Tax amnesty q&a: preliminary information on the FTB and BOE's 2005 amnesty program.

• Position: TAX AMNESTY

Recent legislation authorizes the Franchise Tax Board and the Board of Equalization to administer a tax amnesty program in early 2005. The following provides some preliminary information about the program, who is eligible to participate and when to apply.

WHAT IS TAX AMNESTY?

Tax amnesty is a limited-time chance for individuals and businesses to pay past-due income, franchise, sales or use taxes and the related interest penalty-free--without the fear of criminal prosecution. It runs from Feb. 1, 2005, through March 31, 2005.

Taxpayers eligible to participate in amnesty but who choose not to do so will be subject to additional penalties.

WHO IS ELIGIBLE?

Amnesty is open to both individuals and businesses for taxable years 2002 and prior if they did any of the following:

* Did not file the required California tax returns;

* Underreported income on a previously filed tax return;

* Claimed excessive deductions; or

* Did not pay income/franchise, sales or use taxes on time.

The following taxpayers or transactions are not eligible for amnesty:

* Taxpayers under criminal investigation or prosecution on tax-related matters; and

* Abusive tax shelter transactions that were eligible for relief under California's Voluntary Compliance Initiative or the 2003 IRS Offshore Voluntary Compliance Initiative.

These initiatives applied to taxpayers with nonreported or underreported tax liability amounts attributable to an investment in an abusive tax shelter. These taxpayers are eligible for amnesty for non-abusive tax shelter items.

HOW AND WHEN DO I APPLY?

* Complete and return a signed amnesty application by March 31, 2005. Amnesty runs from Feb. 1, 2005, through March 31, 2005. Since March 31 is a state holiday, the FTB will accept applications postmarked April 1, 2005.

* File all missing income tax returns for amnesty years by May 31, 2005.

* File amended income tax returns for taxable years where you underreported your income for tax amnesty years by May 31, 2005.

* Pay all outstanding tax liabilities and interest by May 31, 2005. Or set up an installment payment agreement that will be fully paid by June 30, 2006.

WHERE DO I GET FORMS?

* The amnesty application will be available on the FTB's website by Jan. 15, 2005.

* Tax forms for years 1994-02 are available on the FTB's website (www.ftb.ca.gov) under Forms & Publications.

* Tax forms for years before 1994 are available by calling (800) 852-5711.

CAN I DELAY FILING AND PAYING PAST-DUE TAXES UNTIL THE...