CA developments: estimated tax payments, 1099s and more.

• Author: Williams, Leonard W.
• Position: CATax - California

The annual liaison meeting between the FTB and CalCPA Committee on Taxation cleared up a long-standing source of confusion among CPAs.

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Under Rev. & Tax Code Sec. 23114, a corporation is not liable for taxes or fees if its year is less than 15 days and no business was conducted. A question posed at the meeting was: What date does the FTB use in determining the date of incorporation?

The answer: The date stamped on the Articles of Incorporation by the California Secretary of State creates a corporation, and that date is forwarded to the FTB. If there is a date stamp discrepancy, the corporation must contact the California Secretary of State to resolve the discrepancy.

New California Estimated Tax Payments and Withholding

At the Education Foundation's annual Tax Planning and Update Conference in November, the FTB speaker was asked if California will require the withholding tables for employees' California income taxes to be revised to track the new schedule of required estimated tax payments. The FTB speaker said he did't think that the board had thought of that one.

More Likely Than Not

While the federal government has reduced what had been the "more likely than not"(MLTN) standard for non-disclosed positions, California has had the MLTN since 2002, and still has it.

Another Independent Contractor Issue

A general contractor hired a subcontractor to do some work. The sub then hired an independent contractor to do the work. The independent contractor was injured on the job. Because he was not an employee, he was not covered by workers' comp and sued the general contractor

The trial court gave summary judgment for the contractor/defendant, but the independent contractor appealed. The appellate court sent it back to the trial court, saying that the independent contractor does have the right to sue the general contractor.

If the independent contractor wins, there's a good chance that general contractors will begin to require workers of their subcontractors be employees, not independent contractors.

The case is Tverberg v. Filler Construction, Inc. (12/5/08, First District, Div. Four. Cite as 2008 SOS 6557). For more, visit www.metnews.com/s0scgi?1208%2FA120050.

Filling 1099 Forms

Many clients are confused about the requirements for filling 1099 Misc. forms for independent contractors paid in connection with a business or rental properties.

Since both the IRS and FTB are disallowing deductions in excess of $599 when 1099...