Improve Compliance and Uniform Administration Taxpayers’ Bill of Rights Annual Report to the Legislature
Legislative Proposals and Regulations
Changes in Statute — Legislative Proposal Summary
In accordance with reporting requirements outlined in California Revenue and Taxation Code (R&TC) Section 21006(c)(1), the following are recent legislative proposals that have been approved by the three-member Board.
Legislative Proposals that were introduced in bills:
State Controller's Office — Unclaimed Property Data Sharing
This legislative proposal would allow FTB to provide additional information from BE returns to the State Controller’s Office related to unclaimed property.
Assembly Member Petrie-Norris authored this proposal in AB 466. On July 16, 2021, this bill was approved by the Governor and chaptered into law.
Real Estate Withholding/Internal Revenue Code (IRC) Section 1031 Deferred Like-Kind Exchange/Failure to Withhold by Qualified Intermediaries (QI)/Cash-Poor Exchange
This legislative proposal would limit a QI’s withholding obligation to available funds in those situations where the QI does not receive sufficient funds from escrow or the QI disbursed funds for the purpose of completing an exchange under IRC Section 1031.
This proposal was introduced by the Assembly Committee on Revenue and Taxation as part of AB 1582. On July 9, 2021, this bill was approved by the Governor and chaptered into law.
Taxpayers’ Bill Of Rights Annual Report to the Legislature/Change Due Date
This legislative proposal would change the Taxpayers’ Bill of Rights Annual Report statutory due date from December 1 to January 15.
This proposal was also introduced as part AB 1582 and was approved by the Governor and chaptered into law on July 9, 2021.
Legislative proposals that were not introduced into bills:
California Research Credit: Modified Conformity to the Federal Alternative Simplified Credit (ASC) and Elimination of the Alternative Incremental Research Credit (AIRC)
For purposes of the California Research Credit, this legislative proposal would bring California into modified conformity with the federal ASC and would eliminate the AIRC.
Taxation of Income from an Incomplete Gift Non-Grantor (ING) Trust
This legislative proposal would treat grantors (who transfer assets into an ING trust) in the same manner as grantors of a grantor trust, eliminating the ability to reduce personal income tax by moving income to a state with more favorable tax treatment.
One-time Abatement of Timeliness Penalties
This legislative proposal would establish penalty abatement authority similar to the federal first-time abatement procedure, except that it would apply to individuals subject to the Personal Income Tax Law only and would be a one-time abatement. The abatement would be available for requests for abatement made by eligible taxpayers to FTB for taxable years beginning on or after January 1, 2020.
Modify The Six-Year Statute of Limitations for Understatement of Gross Income in Excess of 25 percent of Gross Income
This legislative proposal would modify the six-year statute of limitations for understatement of gross income in excess of 25 percent of gross income. This proposal would align state law with federal law by including substantial omissions of gross income as a result of the overstatement of unrecovered cost or basis as a trigger for the six-year statute of limitations.
Disregarded Limited Partnerships (LPs)
This legislative proposal would provide statutory authority establishing filing and payment requirements for disregarded LPs. Unlike the specified treatment of disregarded limited liability companies, current state law lacks a provision expressly requiring disregarded LPs to annually file a tax return and pay the annual tax, which results in the disparate treatment of similarly-situated disregarded entities. This proposal would amend the R&TC to expressly require disregarded LPs to pay the annual tax and file a tax return under the applicable statutes.
Changes in Regulations
The laws administered by FTB broadly authorize the adoption of rules and regulations necessary for their enforcement. Occasionally, specific statutory provisions require us to adopt regulations. (For a list of regulations in progress, please refer to Appendix 3 — Regulations.)
Training of FTB Staff
FTB develops knowledgeable and engaged employees to improve the customer experience and accomplish FTB’s mission. Our goal is to provide the services and information taxpayers need to file accurate and timely tax returns and to only pay the proper amount of tax owed. Training begins with employees’ first day on the job and continues throughout their FTB careers.
All FTB staff received Accessibility Training while public-facing staff in our contact centers, public service counters, and collection programs receive extensive initial training (in a classroom or, since COVID-19, virtually), on-the-job training, and ongoing training, with programs tailored to the specific needs of each business area. Following direction from CalHR, all FTB leadership completed the CalHR Beyond the Pandemic Hybrid Workforce training.
In 2021, Accounts Receivable Management (ARM) Division Leadership completed Flourishing as Leaders, a six-hour training course presented by California State University, Sacramento. This course focused on each individual leader’s personal 360 degree evaluation, and how to use the information obtained from it to improve as a leader. In addition, all ARM staff participated in Customer Service Certification Training.
Audit Division staff also receive extensive training (classroom or virtual) and on-the-job training. Audit Division staff must have the knowledge needed to analyze tax returns, research complex issues, and effectively communicate their findings to taxpayers and authorized representatives. Having well-trained auditors reduces the burden audits place on taxpayers by shortening the completion time and improving the accuracy of the outcome.
In 2020, the Audit Division launched the Pathways to Excellence portal, which is a knowledge transfer and training resource for staff. In simplistic terms, this portal maps out different “pathways” for staff development that combines technical education with other value-added learning experiences and collaboration opportunities. The portal is designed with one-stop shopping in mind and will function as a useful reference tool for the entire FTB organization.
Finally, all FTB personnel who are classified in FTB’s conflict-of-interest code are required to take Ethics training provided by the Department of Justice within six months of appointment to a classified position and once every two years thereafter. Additionally, all FTB staff are required to take an annual Privacy, Security, and Disclosure training.
Evaluating FTB Employees
FTB is committed to evaluating and providing feedback to our employees. This helps them perform at the highest level in their current positions and to advance professionally when promotional or development opportunities arise. Our goal is not only to provide all eligible employees with a written performance evaluation annually, but to also ensure the evaluation and feedback they receive is valuable. The most important part of the evaluation process is sincere, respectful, and open conversations with employees regarding expectations and performance.
Customer service has always been one of FTB’s highest priorities. In recognition of this priority, FTB continues its practice of evaluating employees in annual reviews based on how well they communicate with taxpayers and the overall quality of the customer service they provide. That includes assessing whether employees have provided taxpayers with accurate, timely, and complete assistance. Our goal is for every employee to exceed each customer’s expectations. Importantly, we do not evaluate employees based on revenue that is produced through additional tax assessments or collections, and FTB does not impose or suggest revenue production quotas or goals. (Please refer to Appendix 4 — Certification Letter.)
We provide our supervisors with tools to assist in writing, routing, and storing employee performance evaluations. These tools help us reach our goal of every eligible employee receiving a timely evaluation. In addition, we provide tools to assist supervisors in having effective one-on-one conversations with their employees, and we continue to reinforce the expectation that every supervisor will have regular one-on-one meetings with each of their employees.
A key component of employee and supervisor meetings is to have continuing discussions on performance expectations and to identify training and development needs. Discussing employee development opportunities is critical in today’s environment due to the rising number of employees who are eligible for retirement. It is an important part of our efforts related to workforce and succession planning.
Taxpayer Communication and Education
We strive to provide taxpayers, tax professionals, and external stakeholders with the information they need to file state tax returns completely, accurately, and timely. The department continues to focus on education and outreach efforts, creating useful tools and resources, and improving services.
FTB uses mainstream, trade, and social media to communicate important information to taxpayers and tax professionals. We post information on social media platforms, create video clips and webinars, and provide public service announcements to educate taxpayers. We constantly look for ways to improve our website, such as by adding self-service options for taxpayers and by ensuring the information they need is available.
Amid the ongoing COVID-19 pandemic, FTB this year continued its enterprise-wide effort to quickly communicate information about new, pandemic-related tax laws and our assistance to taxpayers, including filing and payment extensions. We spread the word about the various forms of taxpayer relief and extended deadlines through new informational pages on our website, press releases, social media, and news interviews.
New ftb.ca.gov Webpages and Updates
This year, we created new informational webpages and provided many ftb.ca.gov updates — sometimes multiple times a day – for our customers regarding tax topics related to COVID-19, changes to state and federal tax laws, two rounds of California’s Golden State Stimulus (GSS), and other major initiatives. As a result, traffic on our website surged this year.
Golden State Stimulus – Webpages and Stakeholder Outreach
This year, FTB partnered with the State Controller's Office to deliver GSS payments to millions of eligible recipients. These payments were intended to provide financial relief to low and middle income Californians due to the negative impacts from the COVID-19 emergency.
To assist potential recipients, FTB quickly launched webpages with user-friendly information and resources for GSS I and GSS II. These webpages help customers learn about GSS I and II, find out if they qualify, and for how much. For GSS II, FTB created an online, easy-to-use tool that asks a few questions and provides an estimated payment. Within a week of its launch, the tool received several hundred thousand visits.
Additionally, FTB worked with external stakeholders and nonprofit groups to develop GSS outreach materials. The department also coordinated with groups, such as the California Bankers Association and the tax software and preparation industry to help ensure a smooth process for individuals to receive payments. Throughout the administration of these programs, FTB contact centers assisted over 250,000 individuals directly through its call centers and live chat service.
As of November 12, 2021, 10.8 million payments have been issued to help Californians (4.4 million payments for GSS I and 6.4 million payments for GSS II), totaling over $7.35 billion ($2.7 billion for GSS I and $4.65 billion for GSS II).
New Field Office Appointment Webpage
The Franchise Tax Board’s field and public counter staff provide tax filing and payment assistance to taxpayers and their authorized representatives concerning PIT and BE Income Tax and Nontax Debt. Due to the COVID-19 social distancing requirements, the field offices now assist all customers by appointment only.
Our customers can now schedule an in-person appointment at one of our office locations online. This system also sends text message updates to our customers as their appointment time nears.
Expanded COVID-19 Webpage
The pandemic has caused many changes. We continue to publish COVID-19 related updates and content related to income taxes. Updates include the new 2020 Tax Return Changes webpage, and some of these changes were driven by legislation. Here are some key updates:
- COVID-19 content: Updating and expanding our COVID-19 Frequently Asked Questions for Tax Relief and Assistance webpage, which includes a variety of pandemic-related tax information.
- An FTB website-wide alert banner with links to COVID-19 information.
- In-Home Supportive Services: This new webpage explains how IHSS income may now be excluded from gross income (excluded from taxation) and still be included as earned income for purposes of determining California Earned Income Tax Credit (CalEITC).
- Unemployment insurance: A new “Unemployment and 2020 Tax Returns” webpage explains changes to how federal adjusted gross income (AGI) is calculated if someone received unemployment in 2020. This AGI amount may allow them to qualify for additional help like CalEITC or the Golden State Stimulus.
- A new “Paycheck Protection Program (PPP) and Loan Forgiveness” webpage explains that, due to legislation changes, forgiven PPP loans are excluded from gross income for California purposes.
Summary of Federal Income Tax Changes
We developed an accessible web version of the legally required annual Summary of Federal Income Tax Changes report. This report explains the new federal income tax law changes and how they impact California. This web version is in a searchable and sortable table, which provides a better experience for our customers. Older versions of this report were in PDF format.
Older Tax Forms Available by Request
The top 7 tax booklets (instructions and forms) for each tax year year from 1997 through 2007 are now available almost immediately by online request. Visit 2007 and older forms and publications.
Digital Board Meetings
In light of the COVID-19 pandemic, FTB had to turn our in-person board meetings into virtual board meetings. Board members and panelists use a video platform to attend the meetings. Public comments are made by phone. We continue to stream the board meetings for the public to view.
CalEITC Marketing and Outreach
FTB enhanced the CalEITC presence on its website early this year by creating a new CalEITC landing page. This webpage promotes, among other things, the CalEITC calculator and new outreach materials, including social media toolkits, in various languages.
We refined and updated our Earned Income Tax Credit (EITC) calculator, introduced last year on the FTB website, by, among other things, adjusting the application to reflect a new law allowing taxpayers using an Individual Taxpayer Identification Number(ITIN) to qualify for CalEITC. The EITC calculator provides an estimate of how much money lower-income taxpayers who work might qualify for if they file a tax return and apply for CalEITC, the state’s related Young Child Tax Credit (YCTC), and the federal EITC.
This year we updated FTB’s Volunteer Income Tax Assistance (VITA) locator application to allow additional information for virtual services and modified hours due to COVID restrictions. Launched in June 2020, the VITA locator application helps our customers find free, in-person help with their tax returns. Note: Because of COVID-19, many VITA sites were unavailable this year, but some sites operated virtually or allowed filers to drop off their tax information and come back later to pick up their completed tax return.
Gig Economy and Proposition 22
FTB continued to update its Gig Economy webpage based on legislation changes. Under Proposition 22, most drivers for app-based transportation and delivery companies are classified as independent contractors.
On June 28, 2021, FTB Executive Officer Selvi Stanislaus and Chief Information Officer John Sulenta recertified that the FTB website is accessible. This certification is good for two years and is located in our website’s footer.
Tax Professional Survey
FTB released a customer feedback survey for tax professionals. Their feedback will be used to improve their experience on the FTB website.
Website Visits Spike
New online resources launched in 2021 helped draw 43.1 million visits to ftb.ca.gov during the first ten months of this year, up 92.4 percent from 22.4 million during the same period last year, and 71.0 percent higher than the 25.2 million visits in all of 2020. Our website was visited by 20.4 million mobile users this year through October, up about 158.2 percent from 7.9 million during the same period in 2020.
FTB Cannabis Team
This year, our department-wide cannabis team sent educational Cannabis Business Outreach Letters to 4,367 licensed California cannabis businesses. The letters direct cannabis businesses to our online resources and provide a dedicated FTB cannabis email address where they can send questions about meeting their tax obligations. Included with the letter was an informational insert that provides additional cannabis-related information.
We updated and maintained a variety of resources providing information relating to licensing and tax compliance for cannabis-related activities, including the following:
- A dedicated Cannabis tax law and legislation webpage on ftb.ca.gov.
- A guide explaining how to find cannabis-related tax information (FTB 4020 C).
- No Cash Policy exemption request video.
- Instructional video for businesses making cash payments.
- Tax News article on FTB’s website (January 2021 edition).
FTB has participated in over 30 in-person and virtual presentations and workshops since 2019, including the National Cannabis Industry Association’s Cannabis Business Caucus and Summit, state and local permitting workshops, and various government panels.
We also continue to monitor cannabis legislation pending before Congress and the state Legislature that can potentially affect our programs.
Taxpayers’ Rights Advocate's Office Education and Outreach
During FY 2020/2021, our Taxpayers’ Rights Advocate’s Office participated in 55 presentations to tax practitioners and taxpayers, providing information on California tax updates, forms of business ownership, and small businesses tax matters. As a result of COVID-19, we transitioned in early 2020 to a virtual format for our presentations in place of in-person events, including outreach to taxpayers and tax professionals in English and Spanish. In addition, we responded to inquiries and requests for assistance from taxpayers and tax professionals. In FY 2020/2021, staff responded to more than 1,000 requests for assistance, whether general tax questions or business-specific questions to our Small Business Liaison phone line.
Also, due to COVID 19 and the need to telework, this year we transitioned from telephone to email format for providing small business assistance. The email format has resulted in more specific questions from small business owners, and far fewer unrelated to small business matters. Virtually all email inquiries reflected questions about the tax responsibilities associated with opening, operating, and closing a small business.
Tax News, our award-winning monthly technical publication, continues to be a valuable resource for the tax professional community, with nearly 35,000 subscribers. The content remains relevant, timely, and informative, thanks to the support of FTB’s business areas, which have taken a proactive approach to writing timely articles on relevant topics. We continue to partner with other tax agencies and external stakeholders to share information about educational opportunities. We periodically send Tax News Flashes to inform taxpayers and tax professionals of changes to tax law, new programs, current issues of interest, and COVID-19-related information.
Public Affairs Education and Outreach
FTB’s Public Affairs Office educates taxpayers about filing requirements, eligibility for tax credits, and other important tax issues through interviews with TV, radio, and print media outlets, as well as through FTB’s website, social media campaigns, videos, printed brochures, press releases, and webinars. Since the pandemic hit, FTB’s Public Affairs efforts have aligned with the entire department to help communicate – often on a daily basis – critical COVID-19-related information to taxpayers, tax representatives, and other stakeholders. This year, those efforts included contributing questions and answers to FTB’s Golden State Stimulus, new tax law, COVID-19 FAQ webpages, and responding directly to taxpayer and tax preparer inquiries.
Public Affairs also conducted numerous news media interviews in English and Spanish, often responding to multiple media requests daily. Demand from the Spanish-language news media was especially strong this year, given an intense interest in the new CalEITC eligibility for ITIN filers, as well as both rounds of Golden State Stimulus.
Public Affairs also delivered CalEITC/YCTC and Golden State Stimulus presentations in English and Spanish during a variety of educational webinars held for CalEITC outreach partners, the public, legislators and their staff, VITA volunteers, and social service workers.
Given the pandemic, Public Affairs distributed CalEITC/YCTC and Golden State Stimulus outreach materials – flyers, posters, brochures, and social media toolkits – digitally this year and made them available for download on our website. Most of the materials were available in seven languages: English, Spanish, Mandarin, Vietnamese, Korean, Hmong, and Russian. FTB distributed these materials directly to CalEITC outreach partners, including nonprofits, such as United Ways of California, as well as state legislative offices, and a host of state and local social service agencies that could deliver the information directly to lower-income Californians likely to qualify for CalEITC. FTB also printed 180,000 English-Spanish informational flyers for inclusion in state-funded, emergency food boxes that CalFresh distributed early this year to families statewide.
Translation for Limited-English-Proficient Taxpayers
Translations of CalEITC and other materials into multiple languages is handled by FTB’s Multilingual Communications Program. Our program provides vital services to our Limited English Proficient (LEP) taxpayers, as well as to our bilingual customer service representatives, and the tax preparers who serve LEP taxpayers.
Our goal is to ensure LEP taxpayers have equal access to the tools and resources available in order to file tax returns timely, accurately, and pay the correct amount without experiencing delays due to a language barrier. FTB’s website offers 51 webpages in Spanish and two web applications in Spanish and other languages:
- The Check Your Refund Status application in Spanish.
- FTB’s EITC calculator is available in Spanish, Chinese, Vietnamese, Korean, and Russian.
Over the past year we translated the following FTB public webpages into Spanish:
- Golden State Stimulus index webpage
- Golden State Stimulus I webpage
- Golden State Stimulus II webpage
- Golden State Stimulus II Estimator webpage
- Golden State Stimulus Help webpage
- Paycheck Protection Program Loan Forgiveness webpage
- Frequently Asked Questions for Paycheck Protection Program webpage
- Public Service Bulletin – Federal Tax Changes webpage
Other translations over the past year include the following:
- FTB 854, CalEITC brochure, in Spanish, Chinese, Korean, Vietnamese, Russian, and Hmong.
- FTB 856 B EN-SP, CalEITC ITIN specific poster (regular size), with Spanish on opposite side of English.
- FTB 856 B SP, CalEITC large poster, in Spanish.
- FTB 3568 SP, Alternative Identifying Information for the Dependent Exemption Credit, in Spanish.
We provide access to our programs, services, and facilities in accordance with Title II of the Americans with Disabilities Act (ADA) of 1990. At taxpayers’ request, we provide reasonable accommodations in alternative formats.
We regularly translate major news releases into Spanish. We offer bilingual Facebook Live videos about tax issues in English-Spanish and English-Russian, and we often translate key social media posts into Spanish and occasionally other languages.
Withholding-Real Estate Community Outreach and Education
Our Filing Division’s Withholding Services and Compliance Section (WSCS) continues to work with California’s real estate escrow professionals through education and outreach. Last year, FTB created a new California Form 593, Real Estate Withholding Statement. The new consolidated Form 593 is one form with one due date. It has the essential elements of (and for transactions occurring after January 1, 2020, it replaces) the following three California forms: Form 593-I, Real Estate Withholding Installment Sale Acknowledgement; Form 593-C, Real Estate Withholding Certificate; and California Form 593-E, Real Estate Withholding Computation of Estimated Gain or Loss.
WSCS continues its communication and outreach efforts with the real estate community on how to apply due diligence when completing the new consolidated form. For 2021, WSCS staff delivered content at five virtual Real Estate Escrow Association meetings. WSCS continues to extend its outreach to include withholding information for property managers and attended the 2021 California National Association of Residential Property Managers virtual conference and a National Association of Residential Property Managers Los Angeles chapter meeting to discuss property managers’ withholding obligations.
Exempt Organizations Education and Outreach
FTB’s Exempt Organizations Unit participated in three education and outreach events sponsored by various nonprofit and other groups. FTB’s representatives engaged with the public virtually due to the COVID-19 pandemic, discussing various aspects of exempt organizations, including the following:
- The exemption process, including FTB’s time frames for processing exemption applications.
- Maintaining compliance with exempt organization filing requirements.
- FTB efforts to assist nonprofits seeking to dissolve.
- California conformity with recent federal tax law changes.
- Various current issues identified by FTB auditors.
- Other items by audience request.
Increased Enforcement Capabilities
Although FTB encourages voluntary compliance by providing taxpayer education as well as pre-filing assistance and information, FTB continues to identify ways to improve its enforcement and collection capabilities.
The Audit Division staff works with taxpayers and their representatives to administer and enforce the law effectively to ensure all taxpayers meet their obligations to file correctly and pay the proper amount of tax owed. We use innovative methods to promote these objectives through customer service, education, self-compliance letters, initiatives, and partnerships with federal and state agencies. In performing these activities, we consider the effects of audit activities on taxpayers as well as the increases in timeliness and effectiveness of enforcement actions. All of our work focuses on adherence to FTB Regulation Section 19032, Audit Procedures, to complete audits in a timely manner.
We collaborate with subject matter experts to operate our programs in an efficient manner and also seek better use of technology and data. We continue to seek new opportunities to form partnerships with taxpayers, their representatives, and other agencies to continue to promote best audit practices.
Addressing California’s Tax Gap
The tax gap is the difference between what is properly owed to the state and what is voluntarily reported and paid timely.
The three components of the tax gap are:
- Underreporting, which is under-reporting of income or revenue or the over-reporting of expenses on a timely filed return.
- Underpaying, which is the amount of tax reported on a timely filed return that is not timely paid.
- Non-filing, which is the tax not timely paid by those who do not timely file a return.
This year, we estimated California’s tax gap to be approximately $24 billion. We based this amount on the IRS's most recent study, released in 2019, with adjustments for California and the California economy. The dollar amount of the tax gap has increased because the economy has expanded, but the percentage of compliance has remained steady.
Addressing the tax gap remains a top priority and we are fully committed to ensuring a fair tax system for all California taxpayers. We address the tax gap, starting with the collection of data, which then drives taxpayer education and outreach to encourage self-compliance, followed by campaigns to identify tax gaps and solutions, followed by compliance efforts.
This year, our EDR2 project was approved to start on July 1, 2021. This project will bring improvements to our compliance programs to further address the tax gap. EDR2 will capture more state and federal return information, as well as bring in additional third-party data and new technology that will enable us to identify potential compliance issues earlier and assist taxpayers to resolve these issues using self-service options. The new data and current data coupled with the new EDR2 analytic capabilities will help FTB contact the right taxpayers at the right time and enable them to self-comply.
FTB special agents in the Criminal Investigations Bureau (CIB) are sworn peace officers charged with the investigation of individuals suspected of committing income tax related crimes or crimes against FTB. In the course of investigating suspected violations, FTB special agents gather evidence, interview witnesses, interrogate suspects, and plan and effect search and arrest warrants. CIB works collaboratively with FTB’s Audit, Collections, and Fraud programs, as well as local, state, and federal law enforcement agencies. Once criminal charges are filed, FTB special agents serve as expert witnesses and assist prosecuting attorneys in the preparation and prosecution of their cases.
Accounts Receivable Management (Collections)
The ARM Division is responsible for managing delinquent debts entrusted to FTB, such as personal income tax and franchise and corporate income tax. We also collect various nontax debts, including debts owed to California’s courts and local jurisdictions, delinquent vehicle registration, CalSavers employer penalties, and victim’s restitution orders and fines.
We collect on tax accounts receivable that are established by self-assessment or audit, settlement, and filing enforcement actions. An automated billing system, combined with central and field office collection staff, administers collection activities.
Our collection approach is founded on the principle that we use the least intrusive action first to gain compliance. Our collection strategy is to encourage taxpayers to resolve their debts as quickly as possible through the method best suited for their situation to help them achieve long-term compliance.
The collection staff performs manual collection efforts to ensure that noncompliant taxpayers contribute their fair share to the General Fund. The following are the revenues collected in FY 2020/2021 through FTB’s collection programs.
FY 2020/2021 Revenues Collected from Tax Programs
|Personal Income Tax||$3.28 billion|
|Business Entity Tax||$755 million|
FY 2020/2021 Revenues Collected from Nontax Debt Programs
|Nontax Debt Program||Amount|
|Court-Ordered Debt||$114 million|
|Vehicle Registration||$258 million|
|Interagency Intercept Collections||$54 million|
FTB implemented the Administrative Dissolution Program on January 1, 2019, after being given authority, under AB 2503, to administer the program for business entities seeking relief, and with the objective to improve compliance. Domestic corporations and domestic limited liability companies (LLCs) who ceased doing business and have no assets can now request a Voluntary Administrative Dissolution or Cancellation (taxpayer initiated). To date, we have received 11,732 requests for dissolution or cancellation. Of those resolved thus far, 3,545 business entities were approved for administrative dissolution.
On January 1, 2020, FTB implemented a second phase of the program and began evaluating business entities for Administrative Dissolution or Cancellation (FTB initiated), provided they ceased doing business, show suspended for 60 or more consecutive months, and meet other established criteria. As to whether this program is a “cure” for suspended corporations, overall, the program is doing what it was intended to do: assist domestic corporations and domestic LLCs registered with the Secretary of State for more than 12 months that have stopped doing business, never did business, and have no assets to dissolve or cancel their business. FTB is very pleased with the program and progress in processing 15,256 requests to date to help businesses save money, making it easier to dissolve and educate business owners and their representatives.
FTB’s Legal Division supports enforcement efforts by providing consultation and litigation support for positions developed in cooperation with FTB’s enforcement programs. Support activities include providing representation in protest hearings, appeal proceedings before the Office of Tax Appeals (OTA), settlement of cases, Attorney General staff support in tax litigation in California and federal judicial proceedings, and representation in out-of-state bankruptcy and collection proceedings.
FTB Cannabis Team
Since the passage of Proposition 64, which legalized adult recreational use of cannabis in California and licensing at the state level, FTB has been working collaboratively with cannabis businesses, state agency partners, and stakeholders to ensure seamless implementation of the statute and compliance with the law.
FTB’s compliance strategy begins with a focus on education and observing trends, followed by traditional compliance in the long-term. FTB has been educating taxpayers by providing the information and resources they need to comply with their income tax obligations.
We are working with various state agencies to gather licensing information to help identify businesses that might need assistance and to look for any gaps in the filing process. In order to prepare for compliance strategies that may be specific to this industry, we are evaluating trends and participating in discussions with other agencies.