New Opportunity for Taxpayers Who Avoided Tax Bills
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Public Affairs Office
For Immediate Release
Sacramento – The Franchise Tax Board (FTB) officially launched its second Voluntary Compliance Initiative by contacting 47,000 taxpayers who may have underreported their tax liabilities through the use of tax avoidance transactions or who may have unreported offshore income.
The voluntary program, directed by recent legislation (SB 86, chaptered March 24, 2011) is an opportunity for these taxpayers to step forward and voluntarily amend their 2010 and prior income tax returns. Participating taxpayers must pay both the tax and interest in full. In return, taxpayers will obtain a waiver of most penalties and avoid potential criminal prosecution.
An abusive tax avoidance transaction includes either a ‘tax shelter’ defined under Internal Revenue Code Section 6662(d)(2)(c), an undisclosed reportable transaction, a listed transaction, a gross misstatement, or a non economic substance transaction as defined in Revenue and Taxation Code Section 19774.
An offshore financial arrangement is generally any transaction designed to avoid or evade California income or franchise tax through the use of offshore entities or payment cards, such as debit or credit cards issued by foreign financial institutions.
The FTB strongly encourages taxpayers who qualify for this initiative to participate. Advancements in technology, reporting requirements, and the data sharing between agencies (including the IRS) has allowed the FTB to better identify taxpayers who may have underreported their income due to these schemes.
The voluntary program runs from August 1 to October 31, 2011.
For more information, visit FTB’s voluntary compliance webpage or call 888.825.9868.
Call for breakdown on number of letters issued by county.
For more information on other taxes and fees in California, visit: taxes.ca.gov.