Form 593 problems: plus an update from the cal.CPA committee on taxation.

• Author: Williams, Len

My September column contained a list of suggestions lor avoiding problems with filing California FIB Form 593 Real Estate Withholding Tax Statement to obtain credit for the State income tax that was withheld on a real estate sale

Pages 8 10 of the October 2014 issue of the FTB's Tax .Yews had a comprehensive list of forms 593-C, 593-1. etc. . terminology and entities whose understanding will help in correctly filling in those forms. There's also a new chart to help users: FTB 7429, Do 1 Need to Withhold on This Trust?

Although title companies handling the sale are responsible for remitting the withholding and completing the 593 forms, clients arc asking their CPA for the information that goes on the form and asking the CPA to review the completed form.

Even if the client doesn't ask, the CPA has to be alert as to whether or not it was filled in correctly, because we all know who'll be the first one blamed if it isn't.

CalCPA Committee on Taxation Meeting

Here are some of the highlights:

* The 1TB is sending, or has sent, letters to 45,000 California businesses that have not filed their 2012 state income tax returns. Last year the FTB collected about $32 million from businesses that had failed to file returns.

* There's a new Form 3840, effective for taxable years beginning on or after Jan. I. 2014. 'the purpose of the from is to report Sec. 1031 exchanges into property outside of California. When that property is sold. California tax is due on the gain that was deferred from California.

* A corollary to that is that when clients from other states are deferring gains into California property, be aware of the fact that not all states allow for the use of Sec. 1031 for defer those gains. Some states' income tax statues pn Aide that, when gains are deferred via Sec. 1031 all federal income tax purposes, the gains are into deferred for the income tax of the state of origin if the up-leg property is in another slate.

* Calilfornia has issued new reasonable cause abatement request forms: FTB 29 17. Reasonable Caasr-Individual and Fiduciary Claim fir Wind: and FM 2924. Reasonable Cance--Business Entity Claim Ryinul. An extensive discussion on the use of these forms is in an article by Sandy Weiner, JD in the October issure of Spidell's California Taxletter.

* Interagency Intercept Collection Program: This is not new. The FTB intercepts refunds when individuals and business entities owe delinquent debts to government agencies and California...