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Extended Due Dates for Form 565 and Form 568

September 13, 2017

Purpose of Bulletin

To inform staff of changes to extended due dates for Form 565 and Form 568 tax returns.

Background

Recently, AB 1775 changed the original due dates of some business entity tax returns. As a result, the extended due dates of some business entity tax returns were shortened by one month. The tax practitioner community requested that partnerships and LLCs filing as partnerships be granted one additional month to file. AB 119 allows a 7-month extension to file for these entities, beginning with the 2017 tax year.

Additional Information

For the 2016 tax year, the California Legislature authorized a one-month “grace period” for the 2016 tax year transition period. This grace period allows FTB to use reasonable cause provisions to abate some late filing penalties:

  • Late Filing Penalty under R&TC Section 19131, also known as the Delinquent Penalty
  • Late Filing Penalty under R&TC Section 19172, (Failure of Partnership to Comply with Filing Requirements Penalty), also known as the Per Partner or Per Member Penalty

This relief is available for partnerships, LLCs filing as partnerships, and SMLLCs whose owner is a partnership or an LLC filing as a partnership, which file after the end of the 6-month extension period, but prior to the end of the 7th month after the original due date of the return.

For tax year 2016 returns, FTB is taking proactive steps to try and avoid late filing penalty assessments by using internal systematic processes to abate penalties as returns are processed.

For tax year 2017 returns, FTB systems will be re-programmed to reflect the new 7 month extension to file. No other FTB intervention will be necessary.

Taxpayer Inquiries

If a taxpayer or their representative believes they have been assessed a late filing penalty incorrectly on a tax year 2016 Form 565 or 568 tax return, they should contact FTB to request review of their case.

Upon contact, staff should review the case and determine if the return was submitted within the period of time described above. If the return was submitted during that period of time, reasonable cause provisions should be used to abate the late filing penalties on the 2016 tax year.

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