State Medical Boards Report to State Franchise Boards?

[clement]

I’m probably overlooking something obvious. I’ve had a license in multiple states long before telepsych and COVID were a thing. This year, for the first time, I get a letter from one state’s franchise tax board saying that the medical board reported I was licensed there 3 years ago and they want proof that I filed taxes…that is, simply by virtue of having a professional license. That year I did not live or generate any income in that state and am pretty sure my accountant let them know I’m not filing.

This particularly state is starving for money and what better way to unearth some potential doctor tax money than collaborating with state medical boards? Or are shrinks not paying their share of taxes while teleworking in like 9 states these days?

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[michaelrack]

I’m probably overlooking something obvious. I’ve had a license in multiple states long before telepsych and COVID were a thing. This year, for the first time, I get a letter from one state’s franchise tax board saying that the medical board reported I was licensed there 3 years ago and they want proof that I filed taxes…that is, simply by virtue of having a professional license. That year I did not live or generate any income in that state and am pretty sure my accountant let them know I’m not filing.

This particularly state is starving for money and what better way to unearth some potential doctor tax money than collaborating with state medical boards? Or are shrinks not paying their share of taxes while teleworking in like 9 states these days?

It is a complicated tax situation when a doctor is working in multiple states- and details vary depending on the business organization of the practice, which state the practice is located in, and whether it is inpatient or OP, and exactly where the $ is coming from.
I live on the border of 3 different states. For my inpatient work at one hospital in a neighboring state to the headquarter of the group practice I belong to; the $ from billing patients/insurers flows through the practice and I pay state taxes based on the state the group practice is located in. On the other hand $ directly from the hospital (the hospital pays me directly as an individual for a few specific insurances) I pay state taxes to the state the hospital is located in. Sorry to make this vague but I don't want to name specific hospitals.

 

[clement]

It is a complicated tax situation when a doctor is working in multiple states- and details vary depending on the business organization of the practice, which state the practice is located in, and whether it is inpatient or OP, and exactly where the $ is coming from.
I live on the border of 3 different states. For my inpatient work at one hospital in a neighboring state to the headquarter of the group practice I belong to; the $ from billing patients/insurers flows through the practice and I pay state taxes based on the state the group practice is located in. On the other hand $ directly from the hospital (the hospital pays me directly as an individual for a few specific insurances) I pay state taxes to the state the hospital is located in. Sorry to make this vague but I don't want to name specific hospitals.

I never ran into this despite years of being licensed in various states. I was not living/generating income in all during some years and it was never a hassle. Basically they’re threatening to fine me unless I prove that my medical license didn’t generate income in said state and/or that I wasn’t a resident of the state that year. Pretty sure this came to light with covid. Yes I can hold a professional license in your state and not generate income. It’s more like an in-case type of thing..

 

[TexasPhysician]

This is an accountant problem. In most states, you don’t owe franchise taxes until you pass a certain income threshold in that state. If you have a state license for a state, you likely earned income there before and probably plan to again. Franchise tax forms are simple. You likely could have put 0’s everywhere and signed the bottom. If late, you may owe penalties. This is like the IRS: even if you owe $0 one year, you still need to send in your tax forms.

 

[Sushirolls]

This kind of scat is how tea gets thrown into harbors.

 

[psycho-matic]

I would think it's based on the state where you're located. For example, I see patients in several states through a 1099 position. I only file taxes for the state where I live. That's where I'm doing the work. I just get a paycheck every month. I've no way of knowing what % comes from a certain state nor so I care.

 

[Mad Jack]

This is why I'll never have a California medical license. Most likely this is similar to their process of domicile auditing, which I've heard they like to do for doctors and other high net worth individuals. If you're registered as a corporate entity there, you have to make sure you're filing the zeros for as long as you plan to work there. If you're an individual and not registered as any sort of business entity it's easy enough to prove you earned no income in the state and didn't reside there, but they will ask you to divulge where you live, where your bank is, who your doctors are, where you have seen patients, etc.

Not sure what other states do this, but harassing people that want to provide services to your citizens is not a good way to get those services provided

 

[michaelrack]

I would think it's based on the state where you're located. For example, I see patients in several states through a 1099 position. I only file taxes for the state where I live. That's where I'm doing the work. I just get a paycheck every month. I've no way of knowing what % comes from a certain state nor so I care.

Do you mean that you are doing telepsychiatry from your home? Unless you are working from home, the state you physically live in doesn't usually mattter for where you pay state taxes (although sometimes both states, the state where you are living, and the state in which you are working, will try to lay claim to some of the tax revenue)

 

[psycho-matic]

Do you mean that you are doing telepsychiatry from your home? Unless you are working from home, the state you physically live in doesn't usually mattter for where you pay state taxes (although sometimes both states, the state where you are living, and the state in which you are working, will try to lay claim to some of the tax revenue)

Yes, working from home.

 

[clement]

This is an accountant problem. In most states, you don’t owe franchise taxes until you pass a certain income threshold in that state. If you have a state license for a state, you likely earned income there before and probably plan to again. Franchise tax forms are simple. You likely could have put 0’s everywhere and signed the bottom. If late, you may owe penalties. This is like the IRS: even if you owe $0 one year, you still need to send in your tax forms.

I thought it was an accountant problem too-
Until my accountant punted it back on to me. Should I fire him? He’s really pricey and actually the go to guy for higher earners than me who are self employed and in need of forensic accounting or someone to defend them from audits.

He basically said write my franchise tax board a signed 1 liner saying you weren’t a state resident and had no income. However I was sent a required form with 4 options to select from (ie “I’ve already filed in said state, I’m not sure if I need to file, I am a partial resident”…etc)…None of which apply to me.

Then there is a none apply option which insinuates I’d have to provide supporting documentation. Never thought I’d have to prove that I didn’t generate income in 2021 in a state where I have an active license. Guess I have to send them a copy of my income tax from the other state.

 

[clement]

This is why I'll never have a California medical license. Most likely this is similar to their process of domicile auditing, which I've heard they like to do for doctors and other high net worth individuals. If you're registered as a corporate entity there, you have to make sure you're filing the zeros for as long as you plan to work there. If you're an individual and not registered as any sort of business entity it's easy enough to prove you earned no income in the state and didn't reside there, but they will ask you to divulge where you live, where your bank is, who your doctors are, where you have seen patients, etc.

Not sure what other states do this, but harassing people that want to provide services to your citizens is not a good way to get those services provided

Yea, those guys.

 

[ObsequiousAplomb]

I thought it was an accountant problem too-
Until my accountant punted it back on to me. Should I fire him? He’s really pricey and actually the go to guy for higher earners than me who are self employed and in need of forensic accounting or someone to defend them from audits.

He basically said write my franchise tax board a signed 1 liner saying you weren’t a state resident and had no income. However I was sent a required form with 4 options to select from (ie “I’ve already filed in said state, I’m not sure if I need to file, I am a partial resident”…etc)…None of which apply to me.

Then there is a none apply option which insinuates I’d have to provide supporting documentation. Never thought I’d have to prove that I didn’t generate income in 2021 in a state where I have an active license. Guess I have to send them a copy of my income tax from the other state.

And what's wrong with the "I'm not sure I need to file" option? I would assume that one would have a list of things to check and you would check that you never lived there nor had money pass through there.

 

[clement]

And what's wrong with the "I'm not sure I need to file" option? I would assume that one would have a list of things to check and you would check that you never lived there nor had money pass through there.

My accountant said you don’t need to file or zero file even. It’s just a nuisance and intrusive.

 

[comp1]

I mean it makes sense. If you have a license there, you should be earning some income there. I totally get how through telehealth you might be the very rare person not doing so, but that's not the case for barbers, surgeons or the vast majority of other people caught up in this sort of net. Just send the letter back saying you're not sure you need to file. Trust and believe they will get back to you if you do. In terms of your accountant, at the very least he should be handling this form for you to sign. That's the weirdest part of this story and why I'm W2 for life.