California Taxation: FTB Face Time
Damien B.M. English
COT-FTB Annual Meeting Provides Updates on Hot Topics
The Tax Practitioner Hotline, e-filing and legislation were among hot topics recently discussed at CalCPA’s Committee on Taxation liaison meeting with the FTB. Part of the meeting also included a Q&A session covering issues from bankruptcy treatment to dependency credits to penalty notices.
A transcript of the Q&A will be available at www.calcpa.org/Content/24157.aspx later this month.
Tax Practitioner Hotline Lowdown
Over the past few years, the FTB has received many requests from tax professionals to accommodate the principal of “one and done,” which means callers are no longer transferred or referred to the Accounts Receivable Management Division. The issues are now handled through the Tax Practitioner Hotline, which has increased its staff to 20 people, unless the account is specifically assigned to a collector or collection unit.
When contacting the hotline:
• Be prepared to give your client’s account number and address.
• Remember the hotline is exclusively for the tax professional community. Clients who want to contact the FTB should call (800) 852-5711.
• Include a current Power of Attorney when faxing a request for a transcript.
• Keep in mind that it may take several business days before getting a response when ordering five or more years of transcript information.
The hotline is open 8 a.m.–5 p.m., Monday–Friday (except state and federal holidays). Call the hotline at (916) 845-7057 or fax to (916) 845-6377.
Avoiding E-file Errors
The FTB shared the most common reasons why individual and business e-file returns were rejected during the 2007 processing year (taxable year 2006).
A couple of the top error codes regarding individual e-file returns:
Error Code 679/680: Your/Spouse’s or registered domestic partner’s (RDP) Prior Year Adjusted Gross Income Amount (Field 0020) does not match FTB’s records; therefore, you cannot sign your form electronically.
Tip: You can, however, still e-file your client’s return. Complete and sign form FTB 8453, California e-file Return Authorization, and keep it in your files.
Error Code 900/902/903: Taxpayer SSN/DCN or Spouse/RDP SSN/DCN previously used on an e-filed return.
Tip: To avoid sending duplicate returns, do not retransmit an accepted California return when retransmitting a corrected federal return. If you discover the Social Security number on the accepted California return was incorrect, call the Tax Practitioner Hotline.
A top error code regarding business e-file returns:
Error Code F100/100S-100: Form 100/100S-100, Question E must be a valid six-digit Principle Business Activity (PBA) code as of 1998.
Tip: Reference the PBA codes listing in the current year Form 100/100S booklets.
For more on error codes, visit www.calcpa.org/Content/Files/Taxation/Efile_error_codes.pdf.
FTB Sponsored Legislation
Brian Putler of the FTB’s legislative department discussed significant legislation administered by the FTB, including:
AB 361 (Fiona Ma, Chapter 105): This act requires the general personal representative of the estate attorney of a decedent’s estate to provide notice of the administration of the estate to the FTB no later than 90 days after the date letters are first issued to a general personal representative. The notice must be provided by any open estate opened on or after July 1, 2008.
AB 1561 (Charles Calderon, failed): This bill would change the specified date from Jan. 1, 2005, to Jan. 1, 2007, for taxable years beginning on or after Jan. 1, 2007. Changing the specified date conforms state law to all changes from Jan. 1, 2005, through Dec. 21, 2006, to IRC sections that have been incorporated by reference. Thus, California law would conform to most of the changes made to the federal income tax law during that two-year period.
AB 198 (Committee on Budget, Chapter 381): Amends current law to:
• Determine an LLC’s fee based on the LLC’s total income from all sources derived from or attributable to the state. Under the current apportionment rules, the level of activity would be determined by applying the franchise/income tax sales factor rules
to the total income of the LLC (as defined in the bill) to calculate the amount of total income from all sources derived from or attributable
to the state; and
• Provide that if the LLC fee is adjudged to be discriminatory or unfairly apportioned, any taxpayers that file claims for refund asserting that the LLC fee is discriminatory or unfairly apportioned would have the amount of their claim for refund calculated in an amount necessary
to remedy the discrimination or unfair apportionment required by the statute.
AB 969 (Mike Eng, vetoed): Would have eliminated a taxpayer election to report and pay use tax on the state income tax return and instead require that the use tax be reported and paid through the income tax return.
“This was a tax gap item and this legislation was designed to make reporting on the individual return mandatory if a use tax return wasn’t filed in the hopes of getting better compliance,” says John Woodford, the chair of CalCPA’s Committee on Taxation’s state tax subcommittee.
“A recent mailing by the BOE to tax practitioners is an effort to encourage them to educate their clients. I wouldn’t be surprised to see similar legislation re-introduced next year.”
