Tax quick fix: TaxTalk hot topics include business use of autos, 1099s and more.

• Author: Williams, Leonard W.
• Position: Californiatax

Some recent conferences provided guidance on the following:

* FTB Publication 737 is the guideline for Registered Domestic Partners (RDP). Currently, there is no way for FTB to verify RDP--or marital--status. Find more information at www.ftb.ca.gov/forms/RegDomPrtnr/RegDomPrtnr.shtml.

* Misunderstandings are rampant among the general public about the tax impact of incorporating in Nevada. To help clear up the issue, download Don't Gamble with Your Taxes: Read the Fine Print About Incorporating in Nevada, available at www.ftb.ca.gov/forms/misc/689.pdf. There's also information at www.ftb.ca.gov/amnesty/taxgap.

Business Use of Autos

At the October meeting between Cal CPA's Committee on Taxation and the FTB, mention was made of an FTB plan to examine all individual returns that claimed 100 percent business use on autos. The December 2007 FTB News (www.ftb.ca.gov/professionals/taxnews/2007/1207/1207.shtml) also announced a new "self audit" program, wherein some taxpayers will receive a letter from FTB explaining the rules for claiming auto expenses.

The letter asks those taxpayers to review their claimed auto expenses, complete an accompanying form and remit any shortfall from over-deducting.

A Modest Proposal

CalCPA COT member Jim Counts has proposed a system that would streamline the resolution of issues that often require only minor tweaking to fix, but it's too early to say if the FTB or Employment Development Department will adopt it.

The long-term goal of the system would be that practitioners who have a power of attorney on file with the agency will get a notice before it is mailed to the client. This would enable the representative to fix problems before the client ever hears about it.

The agency would e-mail the practitioner saying that new information has been posted to the client's account, but the practitioner would have to sign-in to see which client was involved.

If the practitioner does not sign-in within a certain period of time, the agency will mail a paper copy to the taxpayer. If the representative sees the notice, then the agency would give him or her a certain period of time to respond and resolve it without sending a notice to the taxpayer.

This is a proposal and has not been adopted by any state agency.

A Practical Problem (Not a Trick Question)

A man moved from California to New Jersey at the end of 2006. Just before he moved, he started a California S corp and he comes to California monthly to check on business. What...