10 Tips to Complete the LLC Income Worksheet

We compiled a list of common errors we see on the LLC Income Worksheet.  / more+

New IRS Tax Preparer Requirements

Effective January 1, 2011, the IRS will require all paid tax preparers who sign federal tax returns to have a Preparer Tax Identification Number (PTIN).   / more+

New Penalty Chart

As promised at the 2009 Taxpayer Bill of Rights Hearing, we completed the FTB 1024, Penalty Reference Chart.  / more+

Statutes of Limitations on Claims for Refund or Credit

This is the second in a series of four articles on Statutes of Limitations (SOLs) that relate to California tax law. This month’s article addresses common SOLs for claims for refund or credit that are unrelated to federal action.  / more+

RDPs Must Now Use Community Property Rules to File Federal Return

On May 28, 2010, the IRS released Chief Counsel Advice (CCA) 201021050 which changes the federal tax treatment of California registered domestic partners’ (RDP) community income.  / more+

State’s First-Time Buyer Credit Almost Gone

As of June 15, 2010, we estimated receiving more than 15,000 applications claiming more than $78 million.  / more+

Register for the IRS Nationwide Tax Forums

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business.  / more+

Small Business

New Reporting Requirements for Small Tax-Exempt Organizations Begins 2011

Beginning January 1, 2011, California conforms to the 2006 federal law that requires smaller tax-exempt organizations with normal gross receipts of $25,000 or less annually, other than churches and church-related organizations, to electronically file an annual informational notice with us under R&TC Section 23772.  / more+

Ask the Advocate

Staff Introductions

The Taxpayers’ Rights Advocate is a legislatively mandated position under R&TC Section 21004. The Taxpayers’ Rights Advocate’s Office identifies systemic problems and find solutions in a cooperative effort, while protecting taxpayers’ rights and recognizing the goals of our audit, collection, and filing programs.  / more+

Inside FTB

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

Criminal Corner

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

Assembly Bills

• AB 1779 (Niello, et al.) Mortgage Forgiveness Debt Relief Modification and Extension – Amended 05/03/10
• AB 1899 (Eng/Lieu) State Agencies Post Specified Audits & Contracts To The Reporting Transparency In Government Internet Web Site – Amended 05/28/10
• AB 2017 (Hall, et al.) California YMCA Youth And Government Fund – Amended 05/28/10
• AB 2041 (Villiness/Smyth) Health Savings Account Deduction Conformity – Amended 05/11/10
• AB 2126 (Garrick, et al.) Minimum Franchise Tax/Small Businesses That First Commence Business On Or After January 1, 2011, Exempt First Taxable Year And $100 Succeeding 9 Taxable Years – Amended 05/18/10
• AB 2148 (Tran/Portantino) Deduction For Physician’s Medical Services Performed Free Of Charge To Local Community Clinic Or Emergency Department Of General Acute Care Hospital – Amended 05/18/10
• AB 2403 (Strickland) State Agencies Post Specified Audits & Contracts To The Reporting Transparency In Government Internet Web Site – Introduced 02/19/10 & Amended 04/26/10
• AB 2528 (Knight) Exclusion/Payments Or Vouchers From Federal Consumer Assistance To Recycle & Save Act Of 2009 (aka “Cash For Clunkers”) – Amended 05/05/10
• AB 2559 (Perez, John A.) State Agencies/Prohibits Requiring Social Security Numbers For Benefit, Service, Privilege, Or Participation In Any Program – Introduced 02/19/10
• AB 2589 (Tran) Dual Renewable Energy Device Credit – Amended 04/08/10
• AB 2605 (De La Torre) State Property Sales Or Long-Term Leases – Amended 06/01/10
• AB 2630 (Emmerson/Cook, et al.) Jobs Tax Credit – Amended 05/18/10

Senate Bills

• SB 1008 (Padilla) Limited Partnerships & Foreign Limited Partnerships/Engineers & Land Surveyors – Amended 03/15/10 & 04/28/10
• SB 1391 (Yee) Employer Tax Credit/Reporting Information/New Credits Chaptered After January 1, 2011, Would Be Recaptured If Taxpayer Has Net Decrease In Full-Time Employees – Amended 05/19/10
• SB 1426 (De Saulnier, et al.) State Budget/ Two-Year Spending Plan – Introduced 02/19/10
• SB 1463 (De Saulnier) Corporate Flexibility Act Of 2010/Flexible Purpose Corporation – Introduced 02/19/10 & Amended 04/05/10
• SBX6 19 (Florez) FTB Compile Specified Corporation Tax Expenditure Information & Include On The State Reporting Transparency In Government Internet Web Site – Introduced 05/26/10

Heads-Up – Changes in Pass-through Entity Return Penalties

Recently signed legislation, SB 401, changed the partnership late filing penalty and added a new late filing penalty for S corporation returns.  / more+

How do I Report a Short Sale?

In prior issues of Tax News we have addressed several issues related to foreclosures. In our February 2010 issue, we addressed how the State of California civil procedures interact with the Internal Revenue Code 108.  / more+

Tax Relief to Baja California Quake Victims

We offer taxpayers affected by the Baja California earthquake in the federally-declared disaster area special tax relief.  / more+

Statutes of Limitations on Assessments

This is the first in a series of four articles on Statutes of Limitations (SOL) that relate to California tax law. This month’s article addresses common SOLs for assessments unrelated to federal action.  / more+

Available Now: Free California Source Income Withholding Webinar in June 2010

We will host a free California source income withholding webinar in June 2010. The topic is Property Management Withholding. / more+

IRS Nationwide Tax Forums Registration Available!

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business.  / more+

Small Business

Does Your Client Know that the Estimated Tax Payment Percentages Changed for 2010?

In 2009, the estimated payment percentages were 30 percent, 30 percent, 20 percent, and 20 percent for respective quarters. For taxable years beginning on or after January 1, 2010, the estimated tax payment percentages have changed for individuals and corporations.  / more+

Ask the Advocate

What You Should Know About FTB Wage Garnishments

An Earnings Withholding Order for Taxes (EWOT) is a continuing wage garnishment on earnings due to a taxpayer from an employer and is subject to the provisions of the Code of Civil Procedure Section 706.010 et seg.   / more+

Inside FTB

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

Estimated Fee for LLCs Due

For most calendar year LLCs, June 15 is the date that their 2010 estimated LLC fee is due. For fiscal year LLCs, the estimated fee is due on the 15th day of the sixth month of the current taxable year. LLCs use Form 3536, Estimated Fee for LLCs, to make their estimated fee payments.  / more+

New Home Tax Credits Available

The 2010 New Home/First Time Buyer tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. / more+

Withholding Agents Who Fail to Withhold

A withholding agent is required to withhold seven percent from all payments or distributions of California source income made to a nonresident payee unless the withholding agent receives authorization from us for a waiver or reduced withholding amount. / more+

Available Now: Free California Source Income Withholding Webinars

We will host free California source income withholding webinars in May 2010.  / more+

Consider an Installment Agreement for Your Clients with Tax Bills

Now that you’ve got those returns filed for your clients, some of them may be returning to your office with Statements of Tax Due from us. Some may have forgotten to send in a check, or if they were short on cash, they may have sent in a partial payment, or no payment at all resulting in the tax bill. The best advice you can give them is to contact us immediately to let us know the situation and to discuss payment options.  / more+

IRS Nationwide Tax Forums Registration Available!

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business.  / more+

Small Business Fair

The Riverside Small Business Fair is a special event designed to help small businesses by connecting them with representatives from over 40 federal, state, and local government agencies.  / more+

2009 Bill of Rights Annual Report

Read about what the Taxpayer’s Rights Advocate is telling the Legislature on your behalf in the 2009 Bill of Rights Annual Report.  / more+

Small Business

If Your Clients Have an Online Business – They May Owe State Taxes

We, along with the California State Board of Equalization (BOE), urge online buyers and sellers to be informed about their tax obligations.  / more+

Ask the Advocate

Doing Business

As you know, I get many questions from practitioners about how to handle their client specific issues. This month, I received an interesting question from a practitioner in the bay area relating to “doing business.”  / more+

Inside FTB

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

Criminal Corner

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

Assembly Bills

• AB 1836 (Furutani) PIT Rates/Increase Maximum Rates To 10 Percent & 11 Percent & AMT To 8.5 Percent Beginning On Or After January 1, 2011, & Before January 1, 2016 – Amended 04/05/10
• AB 1990 (Anderson) Unemployed Worker’s Child Care Costs Contributions Credit – Amended 04/05/10
• AB 2041 (Villines/Smyth) Health Savings Account Deduction Conformity – Introduced 02/17/10 & Amended 03/10/10
• AB 2177 (Beall) Allow Electronic Communication To Taxpayers To Inform Of Tax Change Or Obligation – Amended 04/14/10
• AB 2492 (Ammiano) Property Taxes/Change In Ownership – Amended 04/08/10
• AB 2591 (Feuer/Perez) State Budget/Nonrecurring Revenue/FTB & BOE identify Each Source Of General Fund Proceeds Of Taxes Higher Than Tax Proceeds Received In Preceding Fiscal Year & Report To Legislature, Governor, Controller & Public By May 15 Each Year – Amended 03/17/10
• AB 2630 (Emmerson, Cook, et al.) Employer Hiring Credit – Introduced 02/19/10
• AB 2640 (Arambula) Section 1245 Property Credit For Manufacturer’s Investment In Qualified Property/Eliminate Income Exclusion Of Free Or Subsidized Parking For Participating In A California Ridesharing Arrangement – Amended 04/08/10
• AB 2641 (Arambula/Solorio) Tax Expenditures/Legislative Review Of Each Tax Expenditure/Add 5 Year Sunset – Amended 04/27/10
• AB 2656 (De Leon) Postsecondary Education/Contracts For Academic Research – Amended 04/08/10
• AB 2665 (Strickland) Service Station Emergency Standby Generator Credit – Amended 04/26/10

Senate Bills

• SB 913 (Calderon) Principal Residence Credit – Introduced 01/28/10
• SB 952 (Wyland) Repeal PIT Temporary Rate Increases/Repeal Decreased Personal Exemption Credit for Dependents/Withholding Tables/Eliminate 10 Percent Increase – Introduced 02/04/10
• SB 952 (Wyland) Repeal PIT Temporary Rate Increases/Repeal Decreased Personal Exemption Credit for Dependents – Amended 04/05/10
• SB 1073 (Ashburn) Research Expense Credit/20 Percent Of Qualified Green Technology & Renewable Energy Research And Development Costs – Introduced 02/17/10
• SB 1185 (Maldonado) Adopted Animal Food And Supply Costs Deduction – Introduced 02/18/10
• SB 1216 (Cedillo) Low-Income Housing Credit/Allocation Of Surplus Credits By The California Tax Credit Allocation Committee – Amended 04/05/10
• SB 1244 (Walters) Limited Liability Company Employment Taxes – Amended 04/21/10
• SB 1272 (Wolk) Tax Expenditures/Add 7 Year Sunset – Amended 04/21/10
• SB 1391 (Yee) Employer Tax Credit/Reporting Information/New Credits Chaptered After January 1, 2011, Would Be Recaptured If Taxpayer Has Net Decrease In Full-Time Employees – Amended 04/06/10
• SB 1430 (Walters) Renter Credit & Homeowners’ Property Tax Exemption/Increase Credit & Exemption Amounts For Taxpayers 62 Or Older – Introduced 02/19/10 & Amended 03/24/10

Senate Special Session Bills

• SBX6_14 (Calderon/Correa) Mortgage Forgiveness Debt Relief Extension – Introduced 03/11/10
• SBX8_58 (Dutton/Runner) Research Expense Credit/20 Percent Of Excess Qualified Expenses/Conformity To Election Of Alternative Incremental Credit – Introduced 02/12/10

FTB Conforms to IRC Section 409A

On January 19, 2010, the Internal Revenue Service (IRS) released Notice 2010-6. It allows taxpayers to correct certain operational failures of nonqualified deferred compensation plans in order to comply with IRC Section 409A. / more+

FTB at a Glance Revised and Online

Need a quick overview of our programs, resources, and processing statistics? / more+

Tax Delinquency Letters Mailed

We mailed the Notice of Public Disclosure of Tax Delinquency letters on February 19, 2010. / more+

Fraudulent W-2s

Every year, tax professionals are faced with what to do when presented with documents they think may not be legitimate, of particular concern, fraudulent W-2s. / more+

California Winter Storm Victims Get State Tax Relief

On March 1, 2010, the President declared several counties a major disaster. / more+

California Combined Reports Missing Information

It has come to our attention that numerous combined reports are being filed with missing or incomplete information. / more+

Haiti Donations Are Immediately Tax-Deductible

We announced that a new state law allows taxpayers to immediately deduct their donations made to provide relief for the January 12 Haitian earthquake victims. / more+

Unclaimed Earned Income Tax Credit

Do your clients know someone who qualifies for the Earned Income Tax Credit (EITC)?  / more+

Paying Electronically Saves Time

We all know that going paperless saves time, hassle, and trees. Paying electronically means your client doesn’t have to spend time writing and mailing a check. It also ensures that their payment is quickly applied to their account. We encourage them to use one of the many options we offer for electronic payments. But which is right for them? / more+

IRS Nationwide Tax Forums Registration Available!

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business. / more+

Information for Charities and Nonprofits, Exempt Organizations

We recently updated our Charities and Nonprofits (Exempt Organizations) webpage. / more+

Statute of Limitations on Collection Actions

For many years, no statute of limitations existed on the collection of an income or franchise tax delinquency. Beginning in 2006, a statute of limitations on our collection actions went into effect. / more+

Small Business

Dissolving an Entity

Does your client plan to dissolve, surrender, or cancel business operations in California? / more+

Ask the Advocate

Provisional Assessments

We have received questions regarding our practice of issuing provisional assessments. This article is a brief explanation of the process and the authority to make such adjustments. / more+

Inside FTB

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

Criminal Corner

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

Systemic Issue Update

Sharing our efforts, progress, and changes we have made from your comments and suggestions submitted through the Systemic Issue Management System. / more+

Big Business

S Corporations – New Withholding Rule for the 2009 Form 100S

Beginning tax year 2009, S corporations may claim withhold at source on their S corporation return, but not in excess of their tax liability. / more+

From an updated taxpayer’s bill of rights to W-2 information, click below to find a news summary from the Franchise Tax Board for March 2010.

Click here to visit site.

The Sacramento Bee broke the story this morning regarding he senate committees limit on NOLs and getting rid of the ability to transfer tax credits between affiliated companies. Below is the story:

Democratic gas tax plan rolls back corporate tax benefits
The Senate Budget Committee on Tuesday approved rollbacks of two corporate tax benefits as part of a complex gas-tax swap to help close the state’s $19.9 billion deficit.

The committee also approved a 4.8 percent surcharge on residential and commercial property insurance, which would raise roughly $200 million for the general fund.

The Democratic proposal allows companies to apply only 68 percent of past operating losses against their income in 2010, shrinking that tax benefit and increasing state revenues from corporate taxes. Existing state law allows companies to apply 100 percent of certain past operating losses against income in 2010.

The proposal also would prevent corporations from assigning tax credits in 2010 to affiliated corporations or subsidiaries. Current state law allows that practice to occur starting this year.

Those two changes would allow the state to raise $655 million for the general fund. Democrats believe they can pass the changes on a majority-vote basis because they are decreasing taxes on gasoline by a comparable amount, theoretically making the change “revenue neutral.” Gov. Arnold Schwarzenegger had proposed suspending those two tax benefits — among others — but only if the state failed to get enough federal help.

The California Teachers Association is gathering signatures to place an initiative on the November ballot that would block those tax benefits permanently.

The Senate Budget Committee passed the changes Tuesday on an 8-2 party-line vote. The full Senate and Assembly would still have to approve the plan.

The thrust of the gas-tax plan is the elimination of state sales tax on gasoline, replacing that sales tax with an excise tax on gas. That would allow the state to account for gasoline taxes in a different way that saves the state $920 million in general fund dollars. All told, the proposal would cut the deficit by nearly $1.6 billion. Drivers would save roughly 3 cents per gallon in 2010–11.

Transit agencies would lose out under the Democratic plan, but not by as much as under Schwarzenegger’s proposal. Democrats would preserve sales tax on diesel fuel, generating an estimated $313 million annually. The state also would give transit agencies $400 million for operations out of an existing transportation account.

The Democratic plan would allow local governments to place on the ballot an additional fee on gasoline to pay for transit. Voters would have to approve any such fee by a majority vote.

Republicans questioned that part of the proposal, suggesting that it was a back-door way of raising revenues without meeting requirements for a tax hike. Democrats responded by saying they were only expanding the authority of local officials.

Categories: State budget, Taxes

Posted by Kevin Yamamura

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, we 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, we 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, we collected a record $1.4 billion from taxpayers participating in tax shelters during our 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?”

We 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+

Legislative wrap-up 2009

Here is our 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, we 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

Our 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 we 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 we 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 we 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 our department. / more+

Inside FTB

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

Gross receipts fees discussed at CalCPA

On October 28, we attended the CalCPA Committee on Taxation, our annual liaison meeting. We shared legislative updates affecting us, changes to our auditing and collections, and new communication products available to our taxpayers and tax professionals. / more+