The Heart of the California Taxation Scheme.

[Californians are Presumed to know this information; we might as well actually know it! It seems to me that the California taxation scheme is this simple. Any discrepancies in Franchise Tax Board practice would be the result of deliberate and willful misinterpretation/ignore-ance [deliberate sic] of state statutes and of its own regulations by FTB and its employees.

[If one is not doing business as a Corporation or a Bank or under a State-granted professional or occupational license or a franchise, the only person the FTB has claimed the authority to tax is an 'individual' mentioned in West's Ann.Cal.Rev. & Tax. Code, §§ 18501 or 18505.

[It seems to me that NO individual is taxable under West's Ann.Cal.Rev. & T. Code, §§ 18501 or 18505 until after the FTB has formally adopted Regulations (codified in Title 18, BARCLAYS OFFICIAL CALIFORNIA CODE OF REGULATIONS) pursuant to West's Ann.Cal.Rev. & Tax. Code, § 19503, which would place said individual within a taxable class. FTB adoption of said Regulations is supposed to be in conformity with the Administrative Procedures Act (West's Ann.Cal.Gov. Code, §§ 11340 et seq.). To date, FTB has only adopted Regulations in relation to individuals who fall into the classes: 'married couple' or 'fiduciary'. I believe that FTB has determined or admitted that the unmarried individual who is not acting as a fiduciary is NOT taxable, because FTB has not claimed the authority to tax that particular class (See Rev. & T. Code, § 19503(b)(1) below).

Title 18, C.C.R. (1993), Chapter 2.5. Personal Income Tax, PREFACE, sets out FTB's position on the California tax scheme [The typographic errors are in the original.]:

The "Personal Income Tax Law" [Stats.1935, c. 329, p. 1090] (formerly the Personal Income Tax Act) was enacted and became effective on June 13, 1935. With certain specific exceptions (Sections 17121-17136) the original statute imposed a tax upon the entire net income of residents and upon the net income of nonresidents derived from sources within the State. Notwithstanding the numerous amendments up to 1943, the statute remained basically unchanged. During the so-called war period (1943-1948, inclusive) temporary tax relief was granted in the form of reduced rates and increased exemptions in 1943; the personal exemptions were again increased in 1945 and the 1943 temporary rates and exemptions were made permanent. In 1949 the temporary rates ceased and the permantent rates became effective.
In 1943 the Legislature (Stats. 1943, p. 2354) incorporated the Personal Income Tax Act into the Revenue and Taxation Code as Part 10 of Division 2 thereof. Section 2 of said laws repealed the incorporated act and Section 3 provided that the codification was not effective until July 1, 1945.
Section 1 of the Laws of 1945, Chapter 645, repealed Section 3 of the 1943 law and provided that the 1943 law was to become effective on the effective date of the 1945 law. The latter became effective on June 5, 1945, and, thus, the Personal Income Tax Law became effective on June 5, 1945, as Part 10 of Division 2 of the Revenue and Taxation Code.
The original provisions, notwithstanding repeal, have been continued as part of the Revenue and Taxation Code, the same as if the old provisions had been in code form since 1935.
In 1955 the Legislature (Chapters 939 and 1590) completely revised the taxing provisions of the Personal Income Tax Law so that the language of the sections adopted and their sequence would conform to the Internal Revenue Code of 1954. However, in enacting such law many provision of the Internal Revenue Code were omitted. Also as a part of such revision the law in effect prior to January 1, 1955, was designated the "Personal Income Tax Law of 1954." Accordingly, when referring to the law which was in effect prior to January 1, 1955, in order to distinguish between existing law and former law, after the section number add, Personal Income Tax Law of 1954." The regulations issued by this department and other State agencies are now being published by the Division of Administrative Procedure in the California Administrative Code and Register; the regulations contained in Subchapter 2.5 of Chapter 3 of Title 18 of the California Administratve Code and are distributed by the State of California, Documents Section, P. O. Box 1612, Sacramento, California, 9507.
The regulations issued by the department relating to the "Personal Income Tax Law of 1954," are contained in Subchapter 2* of Chapter 3 of Title 18 of the California Administrative Code.
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* Former Subchapter 2 entitled "Corporation Income Tax" originally printed April 3, 1948 (Title 18). Repealer filed February 18, 1952, as an emergency designated to be effective on the thirtieth day thereafter and declared not applicable to any period prior to July 1, 1951 (Register 27, No. 4).

19501. The Franchise Tax Board shall administer and enforce Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part. For this purpose, it may divide the state into a reasonable number of districts, in each of which a branch office or offices may be maintained during all or part of the time as may be necessary.

19503.(a) The Franchise Tax Board shall prescribe all rules and regulations necessary for the enforcement of Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part and may prescribe the extent to which any ruling (including any judicial decision or any administrative determination other than by regulation) shall be applied without retroactive effect.
(b)(1) Except as otherwise provided in this subdivision, no regulation relating to Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), or this part shall apply to any taxable or income year ending before the date on which any notice substantially describing the expected contents of any regulation is issued to the public.
(2) Paragraph (1) shall not apply to either of the following:
(A) Regulations issued within 24 months of the date of the enactment of the statutory provision to which the regulation relates.
(B) Regulations issued within 24 months of the date that temporary or final federal regulations with respect to statutory provisions to which California conforms are filed with the Federal Register. (3) The Franchise Tax Board may provide that any regulation may take effect or apply retroactively to prevent abuse.
(4) The Franchise Tax Board may provide that any regulation may apply retroactively to correct a procedural defect in the issuance of any prior regulation.
(5) The limitation of paragraph (1) shall not apply to any regulation relating to the Franchise Tax Board's policies, practices, or procedures.
(6) The limitation of paragraph (1) may be superseded by a legislative grant of authority to the Franchise Tax Board to prescribe the effective date with respect to any regulation.
(7) The Franchise Tax Board may provide for any taxpayer to elect to apply any regulation before the dates specified in paragraph (1).
(c) The amendments made by the act adding this subdivision are operative with respect to regulations which relate to California statutory provisions enacted on or after January 1, 1998.

[I can reasonably infer that FTB has reserved, but has not yet adopted any regulation requiring the payment of taxes by ALL persons:]

Division 3. Franchise Tax Board.
Chapter 2.6. Administration of Franchise and Income Tax
Subchapter 4. Payments and Assessments
Article 1. Payment of Tax by All Persons [Reserved.] [page 349]

1. Change without regulatory effect adding new subchapter 4 (articles 1 through 7) and article 1 (reserved) filed 11-23-98 pursuant to section 100, title 1, California Code of Regulations (Register 98, No. 48).

[The only regulations actually adopted by FTB under the delegated authority of West's Ann.Cal.Rev. & T. Code, Section 19503, are published in Title 18, BARCLAYS OFFICIAL CALIFORNIA CODE OF REGULATIONS (Vols. 23 & 24), PUBLIC REVENUES, pp. 341-343 [the page subscripts read: Register 2000, No. 27; 7-7-2000].

Division 3. Franchise Tax Board.
Chapter 2.6. Administration of Franchise and Income Tax
Subchapter 2. Returns
Article 1. Individuals and Fiduciaries

§ 18501. Returns, Married Couples.
(a) The income limits for filing joint or separate returns by a married couple are set out in Section 18501 of the Revenue and Taxation Code. Procedures for filing joint or separate returns by a married couple are set out in Section 18521 of the Revenue and Taxation Code.
For filing a joint return after filing a separate return see Sections 18522 and 18526 of the Revenue and Taxation Code.
(b) A joint return of a husband and wife shall be signed by both spouses, except that one spouse may sign the return as the agent for the other, if the return is accompanied by a power of attorney authorizing such action. The spouse acting as a agent shall, with the principal, assume the responsibility for making the return and incur liability for the penalties provided for erroneous, false or fraudulent returns. The spouse who prepares the joint return of husband and wife shall execute the declaration that the joint return is made under penalties of perjury. The spouse who fills in the return shall be considered to have prepared the return. If the return is prepared by both spouses, or by neither spouse, then both spouses shall execute said declaration. Exceptions to both spouses signing are applicable to both spouses executing said declaration.
(c) If a separate return is filed by a resident married couple, each must report income from his or her separate property. Each must also report one-half of any community income, e.g., wages, salaries, and other compensation for personal services performed by either or both spouses; one-half of the income from community property owned, etc. If the husband and wife are separated and choose to file separate returns, then the entire earnings of each spouse is reported separately.
(d) Whether the income of a married couple who are nonresidents of this state must be reported by the husband or wife if a separate return is filed depends upon the spouse's domicile and the character of the income. Whether, in what fashion and to what extent income belongs to an individual spouse depends upon the character of the income. The character of the income is determined by the law of the state of domicile of the spouse earning the income.

[No Regulations have been published as Title 18, C.C.R., §§ 18502, 18503, or 18504.]

fiduciary, n. 1. One who owes to another the duties of good faith, trust, confidence, and candor . 2. One who must exercise a high standard of care in managing another's money or property ....
BLACK'S LAW DICTIONARY, 7th Edition (1999), p. 640.

§ 18505-1. Fiduciary Returns.
(A) Every fiduciary, or at least one of joint fiduciaries, must make a return of income--
(1) For the individual whose income is in his charge if the income of the individual is such that the individual would be required to file a return in accordance with the provisions of Secton 18501 of the Revenue and Taxation Code, were it not for the fact that the fiduciary is required to file the return for the individual. The return, in the case of a resident, should be filed on Form 540, and for a nonresident on Forn 540NR.
(2) For the estate or trust for which he acts if the net income of such estate exceeds the limits set out in Section 18505 of the Revenue and Taxation Code, Form 541 should be used.
If a return is made by one of joint fiduciaries, it shall contain a statement that the fiduciary has sufficient knowledge of the affairs of the person for whom the return is made to enable him to make the return, and that the return is, to the best of his knowledge and belief, true and correct.
A return shall be filed for the taxable year of an estate which is a period of less than 12 months if the gross income of the estate for such taxable year exceeds the limit set out in Section 18505 of the Revenue and Taxation Code. The requirements as to the filing of a return for a trust remain the same, regardless of whether the taxable year of the trust is a period of less than 12 months.
(b) The executor or administrator of a decedent's estate must make a return for the decedent for the year in which the decedent died, and, in the event the decedent has not filed returns for years prior to the year in which he died, for such prior years, if, (1) in the case of the year of death, the decedent's income from the beginning of that year until the date of his death, or (2) in the case of years prior to the year of death, if the decedent's income for each of such years exceeds the limits set out in Section 18505 of the Revenue and Taxation Code.
(c) In determining whether returns must be filed for an estate or a trust, the entire income from all sources (except income specifically exempt from taxation, see Chapter 3) must be considered if, in the case of an estate, the decedent was a resident of this State, or, in the case of a trust, if either the fiduciary or any of the beneficiaries are residents of this State (as defined by Sections 17742-17745.1). If, in the case of an estate, the decedent was not a resident of this State, or, if, in the case of a trust, neither the fiduciary nor any of the beneficiaries are residents of this State, only income from sources within this State should be considered (see Regulation Section 17951-2 for the meaning of sources within this State.

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guardian, n. 1. One who has the legal authority and duty to care for another's person or property, esp. because of the other's infancy, incapacity, or disability. A guardian may be appointed either for all purposes or for specific purposes....
BLACK'S LAW DICTIONARY, 7th Edition (1999), p. 712.

§ 18505-2. Return by Guardian or Committee.
A fiduciary acting as the guardian of a minor, or as the guardian or committe of an insane person must file a return for such minor or person, unless the minor himself makes a return or causes such return to be made. A return must be filed for a minor or insane person who is single where the adjusted gross income of such person exceeds the limits set forth in Section 18505 of the Revenue and Taxation Code. Regardless of net income, a return must be filed for all persons, whether married or single, if their gross income exceeds the limits set forth in Section 18505 of the Revenue and Taxation Code. The return which must be filed for the persons described above is Form 540 if such persons are residents, and Form 540NR if such persons are nonresidents.
For the purpose of determining the liability of a fiduciary to render a return under the provisions of the preceding paragraph in cases where the minor or the incompetent is married, it is the aggregate gross income or the aggregate net income of both husband and wife which is controlling. See Section 18501 of the Revenue and Taxation Code.

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receiver. A disinterested person appointed by a court, or by a corporation or other person, for the protection or collection of property that is the subject of diverse claims (for example, because it belongs to a bankrupt or is otherewise being litigated)....
BLACK'S LAW DICTIONARY, 7th Edition (1999), p. 1275.

§ 18505-3. Return by Receiver.
A receiver of all the property of an individual who is a resident of this State must make a return of, and pay the tax upon, the income from such property if the adjusted gross income of an individual exceeds the limits set forth in Section 18505 of the Revenue and Taxaton Code. If the individual is a resident of this State the entire income from his property regardless of where located, must be reported by the receiver. If the individual is a nonresident, only income from property having a business or taxable situs in this State should be reported. The return should be made on Form 540, except that if the individual is a nonresident of the State Form 540NR should be employed.
A receiver in charge of the business of a partnership shall render a return on form 565. A receiver of the rents and profits appointed to hold and operate a mortgaged parcel of real estate but not in control of all the property of business of the mortgagor, and a receiver in partition proceedings, are not required to render returns of income. Likewise, a receiver of a corporation is not required to make a return of income but should make a return for the corporation under the Bank and Corporation Tax law if the corporation is taxable under that law.

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§ 18505-4. Time for Filing Returns of Decedents, and Returns for Year in Which an Estate is Closed or a Trust Terminated.
Under the provisions of Section 17552 of the Revenue and Taxation Code, the return by a taxpayer who was not in existence throughout a taxable period of 12 months is a return for the fractional part of a year during which the taxpayer was in existence. If a return is required under the provisions of subdivision (a) of Section 18505 of the Revenue and Taxation Code, or for the last taxable year of a decedent, the executor or administrator of the decedent shall file such a return at the time prescribed in Section 18566 of the Revenue and Taxation Code. If a return for the last taxable year of an estate or trust is required to be filed under the provisions of subdivision (a) of Section 18505 of the Revenue and Taxation Code, such return shall be filed at the time prescribed in Section 18566 of the Revenue and Taxation Code and the last day prescribed for such filing shall also be the due date for payment of the tax or the first installment thereof.
The executor or the administrator is required to file the returns for the dededent for years prior to the year in which death occurred, if returns for such years should have been filed but have not been filed by the decedent (see Section 18505, of the Revenue and Taxation Code.) Such returns should be filed as soon as possible after the fiduciary has assumed his duties, and in any event, must be filed prior to the time the estate is distributed (see Article 7, Chapter 4 of the Revenue and Taxation Code for penalty provisions).

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§ 18522-18531. Joint Return After Filing Separate Return.
(a) In General. Section 18522 provides that where an individual has filed a separate return for a taxable year for which a joint return could have been made by him and his spouse under Section 18521, and the time prescribed by law for filing the return for such taxable year has expired, such individual and his spouse may, under conditions hereinafter set forth, make a joint return for such taxable year. The joint return filed pursuant to Section 18522 shall constitute the return of the husband and wife for such year, and all payments, credits, refunds, or other repayments, made or allowed with respect to the separate return of either spouse are to be taken into account in determining the extent to which the tax based on the joint return has been paid.
The fact that the taxpayer and his spouse are divorced or legally separated at any time after the close of the taxable year for which separate returns are filed shall not deprive them of their right to file a joint return for such taxable year pursuant to Section 18522.
(b) Payments Required Before Joint Returns Can Be Made. A joint return cannot be made under Section 18522 for a taxable year unless at or before the time of the filing of such joint return the following amounts are paid:
(1) All amounts previously assessed with respect to either spouse for such taxable year;
(2) All amounts shown as the tax by either spouse upon his separate return for such taxable year; and
(3) Any amount determined, at the time of the filing of the joint return, as a deficiency with respect to either spouse for such taxable year if, prior to such filing, a notice under Section 19033 of such proposed deficiency has been mailed.
(c) Time for Making Joint Return. A joint return cannot be made under Section 18522 with respect to a taxable year:
(1) After the expiration of four years from the last day prescribed by law for filing the return for such taxable year determined without regard to any extension of time granted to either spouse. Thus where an extension of time for filing returns has been granted by the Franchise Tax Board in accordance with Section 18567, the extension shall be disregarded in determining the last day upon which a joint return may be filed after separate returns have been filed;
(2) After there has been mailed to either spouse, with respect to such taxable year, a notice of deficiency under Section 19033, if the spouse, as to such notice, files a protest under Secton 19041 or appeal under Section 19045 which is still pending;
(3) After either spouse has commenced a suit in any court for the recovery of any part of the tax for such taxable year; or
(4) After either spouse has entered into a closing agreement under Section 19441 with respect to such taxable year.
(d) Elections Made in Separate Return. If a joint return is made under Section 18522 any election, other than the election to file a separate return for the taxable year with respect to the treatment of any income, deductions, or credit of such spouse shall not be changed in the making of the joint return where such election would have been irrevocable if the joint return had not been made. Thus, if one spouse has made an irrevocable election to include patronage dividends in gross income for the year received under Section 17086, this election may not be changed upon making the joint return under Section 18522.
(e) Additions to the Tax. Where the amount shown as the tax by the husband and wife on a joint return made under Section 18522 exceeds the aggregate of the amounts shown as tax on the separate return of each spouse, and such excess is attributable to negligence, intentional disregard of rules and regulations, or fraud at the time of the making of such separate return, there shall be assessed, collected, and paid in the same manner as if it were a deficiency an additional amount as provided in the two succeeding sentences. If any part of the excess is attributable to negligence, or intentional disregard of the rules and regulations, at the time of the making of such separate return, but without any intent to defraud, this additinal amount shall be 5 percent of the total amount of the excess. If any part of such excess is attributable to fraud with intent to evade tax at the time of the making of such separate return, this additional amount shall be 50 percent of the total amount of the excess. The latter addition is in lieu of the addition to the tax provided in Section 19164.

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§ 18566. Time for Filing Returns.
Unless an extension of time is granted, returns made on the basis of the calendar year must be filed on or before April 15 following the close of the calendar year, and returns made on a basis of a fiscal year must be filed on of before the 15th day of the fourth month following the close of the fiscal year. If an extension is granted, returns must be filed on or before the expiration of the period of extension. If the last day for filing returns falls on a Saturday, Sunday or other legal holiday, returns may be deemed to have been filed as of the date they are placed in the United States mail. If returns are so posted, properly addressed and postage prepaid, no penalty will attach should the returns not reach the Franchise Tax Board's office until after the due date thereof. However, see Section 18567 for rules pertaining to taxpayers residing or traveling abroad.

For comparison, here are relevant parts of REVENUE AND TAXATION CODE (2000), Section 18501:

18501. (a) Every individual taxable under Part 10 (commencing with Section 17001) shall make a return to the Franchise Tax Board, stating specifically the items of the individual's gross income from all sources and the deductions and credits allowable, if the individual has any of the following for the taxable year:

(1) An adjusted gross income from all sources in excess of eight thousand dollars ($8,000), if single.

(2) An adjusted gross income from all sources in excess of sixteen thousand dollars ($16,000), if married.

(3) A gross income from all sources in excess of ten thousand dollars ($10,000), if single, and twenty thousand dollars ($20,000), if married, regardless of the amount of adjusted gross income.

(4) In the case of an individual described in Section 63(c)(5) of the Internal Revenue Code, relating to limitation on basic standard deduction in the case of certain dependents, a gross income from all sources that exceeds the amount of the standard deduction allowed under that section.

(b) If a husband and wife have for the taxable year an adjusted gross income from all sources in excess of sixteen thousand dollars ($16,000) or a gross income from all sources in excess of twenty thousand dollars ($20,000), each shall make a return or the income of each shall be included on a single joint return as otherwise provided in this article... [I omitted the rest of the code section.]