liability? The California taxing authorities said he was operating a "unitary" business. Therefore, his tiny business was subject to California's apportionment rules. The FTB would not budge, so Mr. Bindley went over their head to the state’s Office of Tax Appeals (OTA), but it agreed with the FTB. This case has precedential effect, so it is clear that the Golden State can go after other non-Californians too, and it’s happening. Exactly what was poor Mr. Bindley’s tax offense in California? He is a self-employed screenplay writer living in Arizona. He performed services for a few companies headquartered and registered in California. The California Franchise Tax Board matched income records showing that he collected $40,000 of income from California companies. Not surprisingly, Bindley did not file a California tax return.

[Mean Daddy]

Nebraska was considering having employers take out taxes for road projects & wanted businesses to do it on their behalf for out of state workers.

I tell people, I’m a Nebraskan smart enough to live in Iowa. They have so many damn taxes but yet if you look at their roads, snow plowing (or lack of) you’ve got to wonder where it’s going.

One of their city pensions was at 90% funded & they turned the management over to a handful of workers who pissed it away on crap funds & last I heard was down to 50-60%.

[Jeff Chandler]

A part of our income is derived from an out-of-state LLC which is half owned by our S-Corp. We pay state taxes for that portion of our income to that state, and that income is deducted from our tax liability in our home state.

It usually depends on whether or not you have a nexus in that state.

[ridesthemiles]

Firefighters draw state/ county pensions. THEY were huge participants in that lawsuit.

It is still TAXATION without representation-—You cannot vote on Calif election items.

[WildHighlander57]

I was in that situation, worked in CA, then the company moved me out of state, and in the relocation paperwork there was a form regarding CA tax; I signed it and never heard anything from CA about taxes.

[WildHighlander57]

My relocation happened in 2011, so it was after Congress had put a stop to them going after people that had moved out.

[Cowgirl of Justice]

He should have sent them Monopoly money.

[SubVet72]

I moved to Georgia while still an employee of a Massachusetts based company. I worked remotely for about 10 years before retiring. Since I had become a legal resident of Georgia I only paid income tax to the state of Georgia. How does California get away with this crap?

[EVO X]

Another reason people move from Illinois is to avoid high inheritance taxes.

[PalominoGuy]

..probably because every piece of mail is scanned for addressee and sender, so they collect that info and share with the IRS or any govt entity... ymmv

[HartleyMBaldwin]

Back in the mid-90s I did some consulting work in a Central American country. A few months after I was done, I got a tax bill from that country for several thousand dollars. I figured I could put the money to better use than they were likely to, therefore I never paid. I’m not planning to visit or work in that country ever again, so no worries.

[aMorePerfectUnion]

100%!

[CottonBall]

“The California Franchise Tax Board matched income records showing that he collected $40,000 of income from California companies.”

So Arizona would have to subtract that amount for his state income calculations.

Can you imagine the tax nightmare for an online business selling to every state?

[Trump Girl Kit Cat]

Businesses just STOP selling to CA. sell to ALL other states except CA.

[Jimmy Valentine]

My answer to California, “GFYS!!”

[OldMissileer]

I discovered that California taxed the retirement income of persons who had previously lived in the state.

Many years ago California started to send tax bills to retired military members who had been stationed in that State. The tax corresponded to the percentage of their military time stationed in California. IIRC it had to go all the way to the Supreme Court to stop them.

[Vaduz]

Or greed and grab oh wait your right.

[DugwayDuke]

OldMissileer wrote: “Many years ago California started to send tax bills to retired military members who had been stationed in that State. The tax corresponded to the percentage of their military time stationed in California. IIRC it had to go all the way to the Supreme Court to stop them.”

IIRC, that was the court case I was referring too.
It was one of the major reasons I decided not to move to California. I’ve turned down four different job offers in CA.

[Robert A Cook PE]

I have worked several times (in the past) in California, but every time for less than 30 days. I think I’ll tell my bosses that I will never work there again for more 30 days in any future year.

[fr_freak]

When I was considering a job in California, I discovered that California taxed the retirement income of persons who had prviously lived in the state.

I left California for some years a while back, and about 2-3 years after I left, the state of California decided that I owed them something like $200 in back taxes, from whatever kind of audit they decided to run. They couldn't find me, but they found one of my bank accounts with Chase, and without informing me, took out all the money in the account (it was only about $100) and Chase cooperated with them, of course.

Our country is run by communists.