My question involves personal finance in the State of: CA.
Ok. Some time ago I had $5,000 that I sunk into the stock market. Over the years I traded this money, eventually withdrawing bits and pieces of it as I continued to trade. Eventually, I didn't have anything left in my brokerage account; over the years I traded over $500,000 of stock (remember there's a difference between "trading" and "gaining"). Overall I didn't gain, mind you, but I don't think I lost, either (in other words, I'd gain and lose over the years, with the net effect being that I withdrew $5K in bits and pieces, with no overall net capital gain).
Now here's the thing. Imagine my shock when I receive in the mail one day a bill from the idiots at the franchise tax board (California's IRS) totaling a whopping $18,000! Yes, like you, I fancied it a joke. But from whom?
During my trading years I never did any taxes, mainly because I thought the brokerage house did all that for me, and besides, I'm not gaining anything in capital gains, so why even do taxes?
So just recently it looks like that $18,000 wasn't a joke, as the FTB took all the money out of my bank account (like $680), and effectively said they'll keep taking more out until I've paid off $18,000.
I come to find out later that the imbiciles taxed me $18,000 based on the cumulative, year over year trading I had done, or "total trading revenue" (remember? The $500,000). As far as I understand it they should have taxed me on capital gains only, which in my case was a net $Zero.
So what recourse do I have against these knuckle-dragging thieves? They only returned half the $680 and are refusing to pay the bank-imposed $75 lien fee.
They should not have initially taxed me $18,000, as they are obligated to tax on capital gains only, not total trading revenue. Since they came up with that $18,000 figure based on total trading revenue, that means they also had access to my capital gains info during the same period (which is what they should have taxed).
Since this caused me immense pain and suffering (I have therapist bills to prove it), can't I sue the FTB for like an ungodly amount of money?