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Public Disclosure of Tax Delinquency Letters

Purpose of Bulletin

To advise staff that Business Entity Tax System (BETS) will adjust accounts for LLCs that had the late payment penalty, demand and delinquent penalties assessed on the same tax year.

Background

For tax years 2008, 2009, and 2010, certain LLCs that did not file timely returns upon demand, were assessed the late payment penalty in addition to the demand and delinquent penalties.  Per R&TC Section 19132(b) the late payment penalty should not be assessed if the sum of the delinquent and demand penalties are equal to or greater than the late payment penalty.

Systems Updated

FTB systems have been updated to prevent future assessment of a late payment penalty for an LLC if the demand and delinquent penalties are assessed on the same tax year.

BETS will adjust LLC accounts that were incorrectly assessed a late payment penalty, but will not show the correct balance until a financial transaction takes place on the tax year (e.g. payment is applied). However, the BETS forecast function will show the correct balance.

The first BETS notice could include the incorrect late payment penalty, but Accounts Receivable Collection System notices will be correct.

LLCs with a credit or zero balance will receive a credit or refund of the late payment penalties.

We should complete all adjustments within six months.

Policy Implementation

BETS implemented program changes; however, some accounts may need to be manually resolved on a case-by-case basis through taxpayer contacts.