Originally Posted by
Freightpuppy
My fiance was based in Fresno in 2007 for Skywest but we lived in IL. He filed an IL return and paid IL income taxes. He just got a letter from CA stating that just because you don't live in CA doesn't mean you don't owe them CA state income tax. What's the best way to go about this for you guys that have had a similar situation?
Ah, the California Franchise Tax Board... WAY worse than the IRS for trying to get their hooks into you...
If he files in IL (and uses that address on this FED taxes), CA is most likely getting his info from the fact that he pays SDI (disability) tax in CA because he's domiciled there. So they compare SDI rolls with state income tax returns and when there's a discrepancy, they go looking. They may just see if he's willing to believe them about oweing CA taxes and send a check (file a return). If he doesn't, then how hard they come after him depends on how much they think they can get. Part of that depends on how much corroborating evidence they think they have that he actually IS residing in CA and just claiming IL to avoid CA taxes. Owning property or having an apartment in his name (on the lease) complicates things, even if it's just a crashpad that he only spends time in when working.
Definitely make sure his FAA Certs and Medicals have your IL address on them, register to vote in IL, have an IL drivers license, etc. The more stuff like that they find with a CA address, the more difficult it becomes to 'prove' your IL residence. Paying IL taxes alone is not proof enough for CA and they could try to garnish his wages thru Skywest if they think it'll stick.
The cheapest (airline pilot preferred) method to resist at first is to write a certified letter explaining that he's a professional pilot based in Fresno (which they already know) who lives, owns/rents property, files taxes, etc in Illinois and that he's only in California for work and returns to IL each month after work. If they still come back or if there are complicating factors like he owns property in CA (maybe he runs a crashpad), you're probably going to have to consult an accountant who specializes in pilot tax issues. CA, NY, and NC are notorious for hounding pilots for years if they think you owe them. My dad was stationed in CA in the Navy in 1970 for 3 months and never stepped foot in the state again. When he retired 4 years ago, they tried to tax his retirement for earnings 34 years prior!
It is possible, due to their basketcase economy, CA is sending as many "you owe us" letters as possible to generate more revenue and with their limited budget they'll have to pick and choose who to really go after. You can look at that two ways: A Skywest pilot may not seem like someone who makes enough money to really make it worth their while to go after. But he's also not someone who's as likely to hire an expensive tax attorney to defend his case. Good luck.
