COT-FTB recap: top tax delinquents, BOE updates discussed.
State's Top 500 Tax Delinquency List
This list actually has had an impact in getting one tax dawdler to shape up. This is a true story of a taxpayer who had been successful in stalling and breaking promises with respect to paying his California income taxes.
After much effort, the collection arm of FTB threw down the gauntlet and told this particular taxpayer, if he didn't pay up by a certain date, they'd put him on the list of the top 500 tax delinquents. Wow! That got action, and returns that had been sitting in his CPA's computer for a while suddenly got signed, filed and paid.
The FTB's November "Tax News" said that the total delinquencies of those on that list total $132.5 million. Pages 15-17 of that issue also contain the texts and FTB answers to three of the 18 questions submitted by CalCPA's COT to the FTB in October.
Reporting IRS Changes, Adjustments to the FTB
At the liaison meeting, it emerged that the IRS doesn't automatically notify the FTB of revisions or corrections. That came as a surprise for most in attendance. Nevertheless, most CPAs advise clients to notify the FTB of changes that the IRS has made because failure to do so extends the statue of limitations.
If the FTB isn't notified within six months after receiving the notice of the IRS change, then the FTB has four years after the IRS change--instead of the normal two--to issue a Notice of Proposed Assessment (NPA).
With the soon to be released My FTB Account, taxpayers will have the ability report their federal adjustments online.
California College Access Tax Credit Fund
Spidell's California Tax Letter has been emphasizing its analysis that contributions to that fund can bring a tax benefit of more than 90 percent of the amount contributed. The amount contributed is also a charitable deduction for federal income tax purposes. See the numerical example beginning at the bottom of Page 12 (November 2014 issue).
A California Superior Court found that Swart Enterprises was not doing business in California by owning a small part of a California LLC in which it was not a managing member. Although Swart would not be subject to the $800 minimum tax, it would be subject to the California income tax on the California source income that was allocated to it from the LLC.
A Notice of Appeal to the California Fifth District Court of Appeal was filed Jan. 26 on behalf of the FTB, but the appeal doesn't seem to have been decided. The 2009 tax in dispute is $1,106.71 (source, CalCPA Tax Committee meeting Sept. 17, agenda item IVB).
California State Board of Equalization
1. The handbook section for equipment fixtures valuation has been revised for 2016. It can be obtained online as Letter to County Assessors, No. 2015-053, California State Board of Equalization, Nov. 25, 2015.
2. The BOE added a link for tax practitioners in the footer (bottom left side of www.boe.ca.gov) that goes to the tax practitioners' page (www.boe.ca.gov/industry/tax-practioners.html)
3. The BOE updated its resource guide of free sales and use tax (and other taxes and fees administered by the BOE) products and services for small businesses. See BOE Publication 51, Resource Guide, California State Board of Equalization, Aug. 2015.
4. Effective Jan. 1, the California sales and use tax rate for several partially exempt sales and purchases is 2.25 percent, plus applicable district taxes (Special Notice L-440, California BOE, Nov. 2015).
It will apply to qualifying sales and purchases of:
* Farm equipment and machinery;
* Teleproduction or other postproduction service equipment;
* Diesel fuel used in farming activities or food processing;
* Timber harvesting equipment & machinery; and
* Racehorse breeding stock.
Thanks to Kelly Bluth of Moss Adams and Bob Jones, CPA for their contributions to this column.
Leonard W. Williams, CPA is a Sunnyvale-based sole practitioner. A member of Cal CPA's Committee on Taxation, the AIC PA Tax Division and a former Peninsula Chapter president, you can reach him at firstname.lastname@example.org.
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|Title Annotation:||CA Tax|
|Author:||Williams, Leonard W.|
|Date:||Jan 1, 2016|
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