Tax Collectors Owe Her an Explanation if Not a Refund

It was an exasperated Annette Fiala that I met Wednesday in her Irvine home. Considering that the matter at hand began in January and here we are in August and it still isn’t resolved--well, I could understand why she was miffed. If I thought I had nearly $1,500 coming back from the state but couldn’t get anyone to give it to me for the last eight months, I’d be stewing too.

And stewing she was, as she discussed her yearlong frustration with the Franchise Tax Board of California, the agency that handles state income tax filings. Or, as Fiala says, keeps income-tax refunds without telling you why.

“If they would just communicate,� she says, biting off every word, “I’m an easygoing person. You explain to me what’s going on, and if I agree, I agree. And if I disagree, show me what I’ve done wrong.�

After she spent the better part of an hour describing to me her frustration with the FTB--unsigned letters from the bureaucracy without people’s names on them, 45-minute waits to get through on the phone, promised mail follow-ups that never come--I told her I’d do some detective work for her. Here goes her cautionary tale. . . .

Fiala is 37 and the single mother of five children. She does business and estate planning for John Hancock Financial Services and works on commission. She says she has received state income tax refunds for each of the six years since she’s been divorced and uses the annual refunds as a self-imposed savings account for the children.

That’s what she expected this year, until she received a letter from the FTB in January saying that it hadn’t received her 1995 income tax filing. Knowing she had sent it, she mailed in another, which, according to her tax preparer’s calculation, entitled her to a refund of $1,465.

By mid-March, she was still waiting for that check when the FTB notified her that it had “made an adjustment “ to her ’95 return that left her with a balance of exactly zero. The form notified her: “The following paragraph will explain the adjustments made to your tax return: We applied the overpayment on your return to another tax year and/or taxpayer penalty.�

That, according to Fiala, was the entire explanation. She compared the FTB’s computation of her tax to her copy and could see no difference. In short, she had no idea why her refund was being withheld. Worse than that, almost, was that she couldn’t contact anyone who could tell her.

In mid-May, she says, she wrote a somewhat turgid letter to FTB, protesting the withholding of her refund. The letter she showed me specifically asks that the FTB tell her for what years she was being penalized and for what infractions.

She never heard back, she says.

“The first couple of phone calls they say they’re going to mail something or send you an explanation,� she says. “So you sit there and wait. Then, finally, you wonder what kind of trickery . . . or what’s going on, because they haven’t sent you anything.�

I ask Fiala if she’s positive she deserved the refund. “I’ve always gotten a refund back,� she insists. “They’ve never questioned any year. There’s nothing [different about her ’95 return]. I have no liens or judgments that would be subjected to being taken. If the FTB is going to take a person’s money, then tell us today what it is for. The right hand doesn’t know what the left hand is doing.�

The continuing saga has left Fiala reluctant to file her 1996 state return. She had wanted to file it early because she expects a refund of the $4,000 she had withheld from her pay. But because of the problem with the ’95 refund, she’s waiting until the extension deadline expires in October.

I contacted the FTB media office and talked to spokesman Jim Shepherd. He said a cursory look into Fiala’s situation indicated that she may owe the state and, if so, it apparently stems from an improper filing from the mid-1980s. Her underpayment wasn’t discovered until this year for various reasons, he said, none of which may be Fiala’s fault. He added that he’d have to do more investigating before being certain she would have to repay the amount believed due.

I asked him about her problems in getting human help. Can the public get through to the FTB? Shepherd said the agency handles between 7,000 and 10,000 calls a day, “so a lot of people do get through.�

Shepherd conceded Fiala’s point that she should have gotten a fuller explanation of why her ’95 refund was held up. “Obviously, she hasn’t been notified,� he said. “That means there’s a problem somewhere, and we’re going to find out where the problem is.�

That’s pretty much where things rest today. Shepherd promised to spend time to sort things out.

I took on Fiala’s case because in this age of voice-mail, I know how frustrating it is to try to puncture a bureaucracy. Having done so, I have two thoughts: First, I wonder how long it would have taken Fiala to get satisfaction if she hadn’t called the newspaper. Second, I’m not taking on anyone else’s tax problems, so please don’t call.

When I told Fiala what Shepherd told me and then hooked the two of them up by phone, I wasn’t sure she would appreciate my legwork. After all, she may never get her refund back.

To my relief, she was thankful. “I’m just happy to get it resolved,� she said late Thursday afternoon. “I don’t believe it’s going to come out against me. But we’ll see what happens.�

Dana Parsons’ column appears Wednesday, Friday and Sunday. Readers may reach Parsons by calling (714) 966-7821 or by writing to him at the Times Orange County Edition, 1375 Sunflower Ave., Costa Mesa, CA 92626, or by e-mail to [email protected]