Taxtalk highlights: taxpayer permission, Hawaiian refunds, EDD Q&As and more.

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

Loose lips sink ships. This old World War II expression meant that "the walls have ears," and things said could be heard by the enemy.

An adage taught to children was "Of these five things beware: Of whom you speak, to whom you speak, how, when and where."

The practical aspects of these sayings came home to roost in recent months when a CPA visited the Franchise Tax Board's website to get the estimated tax payments of a client's former spouse. The ex-spouse was not a client, and had not given the CPA permission to access the information.

The purpose was innocent enough--it was a recent divorce, and the CPA wanted to double check that they both weren't claiming the same estimated taxes on their separate returns.

But it's not permissible to access such information, even for one's client, without that taxpayer's permission.

The likelihood of one's client complaining to the authorities is remote, but a non-client probably will do so when made aware.

This particular CPA virtually guaranteed a complaint since during a subsequent meeting among all of the parties, the CPA volunteered that information and, to compound it, accused the non-client ex-spouse of incorrectly claiming estimated tax payments.

By now, you can foresee the resulting disaster. In broad strokes, so as not to betray anyone's privacy, the CPA is being sued, and the California Board of Accountancy has started license revocation proceedings.

An early refund of Hawaii income tax withheld on a real estate sale

Hawaii has a provision, similar to California's, of withholding 5 percent of the amount realized on the disposition of Hawaii real estate.

The provision, called HARPTA (Hawaii Real Property Tax Act), is only applicable to nonresidents. But unlike California, it is possible to apply for a tentative refund of the withholding if it exceeds the likely tax amount.

This is done by submitting Form N-288C, obtainable from the Hawaii Dept. of Taxation, www.state.hi.us/tax/tir/tir/2002-02.htm.

EDD Q&As

Jim Counts, CalCPA's Employment Development Department Liaison, has compiled six pages of questions submitted to the EDD and the answers received. Only the highlights can be covered here. A complete set of the questions and answers can be obtained by contacting Cindy Kuhlman at cindy.kuhlman@calcpa.org or (916) 441-5351.

A few short Q&As include:

Are there plans to allow payroll taxes for household employees to be remitted via the employer's personal income tax returns, such as the Form H...