COT meets FTB: new laws, tools and answers for CPA.

• Author: English, Damien B.M.
• Position: CATax - Interview

This year's annual meeting between CalCPA's Committee on Taxation and the Franchise Tax Board started with FTB updates and then delved into FTA official responding to specifie, and often complex, questions submitted by CalCPA members. A full Q&A transcript will be posted to www.calcpa.org/tax before the end of the year.

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FTB Executive Director Selvi Stanislaus opened the meeting by saying the board has been attempting to maintain a high level of service amid budget cuts. She has attempted to receive additional funding to increase staffing of the Practitioner's Hotline and Taxpayer Services over the last several years to no avail.

The FTB has attempted to alleviate the staffing shortage and minimize practitioner wait time by routing calls to other FTB staff during peak hours. Stanislaus said the FTB is sensitive to practitioner needs and it is a top priority.

Estimated Payments Changed, Electronic Payments Now Required

Patrice Gau-Johnson, assistant director of the Legislative Services Bureau, provided a rundown of legislation enacted in 2008, including several budget bills. One, SBX1 28, caught everyone by surprise.

A provision of the act changes estimate payment percentages on personal income and corporate tax payments to 30 percent of the annual tax liability for the first and second estimate payment installments, and 20 percent of the annual tax liability for the third and fourth installments.

Taxpayers may no longer remit their estimated taxes in four equal payments. This is operative for tax years beginning on or after Jan. 1, 2009.

SBX1 28 also:

* Accelerates the date for an LLG to estimate and pay its fee by a specific date for taxable years beginning on or after Jan. 1, 2009.

* Eliminates the safe harbor of prior year's tax to compute the required annual payment for taxpayers with AGI of $1 million or more ($500,000 in the case of a married individual filing a separate return). Some CPAs expressed concern that, because of this, penalties will be assessed on information received too late in the year and require too much speculation.

* Requires corporate taxpayers that are not required to make a first installment to pay 40 percent, 30 percent and 30 percent for their remaining installments due.

* Imposes a 20 percent penalty on corporations with an understatement of tax of $1 million or more. Taxpayers are allowed to file an amended return within that statute of limitations by May 31, 2009, to avoid the...