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.
California taxpayers beware! Willfully failing to file tax returns for three or more consecutive years is sufficient to determine the taxpayer intended to evade paying tax, and therefore may be prosecuted for felony tax evasion and punished by imprisonment not to exceed one year. Under federal law, an element of willfulness is required - that is, some other affirmative act such as hiding assets offshore, keeping a second set of books, or destroying records. According to California's 4th District Court of Appeal, the mere failure to file tax returns is sufficient under California Revenue and Taxation Code section 19706. We agree with the dissent and hope this case proceeds to the California Supreme Court.
Being accused of violating state or federal tax laws is a very stressful situation to be in. Not only are the consequences severe if you are found guilty, the state and federal tax systems are both extremely complex. This video explains what action a person should take immediately after being charged with tax crimes or being investigated for violating state or federal tax law.
In Kernan v. Commissioner, T.C. Memo. 2014-228, the Tax Court sustained the IRS's proposed deficiencies and additions to for tax years 2001 through 2006 due to the taxpayer's failure to file income tax returns. However, the Court rejected the IRS's proposed penalties for fraudulent failure to file these same returns.