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Erroneous underpayment penalties issued.

For taxable years beginning Jan. 1, 2009, California requires individual taxpayers with California AGI equal to or greater than $1 million ($500,000 for married/RDP filing separately] to pay 90 percent of the current year tax or be subject to the underpayment of estimated tax penalty (see notice FTB 5805).

However, FTB systems did not allow the $500/$250 tax liability prior year exception for a 2009 tax year return reporting an AGI equal to or greater than $1 million ($500,000 for married/ RDP filing separately). As a result, notices with incorrect penalties were sent out.

The FTB says the processing error was corrected and the affected 2009 tax returns were identified and corrected. FTB 719PC, Underpayment of Estimate Tax Penalty, was sent to taxpayers regarding the adjustment beginning July 26, 2010. If applicable, refunds will be mailed within two weeks.

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Title Annotation:FTB NEWS
Publication:California CPA
Article Type:Brief article
Geographic Code:1U9CA
Date:Sep 1, 2010
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