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State of California Franchise Tax Board

Tax News
FTB December Board Meeting

At the Franchise Tax Board (FTB) December meeting, board members voted to approve FTB’s four legislative proposals, the rulemaking calendar, and various budget change proposals. The agenda also included the annual update on our Enterprise Data to Revenue program, and finally, the Taxpayers’ Bill of Rights Hearing, where speakers address their concerns with the board member.

During the meeting the following description of the four legislative proposals was provided by staff:

Conform to the Federal Research Credit Methods

This proposal would simplify the calculation of the California research credit by generally conforming to the federal calculation methods and to the recent federal changes to the credit’s calculation rules for acquisitions, dispositions, and aggregations.

Dependent Taxpayer Identification Numbers

Amend current state law to provide that no Dependent Credit would be allowed unless the dependent’s taxpayer identification number is included on the respective tax return.

Business Entities e-Filing Requirement

Require a business entity that files a tax return that was prepared using tax preparation software, to file the tax return electronically, unless the business entity, upon request, is granted a waiver. We may grant a waiver if it determines the business entity is unable to comply with the requirements due to, but not limited to:

  • Technology constraints.
  • Compliance would result in undue financial burden.
  • Circumstances that constitute reasonable cause and not willful neglect.

In addition, a provision would be added that would impose a $500 penalty on a business entity that files a tax return but fails to e-file that tax return when required to do so under the requirements discussed above, unless the failure is due to reasonable cause and not willful neglect.

First-Time Abatement of Timeliness Penalties

Amend state law to establish penalty abatement for these timeliness penalties similar to the federal first-time abatement procedure. This proposal would require us, upon taxpayer request, to abate a timeliness penalty (late filing or late payment) penalty when:

  • Reasonable cause is absent, and for the calendar year of the request for abatement and four calendar years immediately prior to the request for abatement:
    • No other timeliness penalty has been imposed.
    • The taxpayer is otherwise compliant with all income or franchise tax filing requirements.
    • The taxpayer has paid, or is current on an arrangement to pay, all tax currently due.

During Board and Executive Officer Time, Executive Officer Selvi Stanislaus and Assistant Chief Counsel Pat Kusiak were recognized. The State’s CIO recognized Selvi for a recently-received award for innovation and leadership in the area of technology. The board honored Pat Kusiak, who is retiring as head of the Technical Resources Bureau in our Legal Division, with a resolution thanking him for all his years of service with us.

The entire FTB board meeting transcript can be found on our website. Board Meetings are generally held quarterly with the Taxpayers’ Bill of Rights Hearing occurring in December. For more information on issues raised at the Taxpayers’ Bill of Rights Hearing, please see the Ask the Advocate section of Tax News.

Back to January 2014 Tax News

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