California Corner: Calling the Practitioner Hotline
The FTB continues to request (actually beg) practitioners to utilize the self-service options available on its website using “MyFTB Account.” Accessing information on the website frees up hotline agents to handle cases that cannot be resolved without live contact.Tax Practitioner Hotline(916) 845-7057Tax practitioner hotline implements virtual hold technology. As a result of practitioner feedback, the Tax Practitioner Hotline successfully implemented Virtual Hold technology. Virtual Hold allows callers to save their place in the phone queue and receive a call back instead of waiting on hold for a potentially extended period of time.In March 2023 alone, over 24,000 tax practitioners utilized …
California Corner: San Diego County Storm Relief Postpones Filing Deadlines to June 17, 2024
Federal Notice: IR-2024-51, February 27, 2024 IRS notice IR-2024-51 postpones tax year 2023 tax filing and tax payment obligations for residents and businesses of San Diego County as “federally declared disaster areas” due to severe storms and flooding that began on Jan. 21, 2024. California conforms to the June 17 filing and payment date.Other Counties Coming? The same relief will be available to any other California localities added later to the disaster area. The current list of eligible localities is always available on the disaster relief page on IRS.gov. Although not yet designated, watch for Southern California Counties to be …
Why Trusts Can Be Residents of More Than One State
California has 39 million people, according to the census. (I suspect at least 10 million of those folks are employed by the Franchise Tax Board.) The United States has 335 million people. Doing the math, there is a likelihood that if you have an irrevocable trust on the west coast, someone out there is going to ruin your tax professional’s day. so let me get this straight.you can have a trust established in hawaii, holding hawaii real estate and the sole beneficiary is a resident of hawaii, but because the sole fiduciary is a california resident, the whole trust is …
Capitol Hill Connection: Werfel Grilled in House Hot Seat
Happy Friday, tax pros. In case you thought you couldn’t possibly start your weekend without a Capitol Hill tax update from your friend in D.C. (you did not), I’ve got you covered.Indeed, things got a little heated yesterday in 1100 Longworth as IRS Commissioner Danny Werfel got a good grillin’ from lawmakers while in the proverbial hot seat during a House Ways and Means Committee hearing. But because I haven’t yet figured out how to communicate by way of smoke signals, despite my brief phase with pyromania, all you get is this eTax Alert. 2024 Tax Filing Season The …
CALIFORNIA CORNER: FTB Catching Up on Delayed 2022 Business Returns
The California Franchise Tax Board (FTB) has fallen significantly behind in processing business income tax returns for 2022. As of January 29, 2024, the FTB website was showing a processing time of 8 months for all business returns. FTB System Delays As a result of necessary system programming changes to accommodate the winter storm disaster extensions, FTB reports experiencing system delays outside its normal operational time frames. The reprogramming was needed to ensure that interest was correctly calculated on payments due and refunds because of the delayed due dates. As of February 1, 2024, FTB announced it expects to be …
ERC Voluntary Disclosure Deadline Approaching
I hate to drop this on you just as tax season is starting, but…IRS squeezed in another deadline for tax pros – March 22, 2024. Applications to participate in the new Employee Retention Credit Voluntary Disclosure Program (ERC-VDP) must be filed by 11:59 pm on March 22, 2024. ERC-VDP The ERC-VDP will allow certain businesses to pay back ERC money that they were not entitled to claim. Tax pros will need to know whether their client is eligible to participate, wants to participate, and can meet the deadline to be considered. Then we tax pros will need to present advice …
The Global Tax Surprise
With a project as broad and wide-ranging as the Organization for Economic Cooperation and Development’s planned overhaul of the global tax system, many taxpayers who don’t view themselves as involved in significant international tax planning are unexpectedly finding out that they’ll be affected.And they’re also finding out late in the process when their options for response are limited. 15% Global Minimum Tax The project culminated in a 140-country agreement announced in the summer of 2021, including plans for the minimum tax. But it began in 2017 in response to public outrage over alleged tax avoidance in the tech sphere, especially …
CALIFORNIA CORNER: IRS Extends California Disaster Relief Again!
On October 16, 2023, the IRS issued IR-2023-189, further postponing tax deadlines for most California taxpayers to Nov. 16, 2023. In the wake of last winter’s natural disasters, the normal spring due dates had previously been postponed to October 16.As a result, most individuals and businesses in California will now have until November 16 to file their 2022 returns and pay any tax due. Fifty-five of California’s 58 counties—all except Lassen, Modoc and Shasta counties—qualify. IRS relief is based on three different FEMA disaster declarations covering severe winter storms, flooding, landslides, and mudslides over a period of several months.Eligible returns …
CALIFORNIA CORNER: FTB Issues Guidance Regarding Payments Made Following Disaster Relief
In a Tax News Flash issued September 15, 2023, the California Franchise Tax Board (FTB) has warned taxpayers and tax professionals about combining payments due October 16, 2023. The disaster declarations from the winter storms that were applicable to most counties of California extended the due date for multiple personal and business entity tax payments covering two tax years. To ensure your clients’ payments are processed timely and accurately, please submit separate payments for each payment type and do not combine payments for different tax years. As an example, be sure that payments for 2022 tax year liabilities are made …
Employee Retention Credit (ERC) – What Tax Pros Need to Know
The Employee Retention Credit (ERC) enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) was a blessing for many businesses during the COVID-19 pandemic, providing much needed financial assistance to help keep staff on payroll. When Congress changed the law allowing Paycheck Protection Program (PPP) borrowers to retroactively claim the ERC under the Consolidated Appropriations Act, 2021 (P.L. 116-260), which included the Taxpayer Certainty and Disaster Relief Act of 2020 (TCDRA), the flood gates opened, and many more businesses were eligible for the ERC. ERC – Not for the Faint of Heart Determining ERC eligibility and …
IRS Extends New $145,000 401(k) Catch-Up Contribution Rule by Two Years
The IRS issued Notice 2023-62, extending the effective date for a new SECURE Act 2.0* Roth catch-up contribution rule for eligible participants with more than $145,000 in compensation. Under this new rule, catch-up contributions for such participants must be made to a designated Roth account (DRA). Notice 2023-62 extends the effective date from 2024 to 2026. *SECURE Act 2.0 was enacted as Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022). Notice 2023-62 also corrected a SECURE Act 2.0 error, which unintentionally repealed IRC Section 402(g)(1)(C). IRC Section 402(g)(1)(C permits catch-up contributions. How We …
Knock knock. Who’s there? Not the IRS.
The IRS states it will end most unannounced visits by revenue officers: In a major policy change, the IRS stated that it will end most unannounced visits by revenue officers. Instead of a surprise visit, taxpayers can now expect to receive an appointment letter, known as a 725-B, and schedule a follow-up meeting with the revenue officer.The move comes as part of the larger effort to transform operations under the new IRS Strategic Operating Plan. IRS Commissioner Daniel Werfel said, “We are taking a fresh look at how the IRS operates to better server taxpayers and the nation, and making …
S corporations: Trusts Are Trickier Than You Might Imagine
Among the many foot faults with S corporations are the myriad of seemingly disconnected rules when trusts become shareholders. There are only a select few types of trust that are eligible to hold shares in S corporations:Grantor trusts during the grantor’s lifetime and for two years thereafter.Deemed grantor trusts, during the beneficiary’s lifetime and for two years thereafter.Testamentary trusts, for two years after funding.Qualified Subchapter S Trusts (QSST requires election).Electing Small Business Trusts (ESBT requires election).Voting trusts. QSST and ESBT Seem to Have the Most Hazards Of these trusts, the QSST and the ESBT seem to have the most hazards. …
Biden Administration Spotlights Tax Priorities in FY 2024 Budget Proposal
For those of us in the tax world residing in the D.C. area, the last several days have been a non-stop party. The theme? The Biden Administration’s fiscal year 2024 budget proposal, which would increase taxes by over $4.5 trillion over the next decade. If you’re not on Capitol Hill or a tax pro elsewhere who also gets a little amped up about these things, I’ll tell you a bit about what you’ve missed. Don’t worry, getting excited isn’t mandatory; professional interest will suffice. Tax Policy Proposals Tend to Stick Around a While Before we take a first look, it’s …
California Storm Relief Update: Deadlines Pushed to October 16
California is conforming with IRS disaster relief. California residents in 51 counties now have until October 16, 2023, to file various federal and California individual and business tax returns and make tax payments.The IRS has released a notice (IR-2023-33) which extends the tax filing and payment deadlines for tax year 2022 for residents and businesses in specific California counties identified in IRS notices CA-2023-01 and CA-2023-02. These notices were issued on January 10th and 24th respectively. The original notices had granted an automatic postponement for various tax filing and payment deadlines from January 8, 2023, to May 15, 2023, for …
IRS Throws Relief Rope for Postponed Returns’ Trap for the Unwary
The IRS has thrown a rope of relief to those affected by a so-called trap for the unwary related to postponed return filing deadlines during the pandemic. The IRS issued Notice 2023-21 this week, which grants taxpayer relief for determining the lookback period for claims for credit or refund associated with return filing postponements under Notice 2020-23 and Notice 2021-21.In other words, most taxpayers now have more time to file tax refund and credit claims for returns with postponed due dates during the pandemic. Background: Notices and Postponements Related to the COVID-19 Pandemic Notice 2020-23 (which amplified Notice 2020-18 and …
Practitioner Perspective: IRS Commissioner Nominee Daniel Werfel
Daniel Werfel testified before the Senate Finance Committee on Feb. 15, 2023, in a hearing considering his nomination to become the next IRS commissioner through November 2027. If Werfel is confirmed, (which is likely), what can tax practitioners expect to see? Background On Daniel Werfel Werfel began his civil servant career in the late 1990s as a rank-and-file policy analyst, rising to becoming appointed Office of Management and Budget (OMB) Controller in 2009. He has worked for the Office of Information and Regulatory Affairs, Department of Justice Civil Rights Division, OMB, and as Acting IRS Commissioner when appointed by President …
Now is the Time for IRS to Enhance Digital Services
This article by Jessica L. Jeane, J.D. originally appeared in Procedurally Taxing.It likely comes as no surprise to readers that the IRS isn’t winning any awards in the digital services realm. A few old adages come to mind when thinking about the long-awaited improvement needed for the IRS’s digital communications or more formally digital tax administration services. Maybe something along the lines of: there’s no time like the present, seize the day, or even in the words of Elvis Presley, “it’s now or never.”Okay, the last one is probably a little dramatic, but the overarching point here is that now is the time for …
IRS TAX RELIEF ANNOUNCED: California Storm Relief
IRS notices CA-2023-01 and IR-2023-03, issued January 10th and 11th, announced California residents of counties identified by FEMA as “federally declared disaster areas” due to the recent storms now have until May 15, 2023, to file various federal individual and business tax returns and make tax payments.This tax relief postpones several tax filing and payment deadlines that occurred starting on January 8, 2023. As a result, affected individuals and businesses will have until May 15, 2023, to file returns and pay any taxes that were originally due during this period. See the exception below for payroll tax returns and Form …
Millionaire Audits, IRS Resources, Trump’s Taxes, OH MY
1 Audit, 2 Audits, No Audits, Few Audits: During fiscal year (FY) 2022, few millionaires were audited compared to lower-income examinations, which continued to occupy most of the IRS’s audit resources. That’s according to statistics compiled by the Transaction Records Access Clearinghouse (TRAC) at Syracuse University. Shocker.The likelihood of a millionaire being audited by the IRS fell to 1.1% (7,710 agent-examined returns of 703,576 returns filed with total positive income (TPI) of $1 million or more.) In other words, barely over 1 out of every 100 millionaires were audited.These results are based on internal IRS management reports released each month …