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FTB helps with SDI computation-

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Midyear rate change causes some confusion

A midyear rate change to the California State Disability Insurance (SDI) has caused confusion and frustration for those trying to file claims for SDI overpayments.

Fortunately, today there's relief for a condition that was created nearly a year ago.

The Taxable Wage Base subject to the SDI tax is currently $46,327. Taxpayers who had two or more employers during 2000, received more than $46,327 in wages, and whose SDI withholding appears on their Forms W-2 Wage and Tax Statement are eligible to claim a credit for any overpayment in SDI they've made during the tax year.

Effective April 1, 2000, the SDI contribution rate increased to 0.7 percent from 0.5 percent (of covered wages). For wage earners filing a 2000 tax return, the change meant that there were two SDI contribution rates in effect for tax year 2000. See the chart below:

Wages Paid
During
Contribution
Rate
January 1 - March 31 0.5% (.005)
April 1 - December 31 0.7% (.007)

To apply the appropriate rate to the appropriate earnings, taxpayers must know how much they were paid during the first quarter of 2000. Their Forms W-2 are of limited use because it does not break out the wages earned by quarters. Taxpayers have to resort to other, more difficult ways of finding their first quarter earnings, including going over first quarter paycheck stubs (or similar documentation) and contacting their first quarter employer(s). It's a bothersome additional step.

If you're experiencing difficulties with your clients' SDI calculations, we can help. Call our Tax Practitioner Services Hotline at (916) 845-7057.

If the first quarter information is available, we will give you the information reported. If the first quarter information has not been reported, we will still try to locate your clients' wages; however, be advised that we may not be able to. If we can't, please use your clients' first quarter paystubs or estimate the first quarter wages, using the worksheet in the 540/540A tax booklet on page 18, the 540NR on page 20 or the 540A Senior Special Addition on page 24.

You can also advise your clients to contact our general toll-free telephone service for help in determining their first quarter wages. We'll verify their first quarter wages and assist them in completing the worksheet. The toll-free number for taxpayers is (800) 852-5711.

Related notes:

The SDI withholding rate for 2001 is 0.9 percent. The SDI taxable wage limit remains at $46,327 per employee. If you have any questions about the SDI rate change, please call the EDD toll-free number (888)-745-3886 or visit your local Employment Tax Customer Service Office.

Tax Practitioner Services
Need answers fast? Call any one of our Tax Practitioner Services Hotline telephone numbers.

Tax Practitioner Hotline
Telephone (916) 845-7057
Fax (916) 845-6377

Personal Income Tax Collection
Fax (916) 845-0494

Business Entities Collection
Fax (916) 845-0145

FTB e-file Help Desk
Telephone (916) 845-0353

Ask the Advocate
Continued from page 3

For California personal income taxes, bank and corporation taxes, homeowner and renter assistance, and nontax debt collection contact:
Franchise Tax Board
Taxpayer Advocate Bureau
PO Box 157
Rancho Cordova CA
95741-0157
Telephone:(800) 852-5711
Fax: (916) 845-6614
Internet: www.ftb.ca.gov/ aboutftb/taxpayer_advocate

Common advocate or problem resolution responsibilities are:
. Maintain an independent status and to provide independent review of taxpayers' problems
. Protect taxpayers' rights
. Problem resolution
. Adhere to agency tax laws
. Identify trends and issues
. Identify inequities
. Propose changes
. Provide understandable and simple, tax laws, regulation, policies, procedures, forms, and publications
. Ensure courteous public treatment
. Institute staying actions
. May temporarily stop collections while in review
. Encourage public suggestions

Any communication you have with an advocate or problem resolution office should specify what steps you have previously followed to resolve the problem and exactly what action you want the advocate to take. For instance, if your client's bank account has been levied and the action is creating a hardship, you will want to state this clearly in your correspondence, email or telephone call. You should also include a method of contacting you during business hours such as a daytime telephone number.

May/June 2001

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