2017 California Tax Update.

• Author: Bluth, Kelly
• Position: TAX SEASON toolkit

Extensions for Partnership and LLC Returns (AB 119) | Businesses

AB 119 changes the automatic extension for filing partnership and IXC returns from six months to seven months, effective for 2017 tax year returns and thereafter (R&TC Sec. 18567). For calendar-year partnerships and LLCs taxed as partnerships, the extended due date will return to Oct. 15.

AB 119 directs the FTB to presume reasonable cause and not willful neglect for the late-filing penalty (R&TC Sec. 19131) and the per-partner/member penalty (R&TC Sec. 19172) for 2016 returns filed after the Sept. 15, 2017, due date if the partnership or LLC:

* Files a return by Oct. 16, 2017, (or by the 15th day of the 10th month for non-calendar year entities); and

* Requests relief "in a form and manner specified by FTB." At this time, FTB hasn't specified how they're going to implement this provision.

AB 119 didn't change the extended due date for any other entity returns.

FTB to Revise Income Tax Forms and Instructions for Use Tax Reporting Requirements (AB 1593) | Individuals and Businesses

For the returns required to be filed for taxable years beginning on Jan. 1, 2017 and thereafter, AB 1593 requires the FTB to revise the personal income tax return related to use tax reporting. AB 1593 requires:

* Taxpayers to enter a number on the use tax line of personal income

tax returns

* If zero is entered on the use tax line, taxpayers will need to check one of two boxes to validate that they:

** Remitted the use tax due for the taxable year to the Board of Equalization (now the California Department of Tax and Fees Administration), or

** Don't owe use tax

E-filed returns will be rejected if the use tax lines are left blank.

FTB Income Tax Forms for Use Tax Reporting and Payment; Acceptable Tax Return Means Original Return (AB 1717) | Individual and Businesses

AB 1717 made the following changes:

* Removes the phrase timely filed from the definition of an acceptable return for the purposes of remitting use tax on the income tax returns

* Defines an acceptable tax return to mean an original return, clarifying that use tax can be reported on an original return regardless of the date the original return is filed.

AB 1717 changed the definition of original return to avoid the California Department of Tax and Fee Administration from asserting late payment penalties where the FTB transferred the use tax payment to cover any shortfall in the income tax liability.

CA Earned Income Tax Credit (SB 106) | Individuals

For taxable years beginning on or after Jan. 1, 2017, California conforms to...