Tax News January 2023

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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 (FTB) 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.

New Online Notice Based Self-Service Option

We updated four of our current notices to provide taxpayers the opportunity to respond more easily, and timely, by using a new Notice Based Self-Service (NBSS) online process.

The updated notices (available on our website by end of January) a taxpayer may receive are: 

  • Final Request for Federal Information – Pending Claim for Refund (FTB 1526Q) 
  • Request for Federal Information – Pending Claim for Refund (FTB 1535Q) 
  • Hold Pending Federal Action (FTB 1581B) 
  • Request for Pending Federal Status Update (FTB 1581Q) 

This new option does not require the taxpayer to have a MyFTB account, they only need to follow the directions on the notice and respond using the new NBSS online process.

FTB plans to expand the number of notices available for the NBSS online process in the future and we will do our best to keep you informed. 

One-Time Penalty Abatement Relief – Follow Up 

As previously mentioned in the September Ask the Advocate article, we would like to share some additional information regarding the One-Time Penalty Abatement relief. 

With the signing of AB 194, Section 19132.5 was added to the Revenue and Taxation Code (RTC) to give FTB the authority to grant California taxpayers a one-time abatement of timeliness penalties, which can include a failure-to-file penalty imposed pursuant to RTC 19131 or a failure-to-pay penalty imposed pursuant to RTC 19132. 

The one-time penalty abatement is: 

  • A once-in-a-lifetime abatement 
  • Available only to individuals subject to Personal Income Tax law 
  • Applicable for taxable years beginning on or after January 1, 2022 

To request a one-time abatement, taxpayers must: 

  • Be compliant with all tax return filing requirements 
  • Have not previously been granted abatement under RTC 19132.5  
  • Have paid in full all outstanding liabilities (other than the timeliness penalties they are seeking to abate) or arranged to pay pursuant to an installment agreement and be current on all installment payments  

Taxpayers may choose to forgo reasonable cause review or request one-time penalty abatement when reasonable cause is absent.

We will begin to accept one-time penalty abatement requests on April 17, 2023, either verbally or in writing. For written requests, a new form will be available in March 2023. We will provide more information, including the new form, as we get closer to April. 

Your Options to Get Answers from FTB

One of our goals is to provide exceptional service. We strive to continuously enhance our customers' experience and work to achieve this goal. We listen to your feedback and implement improvements to operations, as appropriate.

We continue to experience an unprecedented number of contacts that impact customer wait times and are exploring the following strategies to reduce wait times and improve your customer experience.

Tax Practitioner Hotline

By February 2023, we plan to reduce the Tax Practitioner Hotline wait times by adding Virtual Hold. The Virtual Hold service allows callers to save their place in the phone queue and wait for a call back. Another strategy is to hire twenty new agents by January 2023 to answer calls for the duration of the Filing Season to further reduce wait time.

Audit

You are encouraged to contact FTB audit staff assigned to your customers case to receive prompt responses to questions related to an open audit or protest. Staff and their supervisor’s contact information can be found on FTB correspondence. For questions not related to an open audit or protest, use one of the other appropriate options mentioned in this article.

MyFTB

Avoid the phone and use MyFTB to access specific information about your client’s account. MyFTB provides 24/7 service which allows you to take care of your or your clients’ needs at your convenience. Since February 2022, individuals and tax professionals can register for a MyFTB account in real-time. We added this feature to help expedite obtaining tax information.

Once your POA or TIA relationship is approved, practitioners can Live Chat with an FTB representative about your client’s account, send a message, and view notices within the last 12 months.

With your full online account authorization from each client, you can view the following information for the tax year(s) authorized:

  • Confirm estimated and PTE elective tax payments
  • Review payment and return history
  • View account balance and tax year details
  • Confirm credits available to be claimed on return
  • View proposed assessments
  • Update contact information and protest proposed assessments (POA required)

MyFTB also provides tools to manage your client relationships. For example, you can submit and update POA declarations, request and renew TIA relationships, and check the status of these relationships.

For more information about MyFTB or how to register for a MyFTB account.

Representing Minor Clients 

How to establish POA and TIA relationships with minor clients 

There are several special rules that apply to establish Power of Attorney (POA) and Tax Information Authorization (TIA) relationships with minor taxpayers. Most importantly, the POA or TIA must be signed by a parent or guardian and proof of relationship must be attached.  

POA declarations 

If you are filing a POA declaration on behalf of a minor, you must attach a birth certificate, custody agreement, court order, and/or any documentation that establishes authority of the person signing the POA declaration on behalf of the taxpayer.  

In MyFTB, this means you cannot select the “I am not attaching the taxpayer’s authorization” option. You must attach a signed FTB 3520-PIT and the additional documentation. 

TIA relationships 

The same documentation is needed to establish a TIA relationship as is required for a POA.  

Unfortunately, we do not accept attachments to TIA requests in MyFTB. This means you will need to attach the documents to FTB 3534 – Tax Information Authorization and submit the request through the mail. 

We hope these tips will help your relationship requests get approved on the first submission. 

Electronic Signature Options Extended Through June 30, 2023 

FTB will continue to accept e-signatures for statute of limitation (SOL) waivers and will not require an original signature for paper returns and other documents that must be signed with an original signature through June 30, 2023. However, Power of Attorney (POA) forms will still require an original signature.  

If you need to submit a POA, follow the instructions on Submit a power of attorney. 

For more information about e-signature options, visit our recent Public Service Bulletin. 

Important Tips on Web Pay for Small Businesses 

Your small business clients can use Web Pay for free with their checking or savings account. Corporations, limited liability companies (LLCs), and partnerships use Web Pay for business, while sole proprietorships must use Web Pay for personal.

There are several different types of payments, and each differ depending on your client’s business entity type.

Your client can make the following payments such as, but not limited to: 

  • Annual tax or fee 
  • Bill or other balance due 
  • Current year or amended tax return 
  • Estimated tax 
  • Extension 

When logging in, the entity type and entity ID must match our records. Do not enter dashes, it is important to ensure owners enter the correct number.

The length of the number should be: 

Corporation LLC Partnership
7 digit corporation ID number  9 or 12 digit number (Corporation ID number if filing as a corporation) Secretary of State (SOS) number, or FTB issued ID number  

In most cases, Web Pay accepts the entity ID number. For additional help using Pay by bank account (Web Pay), go to Help with bank account payments. 

What’s New for Tax Forms 

To provide further transparency and better support to our tax professional community, you will now be provided a link in the monthly edition of Tax News. This link takes you directly to our new webpage that will provide information for possible upcoming changes to existing tax forms.

We appreciate your support and look forward to working collaboratively with you for a successful partnership. 

In-Person Education and Outreach Presentations Are Back!

As part of our ongoing Education and Outreach efforts, representatives from the Taxpayers’ Rights Advocate’s Office are available to provide virtual and in-person presentations to tax professionals, government and nonprofit organizations, and community groups on a variety of tax-related topics. 

Our Small Business Liaison presents to small business owners to help them better understand their income tax requirements and responsibilities. Our liaison offers valuable insights on the different types of ownership to allow business owners to determine which form of ownership best fits their business need. 

In-person presentations are limited to groups of 25 or more and we ask that all requests be made at least 30 days prior to the event. Our presenters can adjust the topic to fit your needs, but we cannot present more than two-hours. Our presentations are not intended as courses or classes to meet the needs of continuing education requirements.

Go to Request a Speaker for additional information and to schedule a presentation. 

Updates and More from the Internal Revenue Service 

We recently partnered with the IRS to provide monthly IRS articles to assist our tax professional and small business communities. We are excited to share this information; however, if you have questions about the content, you will need to contact the IRS directly.

Community and bilingual volunteers needed to provide free tax help in 2023 

IR-2022-216, December 8, 2022 — The Internal Revenue Service (IRS) is looking for volunteers to train for the upcoming filing season to provide free tax help in communities across the country. Bilingual volunteers are particularly needed. 

IRS seeking qualified applicants for the Electronic Tax Administration Advisory Committee 

IR-2022-215, December 7, 2022 — The Internal Revenue Service is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC). Applications will be accepted through January 31, 2023. 

Treasury and IRS propose regulations identifying syndicated conservation easement transactions as abusive tax transactions 

IR-2022-214, December 6, 2022 — The Treasury Department and Internal Revenue Service today issued proposed regulations identifying certain syndicated conservation easement (SCE) transactions as “listed transactions” – abusive tax transactions that must be reported to the IRS.  

Get Ready for taxes: What's new and what to consider when filing in 2023 

IR-2022-213, December 6, 2022 — The Internal Revenue Service encouraged taxpayers to take important actions this month to help them file their 2022 federal tax returns. 

IRS updates frequently asked questions about the 2020 unemployment compensation exclusion 

IR-2022-212, December 2, 2022 — The Internal Revenue Service today updated frequently asked questions (FAQs) for the 2020 unemployment compensation exclusion. 

Ask the Advocate
Taxpayers’ Bill of Rights Hearing 

Brenda Voet, EA Taxpayers’ Rights Advocate

We just finished holding one of our most important meetings of the year, the Taxpayers’ Bill of Rights (TBOR) hearing. This annual hearing was held during the December 8, 2022, meeting of Franchise Tax Board (FTB) and was attended both in-person and virtually. 

The purpose of the TBOR hearing is to provide industry representatives and taxpayers an opportunity to present to FTB their proposals on changes to California's tax laws and suggestions on how FTB can improve the services we provide. 

If you were unable to attend, or follow it live online, you can access an archived video of this and other public meetings at  Franchise Tax Board Meetings. 

During this year’s hearing, some of the issues brought forward included: 

  • Allow pass-through entities to apply overpayments of taxes to the pass-through entity elective tax June 15 prepayment
  • Provide more consistency between the e-file and Web Pay taxpayer identification number requirements 
  • Publicize major form changes prior to their release

As shared during the meeting, we will provide written replies by February 1, 2023. We will add this year’s responses to the Taxpayers’ Rights Advocate page under  Taxpayers' Bill of Rights Hearing Responses along with prior years’ responses that are currently available. 

Reminder that our filing season will commence Tuesday, January 17, 2023, after the Martin Luther King Jr. holiday. 

Tax News Flash Links

Tax News Flashes are real-time FTB news releases which inform taxpayers of the latest breaking tax-related events. These articles are published separately from our monthly Tax News edition.

There were no Tax News Flashes sent for the month of December.

FTB Career Opportunities

We have a wide variety of jobs that offer the growth and challenge you may be looking for

If you are a student, recent graduate, or experienced professional, we encourage you to apply. For more information Careers with the State of California at Franchise Tax Board.

Event Calendar

As part of our education and outreach to the tax professional community, we participate in many different presentations and fairs. We provide a calendar that shows the events we attend, as well as other events happening with us, such as interested party and Board meetings.