Tax Season Toolkit: everything you need for the most wonderful time of the year!(Directory)

"It's the most wonderful time of the year," croons Andy Williams through the Muzak system of nearly store you enter this month. But is something lurking in the corner--behind the Game Boys, golf clubs and Post-Millennial Barbies? Could It be the ghost of tax season past waiting to pounce on your holiday bliss like the Grinch on a Whoville resident?

Never fear! With CalCPA's annual Tax Season Toolkit, your slide into tax season will be as cool as a slosh down the snow-laden slopes. Soon you'll be in high gear meeting with clients, researching what's new in the tax codes and updating your software to provide the best service you can. So get ready for the "hap-happiest season of all"--tax time!

California Tax Tips

Practitioner Hotline Hours Cut

Because of budget reductions, the FTB has had to reduce its Tax Practitioner Hotline hours. Hotline hours for the 2003 filing season are Monday-Friday, 8 a.m.-5 p.m. The best time to call is before 10 a.m.

The tax practitioner hotline--(916) 845-7057--will not be open on Saturdays, Sundays or state holidays.

California Package X

One of the best ways to greet tax season is with a copy of the FTB's Package X firmly in your grip. Package X contains 2002 California and IRS tax forms, as well as various California State Board of Equalization and Employment Development Department forms. The FTB offers the print version of the 2002 California Package X in bound and loose-leaf formats for $14, plus sales tax.

For information or to download an order form, go to the Package X Web page at www.ftb.ca.gov/education/packageX. Print and complete the order form and mail it with your check or money order made out to the Franchise Tax Board to: Package X/Tax News; PO Box 2708; Rancho Cordova CA 95741-2708.

Recent Legislation

* Teacher Retention Credit and NOL Deductions Suspended

AB 2065 suspends the California Teacher Retention Credit for the 2002 tax year. There are no carry-over provisions for the credit. The bill also suspends the deduction for net operating losses for the 2002 and 2003 taxable years, then makes the NOL deduction 100 percent.

* Stock Options and Bonuses Taxed at Higher Rate AB 2065 increases withholding on stock options and bonus payments from 6 percent to 9.3 percent, effective Jan. 1.

* Tax Withholding on Real Estate Sales Expands Drastically Effective with sales closing as of Jan. 1, people buying California real estate must withhold 3 1/3 percent of the sales price and send it to the FTB, to comply with AB 2065.

The penalty for not complying is $500 or 10 percent of the withholding amount, whichever is greater.

As of Jan. 1, the new law also expands the withholding requirement to residents and nonresidents alike. Current real estate withholding laws only apply to sales by nonresident sellers of California real estate. Also, unlike the current law, the FIB will not grant individuals a waiver or reduced rate of withholding for sales with small taxable gains.

There are some exceptions to the law. Withholding is not required if the total sale price is $100,000 or less, or for principal residences, sales resulting in a taxable loss, like kind exchanges and some involuntary conversions. Also exempted are sales where the seller is tax exempt or a California corporation or partnership.

* High-Risk Collection Accounts Get Relief

AB 2065 allows the FTB to offer taxpayers with high-risk collection accounts the opportunity to satisfy an unpaid tax liability by paying the tax in full and receiving a waiver of interest, penalties and fees.

New Law impacts Taxation of California Nonresidents

The September/October 2002 issue of the Franchise Tax Board's TaxNews features a comprehensive look at AB 1115. This legislation created new laws guiding California's...