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+

California Franchise Tax Board Reminds Us That Your Third Estimated Tax Payment is Due September 15

Your third 2009 quarterly estimated tax payment is due by September 15, 2009.

The FTB has a free Web Pay service to easily pay your estimated tax online. You will need the following to pay online:

Your social security number

The last name you used when you filed your 2007 income tax return.
Your bank account number and bank routing number.

Don’t want to use Web Pay?

View all your payment options.

If you mail a check or money order, be sure to include Form 540-ES, Estimated Tax for Individuals, with your payment.

September California Franchise Tax News

More information directly from the California Franchise Tax Board.

Clarification of the “Cash for Clunkers” Tax
Rules

The federal “Cash for Clunkers” program has generated a lot of interest among consumers and we have received many inquires about the tax implications of this popular program. / more+

Did You Know NHSC Loan Repayment Awards Are Exempt Under California Law?
National Health Services Corps (NHSC) loan repayment program provide payment of student loans for participants who provide certain services in areas where shortages of these services exist. / more+

Federal and State Income Tax Changes

Federal, State, and Revised 2009 Withholding Tables. / more+

How to Select a Tax Preparer

How to Select an Income Tax Return Preparer, FTB 982, is an educational tool for taxpayers. / more+

Chiang Determines Date to Stop Issuing IOUs

State Controller John Chiang today announced he has completed “stress testing” the Department of Finance’s cash projections from the state’s newly-revised budget and has determined the new spending plan will provide the State Treasury with enough cash to stop issuing IOUs on September 4, almost one month earlier than expected. / more+

Small Business
Does Your Client Know to Dissolve, Surrender, or Cancel Their Business Entity When They Are No Longer Doing Business?

It is very important for taxpayers to understand that business entities registered with the California Secretary of State (SOS) must be dissolved, surrendered, or canceled when they are ceasing operations in California.

/ more+

Ask the Advocate

Reasonable Cause

Recently, I have received requests from taxpayers to have certain penalties waived for what they believe may qualify for reasonable cause. / more+

Inside FTB

New Policy for FTB Installment Agreements

We have implemented a uniform Installment Agreement (IA) Policy throughout our department, and external website. / more+

Criminal Corner

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

California Franchise Tax Board Tax News August 2009

The following infomation is from the California Franchise Tax Board’s web site.

Registered Warrants Can Pay Your State Income Tax Bill
[The FTB will] accept California registered warrants (IOUs) as payment of current and past due personal and corporate tax obligations. / more+

State’s New Home Tax Credit Gone
[The FTB] stopped accepting applications for the new home tax credit at midnight, Thursday, July 2, 2009. / more+

FTB Provides Guidance for California Treatment of the Revised Texas Franchise Tax
On July 20, 2009, [the FTB] responded to the request for taxpayer guidance to determine the general eligibility for the Other State Tax Credit (OSTC) and the deductibility of the Revised Texas Franchise Tax (RTFT). / more+

Did You Know [the FTB works with others]?
[The FTB] came together with the Board of Equalization, Employment Development Department, and the IRS in a cooperative partnership called the Joint Tax Agency Communications Committee. / more+

15th Annual Tax Practitioner/IRS Town Hall Meetings
In September, [the FTB] will be working with the IRS and other state agencies at the 15th Annual Tax Practitioner/IRS Town Hall Meetings. / more+

Striking Gold in California
Striking Gold in California is an educational tool for small business owners that provide basic tax information from the Internal Revenue Service and the three California tax agencies, all in one place. / more+

Small Business
Converting a California LLC to a Corporation
[Do you want] to convert [your] limited liability company (LLC) to an S-Corporation and continue to have the profits and losses flow through to its members? Did you know that you can convert an LLC into an S-corporation by making an election? / more+

Ask the Advocate
Systemic Issue Management System (SIMS) at Work
This month, I share the efforts we are taking by discussing an issue that was submitted to us and our response… / 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
Disclosing Deferred Intercompany Stock Account (DISA) Balances
FTB issued Notice 2009-5 on July 17, 2009, to extend the due date until October 15, 2009, for taxpayers to file a completed FTB Form 3726, Deferred Intercompany Stack Account (DISA) and Capital Gains Information. / more+

2009 California Tax Law Changes

Estimated Tax Payments – Installments due for each taxable year beginning on or after January 1, 2009 are now required to be 30 percent of the required estimated tax liability for the 1st and 2nd required installments and 20 percent of the required estimated tax liability for the 3rd and 4th required installments. Prior to this law change, installments were made in four equal (25%) payments.

Taxpayers with adjusted gross income over $1,000,000 ($500,000 for married/RDP filing separately) may no longer compute estimate payments based on 100% of the tax shown on the return of the preceding year. Estimates must be based on the current years income.
Taxpayers with a tax liability less than $500 ($250 for married/RDP filing separately) do not need to make estimated tax payments.

Electronic Payments – Taxpayers are required to remit their payments electronically if they make an estimated or extension payment exceeding $20,000 for taxable year 2009 or the total tax liability shown on their original 2009 tax return exceeds $80,000. Once you meet the threshold, all payments regardless of amount, tax type or taxable year must be remitted electronically. Electronic payments can be made using Web Pay on FTB’s website, by using electronic funds withdrawal (EFW) as part of the e-file return, or by using your credit card.

Any taxpayer required to remit a payment electronically who makes a payment by other means, shall pay a penalty of one percent of the amount paid, unless it is shown that the failure to make a payment as required was for a reasonable cause and was not the result of willful neglect.

Net Operating Loss – For taxable years beginning in 2008 and 2009, California has suspended the net operating loss (NOL) carryover deduction. Taxpayers may continue to compute and carryover an NOL during the suspension period. However, taxpayers with net business income of less than $500,000 or with disaster loss carryovers are not affected by the NOL suspension rules.

The carryover period for suspended losses is extended by:
• Two years for losses incurred in taxable years beginning before January 1, 2008.

• One year for losses incurred in taxable years beginning on or after January 1, 2008, and before January 1, 2009.

Also, NOL carrybacks, NOL carryovers, and the number of taxable years to which the loss may be carried, are modified. For more information, see form FTB 3805V, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations – Individuals.

Whats New 2008 California Tax Law Changes

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