Post on 14-Dec-2015
Tax Amnesty
FTB/CPA Liaison Meeting
October 28, 2004
Tax Amnesty is
A limited-time opportunity for
Individuals and businesses to
Pay past-due income, sales or use taxes, and the related interest
For tax year 2002 and prior
Avoiding most penalties and fees, and criminal prosecution.
Revenue Estimates2004-05
millions
Gross Revenue 555$ Collections absent Amnesty from participants (355)$ Net 200$
Amnesty Eligible Universe
Who Benefits?
Did not file required franchise or income tax returns
Underreported income on previously filed franchise or income tax returns
Claimed excessive deductions
Did not pay previously assessed taxes, interest, penalties, or fees
Who Qualifies?
Individuals Fiduciaries Estates and Trusts Partnerships Limited Liability
companies Corporations Exempt organizations with
unrelated business taxable income
Excluded Taxpayers/Transactions
Those under criminal investigation or prosecution on tax-related matters
Abusive tax shelter transactions
Pre-Amnesty TimelineDecember 2004 - January 2005
Taxpayer & tax preparer outreach
Mail 2.2 million amnesty letters (applications)
Amnesty Media Campaign
Media--Network TV--Billboards--Radio--Public Service Announcements
Amnesty TimelineFebruary 2005 – March 2005
File an application February 1, 2005 - March 31, 2005Postmarked by April 1, 2005, due to the holidayPostmarked by April 1, 2005, due to the holiday
Most penalties and fees waived for taxable years 2002 and older
Amnesty Timeline April 2005 – May 2005
By May 31, 2005:
Underreporters and nonfilers must file returns
Pay in full taxes and interest or initiate an installment agreement
Final payment on an installment/payment agreement Final payment on an installment/payment agreement due by June 30, 2006 (amnesty years only).due by June 30, 2006 (amnesty years only).
Special Filing Requirements
Bankruptcy StatusBankruptcy Status – Court Approval Required
Notice of Proposed AssessmentNotice of Proposed Assessment – FTB will finalize assessment
Pending ProtestPending Protest – FTB will dismiss protest
Pending AppealPending Appeal – FTB will finalize assessment
Partial ParticipationPartial Participation – Amended return required
Under Audit Under Audit – Amended return required
General Amnesty Information
No refunds allowed on taxpayer balances paid prior to amnesty
Taxpayers waive their rights to claims for refund or credit for amounts paid in connection with amnesty
IRS Information Exchange Agreement
Compliance Period2005- 2006
FTB will revoke amnesty, reinstate the penalties and fees, and assess the new
amnesty penalty for the failure to file and pay any amount of tax, including
penalties and fees, for the 2005 or 2006 taxable years.
Amnesty Penalty
Penalty equal to: 50% of the post-amnesty unpaid interest amount on
any tax year eligible for amnesty 50% of the unpaid interest subsequently assessed on
deficiency amounts
Penalty would not apply to a taxpayer that: Initiates and is compliant with an installment/payment
agreement under amnesty Has an existing (“grandfathered”) installment
agreement and does not participate in amnesty (PIT only)
Accuracy Related Penalty Increase
An increase in the penalty for a taxable year eligible for amnesty from 20% to 40% of the understatement for any assessment issued post amnesty
Increase does not apply to: A taxpayer in audit, protest, appeal, settlement, or
litigation as of the start of amnesty Understatements relating to tax shelter items
Tax Professional Services
FTB Amnesty Mailings - Copy to Power of AttorneyPractitioner HotlineAmnesty Application provided to CTPs Tax News ArticlesSpecial Fax Number BOE and FTB Amnesty Portal www.taxes.ca.gov
Thank you for your time and attention..