Tax News November 2025
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Overview
Tax News is a monthly online publication to inform tax professionals, taxpayers, and business owners about state income tax laws; Franchise Tax Board regulations, policies, and procedures; and events that may impact or provide valuable information for the tax professional community.
We also periodically release Tax News Flashes to quickly notify subscribers of urgent time-sensitive information.
In this edition
- 2025 Legislative Update
- Senate Bill 711 – Federal Conformity Bill
- New Online Service for Voluntary Disclosure Program and Filing Compliance Agreement Applications
- The 15-Day Rule Reminder
- How to Start a Charity or Nonprofit
- How-to-Videos for Estimated Payments
- Internal Revenue Service Updates
- Ask the Advocate - Annual Stakeholder Meetings
2025 Legislative Update
For the 2025-2026 session, the California State Legislature enacted the following bills impacting the Franchise Tax Board (FTB). Go to FTB’s Assembly Bill (AB) analyses and Senate Bill (SB) analyses online. FTB is implementing each chaptered bill and will share information as it becomes available.
- AB 130, Qualified Renters' Credit
- AB 480, Low-Income Housing Tax Credit
- AB 703, California Pediatric Cancer Research Voluntary Tax Contribution Fund
- AB 829, Parkinson’s Disease Research Voluntary Tax Contribution Fund
- AB 1076, California Achieving a Better Life Experience (CalABLE) Direct Deposits
- AB 1138, California Motion Picture and Television Production Credit (Motion Picture Credit)
- AB 1170, Code Maintenance
- AB 1511, Political Reform Act of 1974: Voter Information Guide
- AB 1514, Worker Classification: Employees and Independent Contractors – Licensed Manicurists
- AB 1518, Nonresident Group Return with Nonresident Aliens
- SB 132, Taxation Budget Trailer Bill
- SB 159, Gross Income Exclusion for Qualified Wildfire Disaster Settlements
- SB 254, Energy Tax Credit
- SB 302, Gross Income Exclusion for Payments Made Under Federal Environmental Credit Provisions
- SB 376, Incomplete Gift Nongrantor (ING) Trusts
- SB 470, Bagley-Keene Open Meeting Act-Teleconferencing
- SB 711, Conformity Act of 2025 (refer to SB 711 article)
- SB 788, Tax Preparers Exemptions/ California Tax Education Council
- SB 863, Assignment of California Motion Picture and Television Production Credit 3.0 for Disregarded Small Member Limited Liability Companies
Senate Bill 711 – Federal Conformity Bill
Senate Bill (SB) 711, enacted on October 1, 2025, changes California's specified conformity date to the Internal Revenue Code (IRC) from January 1, 2015, to January 1, 2025, for personal income tax and corporate tax purposes.
SB 711 does not include federal tax law enacted after January 1, 2025, such as the “One Big Beautiful Bill Act” (Public Law 119-21).
Under the new specified date, there are continuing differences between California and federal law. When California law conforms to federal tax law changes, it does not always adopt all the changes made at the federal level. Most of the Revenue and Taxation Code amendments are non-conforming and result in no changes to forms or instructions. Additionally, SB 711 identifies provisions that California law previously did not conform to as of the January 1, 2015, specified date and is now conforming to as of January 1, 2025. One example is the changes to alimony (sections 15, 28, 45, and 57 of the bill). Before January 1, 2025, alimony is deductible by the payor and included in taxable income by the payee. Beginning January 1, 2025, and applicable to divorce and separation agreements executed after December 31, 2025, or agreements executed before that date, but modified after that date, as specified, the payor can no longer deduct the alimony payment, and the payee excludes the payment from income.
The Franchise Tax Board’s (FTB’s) final analysis of SB 711 is available on FTB’s website (Bill Analysis, SB 711; Conformity Act of 2025). The analysis contains federal law changes for which conformity decisions were necessary. Where California law automatically conforms to a federal law change, those provisions are not listed or discussed in the analysis. Additionally, those federal provisions that are not applicable to the Personal Income Tax Law, the Administration of Franchise Income Tax Law, or the Corporate Tax Law are not listed or discussed in the analysis.
Prior to enactment, FTB began planning with various program areas across the department. Now that SB 711 has been chaptered, FTB is implementing changes to tax forms, instructions, and publications as applicable. Most updates are instructional. There are a few forms that have been identified as needing changes, including Form 3523, Research Credit, and the Schedule CA (540) series. We are also reviewing internal processes and procedures to ensure they align with the specified date change. In early November, FTB will announce all form changes related to SB 711 on the What’s New with Tax Forms webpage.
Updated tax forms, instructions, and publications will be made available December through January on FTB’s Forms and Publications webpage.
New Online Service for Voluntary Disclosure Program and Filing Compliance Agreement Applications
A new online service is available to assist business entity taxpayers and their representatives to request Voluntary Disclosure or a Filing Compliance Agreement to fulfill past due income tax filing requirements with the benefit of certain penalty relief. Previously, the primary method to make a request was to mail a paper application.
The online process continues to allow the applicant to make their request on an anonymous basis. It informs the applicant of the necessary information needed to apply and will walk them through a series of questions to determine which program is correct for the taxpayer. The applicant will also be able to upload additional information for FTB review.
California Revenue and Taxation Code Section 19191, authorizes FTB to enter into voluntary disclosure agreements with any qualified entities, qualified shareholders, qualified members, qualified beneficiaries, or qualified partners to obtain voluntary compliance with the tax laws of the State of California.
For more information, go to Voluntary Compliance Programs.
The 15-Day Rule Reminder
With the end of the year quickly approaching, this is a good time to discuss with your clients about the 15-day rule. Understanding the 15-day rule and realizing the rule only applies to short taxable years that are 15 days or less, is important information to have when your client is deciding to do business in California.
The 15-day rule states business entities (limited partnerships, limited liability partnerships, limited liability companies, and corporations) with a taxable year of 15 days or less are not required to file a tax return or pay taxes and fees imposed on the business entities, including the $800 annual minimum tax, if they meet both of the following:
- They did no business in California during the taxable year
- Their taxable year is 15 days or less
For example, if a business entity who files on a calendar year basis is formed on or after December 17 and does no business for the remainder of the year, then it may not have to file a tax return and/or pay the $800 annual minimum tax for that short taxable year.
Additionally, if the business entity meets the 15-day rule and is not required to file a tax return, this short period is not considered the first taxable year. The first taxable year will be the following year.
For example, if a corporation filing on a calendar year basis incorporates on December 20, 2025, and does not conduct business from December 20, 2025, through December 31, 2025, then it meets the 15-day rule and is not required to file a 2025 tax return. The corporation’s first taxable year will start on January 1, 2026.
For more information on the 15-day rule, go to Limited Liability Company Filing Information Publication, and Guide for Corporations Starting Business in California.
How to Start a Charity or Nonprofit
There are multiple steps, requirements, and agencies that oversee charities and nonprofit organizations. Not all entities that intend to operate as a nonprofit meet the requirements to receive tax exemption.
Many entities seeking tax-exempt status with the Franchise Tax Board (FTB) will register with the California Secretary of State (SOS). In addition, some entities will have a requirement to register with the California Attorney General (AG). Each of these agencies have their own set of requirements that must be met to obtain and remain in good standing. The charity or nonprofit entity must be in good standing with the SOS and, if required, the AG for tax exemption to be granted and remain in effect with FTB. Additionally, failure to meet the requirements of the SOS and/or the AG may result in a loss of tax exemption even after it has been granted. For entities seeking to file Form 3500A Submission of Exemption Request, the charity or nonprofit must also be in good standing and maintain good standing with the Internal Revenue Service (IRS).
FTB Tax-Exempt Status Application Process
When an entity is ready to apply for tax-exempt status, the entity should review FTB 927 Publication, Introduction to Tax-Exempt Status. The publication provides general information about different entity types, filing requirements, and application requirements. The sections titled FTB 3500, Exemption Application and FTB 3500A, Submission of Exemption Request specifically assist entities to ensure the appropriate documentation is submitted with the application. Failure to provide the required documentation or agency non-compliance mentioned will delay application processing and may result in denial of exempt status.
Application Time Frame
The average time frame to receive information related to a submitted application for tax-exempt status can vary. We currently average four months for Form 3500A applications and six months for Form 3500 applications. Process times vary due to many factors; a complete application, all supporting documents are received with application, entity is current with FTB filing requirements, and compliant with all agencies noted.
For more information, go to Charities and Nonprofits.
How-to-Videos for Estimated Payments
We are excited to introduce a new series of how-to-videos designed to empower you with quick, easy to follow, step-by-step guidance to make and view estimated tax payments.
As part of our ongoing efforts to enhance your experience, these videos will serve as a valuable resource and allow you to access the information you need and save you time!
Our videos are now live for:
- How to View Your Client's Estimated Tax Payments
- How to View Personal Income Estimated Tax Payments through MyFTB
- How to View Business Entity Estimated Tax Payments through MyFTB
- How to Make a Personal Income Tax Estimated Payment using WebPay
- How to Make a Business Entity Tax Estimated Payment
We hope these videos make a real difference in how you interact with FTB resources, to provide convenient, on-demand assistance you can refer to when you need it.
For more videos and self-service options, go to Online services.
Internal Revenue Service 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.
IRS reminds tax pros to renew PTINs for the 2026 tax season
IR-2025-108, Oct. 27, 2025 — The IRS reminds the more than 800,000 paid tax preparers that preparer tax identification numbers must be renewed annually, and the 2026 renewal period is now open.
IR-2025-107, Oct. 23, 2025 — The IRS issued frequently asked questions in Fact Sheet 2025-08 regarding the dollar threshold for filing Form 1099-K under the One, Big, Beautiful Bill.
IR-2025-106, Oct. 22, 2025 — The IRS issued frequently asked questions in Fact Sheet 2025-07 relating to the limitation on credits and refunds for Employee Retention Credits claimed for the third and fourth quarters of 2021 that were filed after Jan. 31, 2024. This limitation was enacted under the One, Big, Beautiful Bill.
IR-2025-105, Oct. 21, 2025 — The Department of the Treasury and the IRS provided transitional guidance for businesses required to report car loan interest under the One, Big, Beautiful Bill. Notice 2025-57 provides penalty relief and guidance to certain lenders for new information reporting requirements for car loan interest received in 2025 under the OBBB.
IR-2025-103, Oct. 9, 2025 — The IRS announced the tax year 2026 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2025-32 provides details about these annual adjustments.
IR-2025-105, Oct. 21, 2025 — The Department of the Treasury and the IRS provided transitional guidance for businesses required to report car loan interest under the One, Big, Beautiful Bill. Notice 2025-57 provides penalty relief and guidance to certain lenders for new information reporting requirements for car loan interest received in 2025 under the OBBB.
IR-2025-103, Oct. 9, 2025 — The IRS announced the tax year 2026 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2025-32 provides details about these annual adjustments.
IR-2025-102, Oct. 7, 2025 — The Department of the Treasury and the IRS issued guidance providing deposit penalty relief for the first three quarters of 2026 to remittance transfer providers. Notice 2025-55 provides relief in connection with the new excise tax imposed on certain remittance transfers under the One, Big, Beautiful Bill.
IRS announces leadership change, Jarod Koopman to lead agency’s enforcement efforts
IR-2025-101, Oct. 6, 2025 — The IRS named Jarod Koopman as its Acting Chief Tax Compliance Officer, overseeing IRS employees in its enforcement divisions.
IRS Independent Office of Appeals starts Post Appeals Mediation pilot program
IR-2025-100, Oct. 1, 2025 — The IRS Independent Office of Appeals is launching a two-year pilot program to make Post Appeals Mediation more attractive to taxpayers.
Volunteers needed to provide no-cost tax services for the upcoming filing season
IR-2025-98, Oct. 1, 2025 — The IRS and its community partners are seeking volunteers to support the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.
IRS extends the period for feedback on Form 6765
IR-2025-99, Oct. 1, 2025 — The IRS announced that it is continuing to seek feedback regarding the draft Instructions for Form 6765 and is extending the dates for certain reporting requirements related to the Credit for Increasing Research Activities, also known as the research credit.
IR-2025-96, Sept. 30, 2025 — The Department of the Treasury and the IRS issued guidance on Qualified Opportunity Zone investments in rural areas as provided for under the One, Big, Beautiful Bill.
IR-2025-97, Sept. 30, 2025 — The IRS announced that due to the ongoing conflict in Israel, the agency is providing additional tax relief to affected individuals and businesses, postponing until Sept. 30, 2026, a wide range of deadlines for filing federal returns, making tax payments and performing other time-sensitive tax-related actions.
IR-2025-95, Sept. 29, 2025 — The Department of the Treasury and the IRS issued interim final regulations and a notice of proposed rulemaking to reduce the amount of the user fee imposed on tax professionals who apply for or renew a preparer tax identification number (PTIN).
IRS to phase out paper tax refund checks starting with individual taxpayers
IR-2025-94, Sept. 23, 2025 — The IRS, working with the U.S. Department of the Treasury, announced that paper tax refund checks for individual taxpayers will be phased out beginning on Sept. 30, 2025, as required by Executive Order 14247, to the extent permitted by law.
IRS extends relief to farmers and ranchers affected by drought in 49 states, other regions
IR-2025-93, Sept. 22, 2025 — The IRS issued guidance that provides tax relief for farmers and ranchers in applicable states and regions who sold or exchanged livestock because of drought conditions.
Ask the Advocate - Annual Stakeholder Meetings
Angela Jones, Taxpayers’ Rights Advocate
Each year, our annual stakeholder meetings provide an opportunity for FTB and the tax professional community to meet and review concerns and issues identified through our interactions over the past year. With this information, we work to improve FTB processes and services, to better serve taxpayers and tax professionals.
Each meeting's format is similar in which FTB delivers topic presentations members are interested to learn more about. This year in October, we presented at the California Society of Enrolled Agents (CSEA) - State Tax Agencies Liaison Meeting:
- Customer Service Enhancements/Online Services
- Website Redesign
- Best Practices for Tax Professionals
- MyFTB View Estimated Payment Demo
After the presentations, we dedicated a portion of the meeting to respond to questions submitted by CSEA in advance of the meeting. We appreciate your attendance at this meeting and especially those of you who brought forward questions and shared your insight.
FTB will meet with the California Certified Public Accountants (CalCPA) community in November.
These interactions allow tax professionals to provide constructive feedback and help us identify areas where improvements to processes and services are possible. While many of you belong to CSEA or CalCPA, membership in one of these organizations isn't necessary for you to voice your concerns or present your ideas. In fact, you can present your ideas at the annual Taxpayers’ Bill of Rights Hearing scheduled for Monday, December 8, as part of our quarterly board meeting. Go to Meetings for more information.
As the Advocate, one of my goals is to ensure every interaction with FTB goes as smoothly as possible and everyone is treated with fairness and respect. FTB’s management team shares this collective goal, and your input is valuable.