Tax News August 2025

Your Voice Matters

Take a moment to answer a few questions and provide your feedback on how we can better serve the tax professional community, small business owners, and taxpayers of California.

Tax News Survey

Exempt Organizations Regulatory Project

On July 3, 2025, the Franchise Tax Board published a Thirty-Day Notice of proposed amendments to Title 18, California Code of Regulations, Sections 23701, 23772, and 23775-23778, relating to Exempt Organizations. Written comments regarding the proposed amendments will be accepted until August 4, 2025.

The Thirty-Day Notice, Proposed Regulatory Text, and an Explanation of Draft are available on the FTB Regulatory Activity webpage.

Senate Bill (SB) 132 Extends the Pass-Through Entity (PTE) Elective Tax

The Governor signed SB 132 (Stats. 2025, ch. 17, §17) into law June 27, 2025, to extend the PTE elective tax, with amendments. Initially operative only through taxable year 2025, the PTE elective tax has been extended for an additional five years to provide qualified pass-through entities the option to make the election for taxable years beginning on January 1, 2026, and before January 1, 2031.

FTB remains committed to provide accurate and timely information. Given the recent enactment of SB 132, FTB is currently reviewing its provisions and implementation. Additional information will be shared as new information becomes available.

California Competes Tax Credit

The California Competes Tax Credit (CCTC) is an income tax credit available to businesses that want to locate in California or stay and grow in California and create quality, full-time jobs in the state that might not otherwise be created.

The CCTC agreements are negotiated by the Governor's Office of Business and Economic Development (GO-Biz) and approved by a statutorily created CCTC Committee. 

For Fiscal Year 2025/2026, the CCTC is available for allocation in three separate application periods: 

• July 21, 2025, through August 11, 2025 
• January 5, 2026, through January 26, 2026 
• March 2, 2026, through March 16, 2026 

For the first application period, $308 million is available for allocation.

Applications for the credit will be accepted at calcompetes.ca.gov from July 21, 2025, through August 11, 2025.  

Get more information at California Competes Tax Credit. 

Voluntary Administrative Dissolution

It may be a good time to remind your small business clients with a registered business entity that may have not dissolved or canceled in the proper way, that a qualified domestic corporation or qualified domestic limited liability company can request a voluntary administrative dissolution/cancelation.

Upon written request by a qualified entity, the unpaid qualified taxes, penalties, and interest for the taxable years in which the entity certifies may be abated. To do this, an entity, under penalty of perjury, must certify it is not actively engaging in any transaction for the purpose of financial or monetary gain or profit, it has ceased doing business, or never conducted business, and it has no remaining assets in the business name. Please note that it does, however, require the entity to file and pay in full for the taxable years in which it conducted business. 

Only an officer, owner, member, director, or an authorized POA can request Voluntary Administrative Dissolution/Cancellation. 

The request forms to submit by entity are: 

• Corporations: Domestic Corporation Request for Voluntary Administrative Dissolution (FTB 3715 PC) 
• Limited liability companies (LLC): Domestic Limited Liability Company Request for voluntary Administrative Cancelation (FTB 3716 PC)

Applying for Voluntary Administrative Dissolution does not legally terminate a business. The entity is still required to submit the proper dissolution/cancellation forms to the Secretary of State (SOS) to close their business entity.

The business entity may qualify if it:

• Is a domestic corporation or domestic LLC registered for more than 12 months with the SOS.
• Is not actively engaging in any transaction for the purpose of financial or monetary gain or profit.
• Has stopped doing business or never did business.
• Has no assets.

Additional information is available at Voluntary administrative dissolution/cancelation. 

How-to Videos for Estimated Tax Payments

We are excited to announce two new how-to videos to assist you, or your client, in making estimated tax payments.

• How to make a Personal Income Tax Estimate Payment  
• How to Make a Business Entity Tax Estimate Payment 

Current videos can be found on FTB's YouTube page, and on our Self-service options webpage. FTB will continue to release how-to videos as we identify information helpful for you and your clients.

Website Update and Redesign

FTB is excited to announce that our external website, ftb.ca.gov, will undergo an update and redesign, to begin late September 2025, with static webpages, static applications, and our electronic communications system.

The upgrade and redesign (known as the California Design System) is a key part of our digital strategy to improve overall user experience, mobile performance, enhance accessibility, and better reflect the needs of our customers.

It is also a key component of the State of California’s digital strategy to create a new standard that keeps the user’s experience across ca.gov websites consistent.

We will keep you informed about the update with a sitewide alert banner posted the week of the upgrade, and messaging on our website’s Maintenance page.

Internal Revenue Service (IRS) Updates

We partnered with the IRS to provide monthly IRS articles to assist our tax professional and small business communities, and we are excited to share this information; however, questions about the content should be directed to the IRS.

Tax pros should watch out for phishing emails and other attacks, Security Summit warns

IR-2025-75, July 15, 2025 — The IRS and Security Summit partners warn tax professionals to be wary of evolving phishing emails and other schemes to steal sensitive taxpayer data and offer steps tax pros can take to protect sensitive taxpayer information.

IRS urges extension filers to use IRS Free File this summer

IR-2025-74, July 10, 2025 — The IRS encourages taxpayers who requested an extension to file their returns now rather than wait until the Oct. 15 deadline. IRS Free File makes it easy.

IRS, Security Summit launch summer series to help tax pros protect clients from identity theft as Nationwide Tax Forums begin

IR-2025-73, July 1, 2025 — With new scams continuing to emerge, the IRS and the Security Summit partners announced the start of the special summer Protect Your Clients; Protect Yourself campaign to help tax professionals protect themselves against new and ongoing threats involving tax-related identity theft.

Electronic Tax Administration Advisory Committee 2025 Annual Report includes recommendations to Congress and IRS

IR-2025-72, June 25, 2025 — The IRS Electronic Tax Administration Advisory Committee (ETAAC) released its 2025 annual report with 14 recommendations – four to Congress and 10 to the IRS.

Ask the Advocate
Follow Up: Call Center Wait Times

Last year, in August 2024 Tax News, I provided an evaluation of the Franchise Tax Board’s (FTB) call center wait times. At that time, I identified the Tax Practitioner Hotline (TPH) call volumes significantly increased by a staggering 63% while staffing levels remained flat. This imbalance led to longer than usual wait times for tax professionals. I am happy to report TPH call volumes decreased by 16% during the period of January 1, 2025 – June 30, 2025, and as a result, wait times also decreased.

FTB continues to demonstrate their commitment to provide California taxpayers and tax professionals with the best customer service possible and are proactive in making improvements to their call management system. ^[1]

• FTB’s Virtual Hold Technology (VHT) allows callers to receive a callback instead of waiting on hold with 80% of more than 1.35 million offered callers opting for the callback feature in Fiscal Year 2023–24. ^[2]
• FTB evaluates replacement options under the Contact Center Platform refresh, to ensure uninterrupted callback capability and system resilience.
• FTB continually hires and trains new staff to improve customer service.
• During the high demand peak filing season, FTB extends customer service hours and offers many self-service options which includes how-to video instructions to mitigate call center congestion and wait times.

Helpful Tips

• Plan ahead. If you contact FTB without a valid Tax Information Authorization or Power of Attorney on file, be prepared with your client's account information and current tax records. This enables call center staff to verify you are authorized to receive limited information.
• To avoid the menu, press the * (star) button at any time.
• The VHT callback system attempts 2 callbacks, if you miss the 2 attempts, you will need to call again.

I highly encourage tax professionals with full online account access to use MyFTB to verify their client’s estimated tax payments and other account information. Using MyFTB for routine inquiries helps reduce call volumes and keeps phone lines available for complex matters that require live assistance.

As always, thank you for your continued support and partnership. Your input helps shape future improvements. If you experience challenges or have ideas to share, please reach out to the Taxpayers’ Rights Advocate’s Office. We are your voice within FTB.

• FY 25-26 BCP - Contact Center Platform and Customer Callback Software↵
• FY 25-26 BCP - Contact Center Platform and Customer Callback Software↵