Budget package leaves out FTB erroneous refund claims penalty.

• Position: ADVOCATING FOR THE PROFESSION - California Franchise Tax Board - Brief article

As the Legislature completed its budget work, CalCPA and a coalition of other business groups were successful in having a harmful and costly taxpayer penalty provision removed from budget language. As introduced, budget trailer bill SB 1015 had a provision that authorized the FTB to impose a 20 percent penalty on taxpayers seeking an erroneous tax refund claim. Specifically, the proposal would have allowed the FTB to penalize any refund claim it thought lacked a reasonable basis--and would have prohibited any appeal or protest from the taxpayer.

CalCPA opposed this proposal arguing that it's unreasonable to penalize taxpayers who have simply overestimated and overpaid their taxes. California law currently has a 20 percent underpayment penalty for understatements in excess of $1 million, which in many cases results in taxpayers overpaying their taxes to avoid the underpayment penalty. This proposal would have left taxpayers caught...