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 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.
Remember: The California Franchise Tax Board (FTB) changed the tax return due dates for returns filed by business entities. The original return date is now April 15 for calendar-year filers (one month later than it used to be), and the 15th day of the 4th month following the close of the taxable year for fiscal-year filers. The extended due dates remain unchanged.
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:
Next year, the due dates for various federal tax returns will change based upon the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41). California Assembly Bill 1775 was passed to conform the due dates of related state tax returns to the federal dates. In 2017, the following changes will take place:
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:
The California Franchise Tax Board (FTB) implemented a "no cash" policy in its field offices effective September 1, 2015. However, recognizing that this could create a hardship for some taxpayers, the FTB has established an exemption policy effective July 1, 2016. Taxpayers may sign a No Cash Policy Exemption Request form and submit it to the FTB with an explanation for their inability to pay using an alternative method. If accepted, exempt taxpayers will need to make an appointment at an FTB field office to pay in cash.
On February 19, 2016, California Assembly Member Lopez introduced Assembly Bill No. 2625 to amend certain sections of the Revenue and Taxation code related to the annual minimum franchise tax and microbusinesses. Specifically, it would reduce the annual tax for qualifying new microbusinesses according to a sliding scale, up to $600 annual tax for businesses with gross receipts less returns and allowances of more than $100,000 but less than $150,000.
The US Supreme Court issued its decision in Franchise Tax Bd. of California v. Hyatt on April 19, 2016, affirming the jurisdiction of the Nevada courts but limiting the damages it could award against the California tax agency. This decision lays to rest a case in which taxpayer Gilbert Hyatt sued the FTB in Nevada for abusive audit and investigation practices. The original award was for nearly $500 million. However, because Nevada limits damages that can be awarded against its own state agencies, the taxpayer may only be granted up to Nevada's $50,000 limit.