Briefly I want to talk to you about differences between the federal tax system and the state tax system. As I mentioned, due to limited resources state are usually more aggressive in their collection tactics and their examination tactics than the federal government and the principal reason for this is because taxation for the states is the principal source of revenue racing. A lot of times when there is a budget shortfall the state will lean on their self tax and the federal tax bureau will lean on the income tax to help mandate collections priorities and help raise revenues either through collecting past due liabilities or examining returns and finding new ones. In general, the states because of their limited resources will rely more on in voluntary collections actions than field representatives so there's much greater reliance at the state level for collections processes that are instituted from a remote location so for example in California the main center of operation for the FTV which is the Franchise Tax for the State of California income tax bureau is in Sacramento. Most FTV actions are initiated from the Sacramento office whether they are levis, phone calls, contacts with tax payers, or any sort of collection actions. The states have limited resources at the local level.
They like to maintain a presence in the local community through their field offices but often times audits and other state tax matters are handled outside of the local office. For really documented intensive processes and things like that they will be handled at the local offices but the majority of the focus is in a centralized location in the state for one reason or another. The states also have a very limited appeals process. One of the key differences between the IRS and the State of California is that the federal government has a very well-defined appeal system which is created through the IRS Reform and Restructuring Act of 1998. The State of California and a lot of states don't have that same type of appeal system in place so it makes things particularly to work with because sometimes the collection agency that you're dealing with or sometimes the examination unit you're dealing with has a little bit more bravado because they kind of feel like they have a final word of authority. There is an appeals process in place in most states however it is usually of a very limited nature. In addition, with the State Law versus the Federal Law, there's generally fewer statutes that are constructing the framework for collections and examination functions. There is less statutes, there is less challenges to those statutes because the administrative process is lacking and the judicial process is often or really burdensome to clients to undertake so there's kind of less body of case work. Within the states particularly in California, there is usually a governing administrative body of case work that a practitioner and or a client has to work in and out of the framework in order to navigate through. That administrative framework can prove to be quite rigid at times but is usually very formulaic and very easy to predict if you understand how the State Law works.