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Is there a limit of the amount of penalty can be placed on…

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Is there a limit of...
Is there a limit of the amount of penalty can be placed on an amount owed? For example if you owe $1,000. and you are told if you pay off the amount you will get a reduced rate but if you don’t pay off the amount they will tack on a $1,000. penalty, so then you will owe $2,000.? California Thank you.
Submitted: 1 month ago.Category: Business Law
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1/16/2018
Business Lawyer: Damien Bosco, Attorney replied 1 month ago
Damien Bosco
Damien Bosco, Attorney
Category: Business Law
Satisfied Customers: 3,649
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Hello: My name is ***** ***** I am an attorney. Please give me a moment to review your question. I may ask some questions to clarify issues.

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Business Lawyer: Damien Bosco, Attorney replied 1 month ago

There could be limits. It depends on what the transaction is. Is this dealing with a specific type of transaction?

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Customer reply replied 1 month ago
Isn't 100% or more penalty usury no matter what kind of transaction?
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

Usury Laws do not apply to all transactions, such as instalment contracts.

In any event, under California law, the amount of services charged by a creditor must be reasonably related to the actual damages suffered by the creditor. California courts recognize certain costs as actual damages, including collections and accounting expenses suffered by a creditor when a customer does not timely pay its invoice and certainly 100% would not be considered reasonable.

Courts have held that finance charges, or late fees as high as 18% per annum (or 1.5% per month) are permitted when the creditor could show that non-payment by the customer created administrative costs for the creditor were valid.

Does this answer your question? We can continue to discuss this if you want to do so. Feel free to ask any followup question you may have or let me know if you need clarification.

If you have all the information you need, please remember to rate my answer between 3 to 5 stars without any additional costs to you. That is how I get credit for answering your question. If I have not answered all your questions, just let me know what more you need. Best regards.

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Customer reply replied 1 month ago
How about owed tax
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

The penalty is 5 percent of the unpaid tax as of the due date plus 1/2 of 1 percent each month, or part of a month the tax remains unpaid, not to exceed 40 months. The maximum penalty is 25 percent of the total unpaid tax. A delinquent penalty will be charged on unpaid taxes if a return is filed late.

We can continue to discuss this if you want to do so. Feel free to ask any followup question you may have or let me know if you need clarification.

If you have all the information you need, please remember to rate my answer between 3 to 5 stars without any additional costs to you. That is how I get credit for answering your question. If I have not answered all your questions, just let me know what more you need. Best regards.

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Customer reply replied 1 month ago
Please explain "not to exceed 40 months" & "The maximum penalty is 25 percent of the total unpaid tax"
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

It means that the penalty is the lesser of what it would be within a 40 month period or 25%.

f you have all the information you need, please remember to rate my answer between 3 to 5 stars without any additional costs to you. That is how I get credit for answering your question. If I have not answered all your questions, just let me know what more you need. Best regards.

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Customer reply replied 1 month ago
Are you saying the maximum penalty that the tax people can charge is 25% of the unpaid balance?
Customer reply replied 1 month ago
I'm still not clear on your answer to: explain "not to exceed 40 months" & "The maximum penalty is 25 percent of the total unpaid tax"
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

What it means is that after the immediate 5 percent, the 1/2 of 1 percent each month goes on for 40 months up to a maximum of 25%.

If you have all the information you need, please remember to rate my answer between 3 to 5 stars without any additional costs to you. That is how I get credit for answering your question. If I have not answered all your questions, just let me know what more you need. Best regards.

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Customer reply replied 1 month ago
Can you give me an example with a $1.000 owed tax
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

I can try. I am not so great at the math though.

I think it would be 1000 x 0.005 the first month to equal 1000.50 for the first month.

Then for the second month 1000.50 x 0.005 to equal whatever that amount is, maybe it's 1002.50 ( or something like that).

Then so on and so on until you get to 40 months. But the amount cannot be higher that $1025.

That's the best I can do quickly without using some spreadsheet or an accountant but I think you understand now.

I hope I answered all your questions at the moment.

If so, please remember to rate my answer between 3 to 5 stars without any additional costs to you. That is how I get credit for answering your question. If I have not answered all your questions, just let me know what more you need. Best regards.

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Customer reply replied 1 month ago
No it really doesn't. What happenes on the 41 month and there after
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

Are we talking about unpaid real estate tax (local and/or state), unpaid state income tax, unpaid federal income tax?

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Customer reply replied 1 month ago
State
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

State Income Tax?

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Business Lawyer: Damien Bosco, Attorney replied 1 month ago

This is what the State says. It is the only information that I have to provide to you.

An underpayment penalty will be charged when taxes are not paid by the due date. The penalty is 5 percent of the unpaid tax as of the due date plus 1/2 of 1 percent each month, or part of a month the tax remains unpaid, not to exceed 40 months. The maximum penalty is 25 percent of the total unpaid tax.

A delinquent penalty will be charged on unpaid taxes if a return is filed late. The penalty is 5 percent of the unpaid tax due for every month that the return is late, up to a maximum penalty of 25 percent of the unpaid tax. The minimum penalty for filing a tax return more than 60 days late is $135 or 100 percent of the unpaid tax, whichever is less.

There are also other penalties that can be imposed such as for a check returned for insufficient funds, negligence, substantial understatement of tax and fraud.

Interest will be charged on any delinquent or late payment from the original due date of the return to the date paid. In addition, if other penalties are not paid within 15 days of the date of the notice, interest will be charged from the date of the billing notice until the date of payment. Interest compounds daily and the interest rate is adjusted twice a year.

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Customer reply replied 1 month ago
what happens after the 40 months?
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

My reading of it is that the penalty amount is max out and there is no more penalty amount added to the amount outstanding after 40 months. The state would have to seek a judgment at that point for payment.

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Customer reply replied 1 month ago
Thank you do you have any code sections that support statements?
Business Lawyer: Damien Bosco, Attorney replied 1 month ago
Ingot the information from
The state"s website discussing the penalties.
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Business Lawyer: Damien Bosco, Attorney replied 1 month ago
I mean I search and got the information on the state"s website. The verbiage did not include citations.
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Customer reply replied 1 month ago
Would you have the links to those sites?
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

Here you go:

https://www.ftb.ca.gov/individuals/faq/net/906.shtml

https://www.ftb.ca.gov/businesses/penalty-information.shtml

https://www.ftb.ca.gov/individuals/faq/penaltiesInterest.shtml

https://www.ftb.ca.gov/forms/misc/1024.pdf

I have been happy to help you on these followup questions. If you are especially pleased with my service on this question, you can always provide a bonus! Best regards.

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Customer reply replied 1 month ago
Damien, I see you are a Business Lawyer, do you specialize in Taxes or did you just go fishing for the answers at the State's Web Site?
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

It sounds like you are disappointed with the service I have provided to you. Sorry to have disappointed you.

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Customer reply replied 1 month ago
I am disappointed I know that the law is extremely complicated and the tax laws
are even worst. If you’re not a specialist in tax law then you should not be answering
my questions. With the information you supplied the FTB can’t charge you
anything after 40 months, do you really believe that to be true?
Business Lawyer: Damien Bosco, Attorney replied 1 month ago

I believe you can contact customer service to request a second opinion.

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