According to the October 2017 newsletter of the California Franchise Tax Board, beginning in January 2018, California taxpayers will be able to e-file amended individual returns for tax year 2017 and later on a new Schedule X, California Explanation of Amended Return Changes. The Form 540X will be eliminated going forward, but you will still need to paper file Forms 540X to amend returns for prior tax years.
The California Franchise Tax Board (FTB) issued Chief Counsel Ruling 2017-01 on August 2, 2017, regarding market-based sourcing rules for performance of "non-marketing" services. Where a subcontractor performed administrative or non-marketing business services for a health plan client, the members or sponsors of the health plan are not considered the direct customers of that subcontractor, but rather only the health plan entity.
The California Franchise Tax Board (FTB) recently released an update on the current state tax filing season. The number of personal returns that were e-filed in 2017 increased by one percentage point as compared to 2016 (88% in 2017, and 87% in 2016). Some 133,400 people used CalFile to file returns this year, and 95% of CalFile users found that the program was easy to use and understand.
The Franchise Tax Board has updated its cost recovery fees, which are assessed against individuals and business entities when they fail to file tax returns upon demand or fail to pay their delinquent taxes. The filing enforcement fee for individuals and most entities will be $84, and the collection fee will be $287. For corporations and LLC's treated as corporations, the filing enforcement fee will be $85 and the collection fee $374.
We experienced an original success this month, trying a new approach to a very old problem. Businesses that register with the California Office of the Secretary of State (SOS) must, among other things, file annual income tax returns with the California Franchise Tax Board (FTB) and pay either the appropriate amount of income tax due based on the business' California net income, or pay a minimum $800 franchise tax, whichever is larger. Frequently, a taxpayer may set up a business but ultimately abandon the idea before ever operating the business. Or, sometimes a business ceases to operate, but the requisite documents are not correctly filed with the SOS, leaving the FTB to believe the business is still active. Many years may pass before the would-be business owner realizes an annual $800 franchise fee has been assessed against the business, along with additional penalties and interest.
The Franchise Tax Board announced it will be accepting applications for the California Competes Tax Credit from March 6 through March 27, 2017. The credit is available to businesses that relocate to California or stay and expand within the state. During Fiscal Year 2016/2017, credits totaling $243.3 million will be available for allocation during three application periods.
The California Franchise Tax Board (FTB) issued a reminder regarding tax return due dates, which have changed for taxable years starting January 1, 2016 going forward. For calendar-year filers, tax returns are due on:
In December a three-judge California appellate panel affirmed a superior court ruling finding that Comcast lacked a unitary relationship with OVC, Inc., and was therefore entitled to a $3 million refund. However, the court also affirmed the trial court's holding that Comcast owed tax on a $1.5 billion termination fee.
California Rev. and Tax Code section 23101 defines what it means to do business in California, including a sales threshold for taxpayers not physically located in the state. A taxpayer is considered to be doing business in California "if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit" where any one of a number of conditions are satisfied, including having $54,771 in real and tangible personal property (originally $50,000), $54,771 in payroll (originally $50,000), and $547,711 in sales (originally $500,000) in the state for taxable year 2016.
The California Franchise Tax Board recently compiled statistics regarding the 2016 tax filing season. It released data regarding individual and business returns, refunds, and taxpayer services. Highlights included: