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Filing compliance agreements will aid certain out-of-state nonfilers

Out-of-state businesses and trusts with California tax liabilities may be eligible for penalty relief if they can show reasonable cause for their failure to file. This will give some out-of-state entities the opportunity to come forward voluntarily if they have unmet filing requirements and owe California State tax.

The category of taxpayers eligible for a penalty-relieving filing compliance agreement is generally limited to certain corporations, limited liability companies, and trusts.

The program allows FTB to review a taxpayer's particular facts and make a finding of reasonable cause before the return is filed. Taxpayers who qualify must file and make full payment to FTB for every year they failed to file a California return. FTB will waive various penalties associated with the return filings identified in the agreement. Penalties most commonly waived are the failure to file, and the failure to pay tax penalties.

Filing compliance agreements are also available to certain taxpayers who do not satisfy the statutory requirements of the existing Voluntary Disclosure Program. That program allows qualified companies, shareholders, and beneficiaries to avoid return-filing penalties by voluntarily disclosing and paying tax liabilities from the past six years.

For more information, go to our website at ftb.ca.gov. If FTB accepts the taxpayer's request for a filing compliance agreement, the taxpayer must generally file the required tax returns, and make full payment within 30 days.

The authority for FTB's filing compliance agreement is found in California Revenue and Taxation Codes (CRTC) Sections 19131 and 19132. The Voluntary Disclosure Program is defined in CRTC Sections 19191-94.

We also offer assistance to others taxpayers, including individuals who fail to file their California income tax returns. Taxpayers can request more time to respond to notices, retrieve information that can assist them in filing a tax return, request tax forms, and find out how to set up an installment agreement by contacting us online at ftb.ca.gov, or calling 800.852.5711.