Proposition 30 California Tax Increase –Tax Penalty Waiver.

The Franchise Tax Board has announced that taxpayers affected by the retroactive personal income tax increase (Proposition 30), may pay the amount due with their 2012 tax return.   Taxpayers subject to underpayment of estimated tax penalties may request relief by completing Form 5808 Underpayment of Estimated Taxes by Individual and Fiduciaries and completing Part 1, question 1 with the explanation that the underpayment is due to Proposition 30.

Have You Been a Bad Bad Taxpayer? No Worries California is Willing to Give You a Break

Even if you have been a bad taxpayer, California is willing to give you a break.

Voluntary Compliance Initiative 2 (VCI 2) is an opportunity for taxpayers who underreported their California income tax liabilities, through the use of abusive tax avoidance transactions (ATAT) or offshore financial arrangements (OFA), to amend their returns for 2010 and prior tax years and obtain a waiver of most penalties.

Filing period: August 1, 2011 to October 31, 2011

Applicable tax years: 2010 and prior

Eligibility

You are eligible to participate in VCI 2 if you (or one of your related entities):

  • Filed a tax return that underreported your income or tax liability through the use of an ATAT or OFA.

You are eligible even if you:

  • Are currently under FTB examination for an ATAT or OFA.
  • Are currently under administrative protest or appeal for an ATAT or OFA.
  • Participated in the IRS’s Offshore Voluntary Disclosure Initiative.

Participation

You must take the following steps to participate:

  1. File a completed Participation Agreement form with us between August 1, 2011 and October 31, 2011.
  2. Attach the form to your amended return to report all income from all sources, without regard to the ATAT and including all income from the OFA.
  3. Pay all tax and interest by October 31, 2011. See payment options for more information.

Benefits

Participation in VCI 2 will allow you to avoid:

  • The cost of litigation.
  • Certain penalties and the associated interest.
  • Criminal prosecution.

Penalties

You can avoid the following penalties under VCI 2:

  • Noneconomic Substance Transaction Understatement Penalty
  • Accuracy Related Penalty
  • Interest Based Penalty
  • Fraud Penalty

If you are eligible but do not participate, you will be subject to the full range of penalties and interest, and may be subject to criminal prosecution.

The Large Corporate Understatement Penalty (LCUP) and the Amnesty Penalty cannot be waived under this initiative.

March FTB News: Includes Info on How to Efile Your California Return With a New Home Credit

Updated Taxpayers´ Bill of Rights

[The FTB] recently revised [their]  publication 4058C, California Taxpayers’ Bill of Rights. / more+

Does your client know where to send the “state copy” of an information return?

You may be asked by your client where they need to send the “state copy” of an information return. If they filed paper returns with IRS, they do not need to send a paper copy to FTB. / more+

Available now: Free California source income withholding webinars

[The FTB]  will host free California source income withholding webinars in March 2010. / more+

The best way to file a protest

Has your client recently received a Notice of Proposed Assessment for added tax resulting from [an FTB] audit examination? Does your client plan to file a protest? / more+

New home credit can be e-filed

Did you know you can e-file California returns that contain the New Home Credit?  / more+

Do all your tax stuff online!

With instant access to taxpayer information, 24 hours a day, doing your tax stuff online will save you, and your clients, time and hassle. / more+

Need W-2 information?

Some clients may have difficulty getting their W-2 information. / more+

Small Business

Small Business Virtual Webinar

[The FTB] partnered with Board of Equalization (BOE) to present cost effective and convenient educational products, including a complete online seminar package that enables taxpayers to get answers to the most commonly asked questions. / more+

Ask the Advocate

FTB responds to tax community´s proposals

The annual Taxpayers´ Bill of Rights Hearing was held December 3, 2009. [The FTB] received several proposals and recommendations from the tax community. / more+

Inside FTB

Take a look at the changes happening at FTB. / more+

Criminal Corner

[The] monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time. / more+

Big Business

Interested Parties Meeting on Specialized Tax Service Fees

[The FTB] scheduled an interested parties meeting for March 16, 2010, at 1 p.m. to discuss amendment of California Code of Regulations, title 18, section 19591 (Specialized Tax Service Fees), to establish the amount of the fee for the issuance of a limited partnership revival confirmation letter, as required by Revenue and Taxation Code section 19591, subdivision (b)(3), for periods on or after January 1, 2011. / more+

California February Tax News From the FTB – Includes Info on California’s New Job Tax Credit

Top 12 tax scams

It’s a new year and a good time to remind [you] about the top tax scams. / more+

Pass-through entities must timely file original tax returns claiming new jobs tax credit in order for owners to claim the credit

A new jobs tax credit of $3,000 is available to small businesses with 20 or less employees for each additional net full-time employee hired and employed in California for tax years beginning on or after January 1, 2009. The total amount of the credit that we can allocate may not exceed $400 million, and claims must be made before a statutorily provided “cut-off” filing date. / more+

Using the Annualization Method in 2009 and 2010

Estimated tax payments have undergone many changes since we started filing season one year ago. / more+

Small Business

Timing is everything

[Are you]considering making an S corporation election? Selling or exchanging 50 percent or more of the total interests in an LLC or limited partnership? / more+

Ask the Advocate

Withholding and estimate tax payment changes

This summer the California legislature again revised the estimated tax payment percentages, and also passed some clean-up legislation to clear up confusion on how wage earners with only wage withholding would meet the new estimated tax payment requirements. / more+

Inside FTB

Take a look at the changes happening here at FTB. / more+

Criminal Corner

[The FTB’s] monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time. / more+

Big Business

California code of civil procedure and foreclosures

Will you clarify how California civil procedures interact with the Internal Revenue Code (IRC)? Specifically how does California Civil Procedure Code (CCP) Sections interact with IRC Section 108, Income from Discharge Indebtedness? / more+

California FTB News – Includes Info on Same Sex Marriages

California recognizes out-of-state same-sex marriages

On October 11, 2009, the Governor signed Senate Bill 54, which provides that a marriage between two persons who have entered into a same-sex marriage outside the State of California prior to November 5, 2008, that was valid by the laws of the jurisdiction in which the marriage was contracted, is valid in California. / more+

Military Spouses Residency Relief Act

The Military Spouses Residency Relief Act (MSRRA) was signed into law by the President on November 11, 2009. For taxable years beginning on or after January 1, 2009, a service member’s spouse is considered a nonresident for tax purposes if the servicemember and spouse have the same legal residence or domicile outside of California and the spouse is in California solely to be with the service member who is serving in compliance with military orders. / more+

Mandatory e-pay penalty update: Not assessed in 2010

When you are required to make electronic payments but pay by other means, [the FTB] can assess a penalty equal to one percent of the amount paid, unless your failure to pay electronically was for reasonable cause and not willful neglect. / more+

Luxury Auto Pilot Program

Each year, [the FTB] receive and process millions of income information records. The nonfiler program uses federal tax return information, information from other California state agencies, third-party data, and income estimates from self-employed activities to determine if a taxpayer has a filing requirement. / more+

EITC Awareness Day is January 29, 2010

The IRS in partnership with local organizations in your area will kick off of the Earned Income Tax Credit (EITC) Awareness Day event on January 29 to promote the federal tax credit. / more+

Consultants wanted: California seeks experts knowledgeable in abusive tax shelter transactions

Abusive Tax Avoidance Transactions (ATAT) cost California billions of dollars each year. In 2004, [the FTB] collected a record $1.4 billion from taxpayers participating in tax shelters during [their] Voluntary Compliance Initiative. / more+

Get ready for the filing season with e-Services

During these difficult times, it is increasingly important to work both smart and efficiently. / more+

Head of Household guidelines

Our filing season is just around the corner. Some of your clients may inquire about claiming our head of household filing status. This filing status provides a lower tax liability and a higher standard deduction than the single filing status. / more+

California’s Enterprise Zones Wage Credit

In our June 2009 issue of Tax News we asked the question, “Are you familiar with California’s Enterprise Zones?”

[The FTB] now ask, “Are you aware some taxpayers who work in an Enterprise Zone may be entitled to a credit for the wages they earned?”  / more+

Small business

Misleading letter schemes target corporations and LLCs

Your business clients may receive a misleading letter to file board minutes and/or a statement of information for a fee. Because the letters look and sound official, your clients may be quick to send payment. But wait! Read the fine print, “…products or services being offered are not approved or endorsed by any government agency.” / more+

Ask the advocate

Taxpayers’ Bill of Rights Hearing

The Annual Taxpayers’ Bill of Rights Hearing was held December 3, 2009, at FTB headquarters in the Gerald H. Goldberg Auditorium. We received four proposals in advance and representatives from two organizations made presentations. We are in the process of preparing responses to the proposals we received. / more+

Inside FTB

Take a look at the changes happening here at FTB. / more+

Criminal corner

Our monthly summary of bringing tax criminals to justice and closing the tax gap one case at a time. / more+

December California News From the Franchise Tax Board

Legislative wrap-up 2009
Here is [an] annual summary of tax-related legislation enacted this session. / more+

Free backup withholding webinar
California conforms to federal backup withholding beginning January 1, 2010. / more+

Corporation tax law changes in California
Recently enacted California legislation adopted new statutes and amended existing statutes that result in major changes to how corporations are taxed in California. / more+

Find forms faster and easier with our form locator
On December 15, 2009, [the FTB] will have a new search tool on our forms webpage; it is called the Form Locator. / more+

Provisional payment plan pilot program begins December 2009
[The FTB’s] collection response and resolution section will begin to offer a provisional payment plan for personal income taxpayers. Taxpayers who qualify for this pilot program will be allowed to make payments towards their tax liability without involuntary collection action taking place, while they prepare and submit their missing valid tax returns to us. / more+

Top 10 personal income tax errors that delay return processing – 2009
Check to see where [the FTB] found the most common errors on personal income tax returns. / more+

Top 10 business entity errors that delay return processing – 2009
Check to see where [the FTB] found the most common errors on business entity returns. / more+

Small business

Will your client qualify for the new jobs credit?
Newly enacted state law, ABX3 15 (Assembly Budget Committee, Stats. 2009 Third Extraordinary Session, Ch. 10) allows a potential income tax credit of $3,000 to a qualified taxpayer for each additional full-time employee hired. / more+

Ask the advocate

Communication guidelines
Quite often [the FTB] receive questions from taxpayers and practitioners on issues relating to the interpretation of provisions of the R&TC as well as policies and procedures of [the FTB’s] department. / more+

Inside FTB
Take a look at the changes happening here at FTB. / more+

Criminal corner
[The FTB] monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time. / more+

Big business

Gross receipts fees discussed at CalCPA
On October 28, [the FTB] attended the CalCPA Committee on Taxation, [the FTB’s] annual liaison meeting. [the FTB] shared legislative updates affecting [the FTB], changes to [their] auditing and collections, and new communication products available to [their] taxpayers and tax professionals. / more+

California Franchise Tax News – October

[Stacie says: This directly from the Calfiornia Franchise Tax Board’s website, is October Tax News]

Coming Soon – Resident, Nonresident, and Real Estate Withholding Form and Processing Changes Begin in 2010

Effective January 1, 2010, we will be implementing changes for withholding forms and payments. / more+

Adjusted Interest Rate for January 2010 to June 2010
Pursuant to Revenue and Taxation Code Section (R&TC) 19521 (formerly 19269), the adjusted interest rate has been determined for the period January 1, 2010, through June 30, 2010. / more+

Thousands of Businesses Need to File State Tax Returns
On September 14, 2009, we began contacting more than 35,000 companies that did business in California in 2007, but failed to file a state tax return for that year. / more+

Form 540 Gets a Mini-Makeover
Each year our forms section revises the previous year forms and publications to reflect the new tax year, new information, and law changes. / more+

IRS Tax Calendar
The Tax Calendar for Small Businesses and Self-Employed is now available. / more+

It’s Official! California Backup Withholding Begins January 1, 2010
Beginning January 1, 2010, with certain limited exceptions, payers that are required to withhold and remit backup withholding to the Internal Revenue Service (IRS) are also required to withhold and remit seven percent of the payment to FTB. / more+

Small Business
What Does Conformity Mean to the Small Business Owner?
California conformity to federal tax law is an area of interest for California taxpayers and small business owners. / more+

Ask the Advocate
Indexing Tables
I have received a number of questions through our Systemic Issue Management System on indexing since California released its indexing tables in August. / more+

Inside FTB
New Policy for FTB Installment Agreements
In our public outreach efforts, we offer different forums for CPAs, enrolled agents, attorneys, corporate tax personnel, and all other tax professionals to have the opportunity to discuss cutting-edge tax topics, provide input, while earning Continuing Professional Education credits. / more+

Criminal Corner
Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time./ more+

Big Business
Business Foreclosures or Short Sales
In our July 2009 Tax News, we addressed some of the questions we had been receiving related to a foreclosure or a short sale of a personal residence. The other question we have received asks, “What if the foreclosure is on my rental property?” / more+

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