Tax News August 2024

Update Your Client’s Address

In order for us to effectively communicate with your clients, please remind them to make sure we have their correct and most current address.

This will help your clients receive: 

• Important notices and/or other correspondence.
• Refunds in a timely manner.

We understand there are many responsibilities when a person moves and changing their address with us may not be a priority. We ask for your assistance to ensure we have your clients' current address, even if it is out of state.

Here are a few ways your clients can report a change of address:

• Create an account on MyFTB. After they complete a one-time registration process to create an account,they can login to view their account information or update their address and phone number online.
• For personal income taxes, timely file a personal income tax return with the correct and up-to-date address information.
• If they pay estimated taxes, mail their estimate voucher (Form 540-ES) with the full and correct address information.
• For individuals, mail a change of address form (FTB 3533).
• For businesses, mail a change of address form (FTB 3533-B).

For individuals or businesses, mail completed forms to: 

Franchise Tax Board

PO Box 942840
Sacramento CA 94240-0002

Learn more information about How do I change my address? 

Voluntary Administrative Dissolution 

As of January 1, 2019, a qualified domestic corporation or qualified domestic limited liability company can request a voluntary administrative dissolution/cancelation. Upon written request by a qualified entity, the unpaid qualified taxes, penalties, and interest for the taxable years in which the entity certifies may be abated. To do this, an entity, under penalty of perjury, must certify it:

• Is not actively engaging in any transaction for the purpose of financial or monetary gain or profit,
• Has ceased doing business or never conducted business, and
• Has no remaining assets in the business name. It does, however, require the entity to file and pay in full for the tax years in which it conducted business.

The entity must submit a request form to us by mail or fax. Only an officer, owner, member, director, or an FTB-approved Power of Attorney is authorized to request Voluntary Administrative Dissolution/Cancelation.

The request forms to submit by entity are: 

• Corporations: Domestic Corporation Request for Voluntary Administrative Dissolution (FTB 3715 PC)
• Limited liability companies (LLC): Domestic Limited Liability Company Request for voluntary Administrative Cancelation (FTB 3716 PC)

Business entities can mail or fax forms to the address or fax number below.

Mailing Address:

Business Entity Correspondence
Franchise Tax Board
PO Box 942857
Sacramento CA 94257-4040

Fax Number: 

916-855-5519 

Applying for Voluntary Administrative Dissolution does not legally terminate a business. The entity is still required to submit the proper dissolution/cancelation forms to the Secretary of State to close their business entity.

The business entity may qualify if it:

• Is a domestic corporation or domestic LLC registered for more than 12 months with the SOS.
• Is not actively engaging in any transaction for the purpose of financial or monetary gain or profit.
• Has stopped doing business or never did business.
• Has no assets.

Additional information is available at Voluntary administrative dissolution/cancelation.

MyFTB: Power of Attorney and Tax Information Authorization

MyFTB provides individuals, business representatives, and tax professionals online access to tax account information and online services. Taxpayers and tax professionals can file a Power of Attorney (POA) or Tax Information Authorization (TIA) through their MyFTB account, check the processing status of an existing POA/TIA, and manage POA representatives.

POAs/TIAs submitted and approved through MyFTB will continue to be the most expeditious processing path. Our processing time frames for POAs/TIAs are generally 15 business days or less.

With a valid POA or TIA, your client may grant you full online account access. Full online account access allows you to retrieve your clients account information at your convenience 24/7. For more information see Tax Professional Online Account Access.

Please be aware that without an established TIA or POA on file, our contact center staff will only be able to provide limited information. While we regret this may cause an inconvenience, it is necessary to safeguard your client's confidential information.

As a reminder, generally, only the representatives listed on the POA may obtain taxpayer confidential information from our contact center agents. Please review Part IV Additional Authorizations (Line 1) of the FTB 3520-PIT or FTB 3520-BE POA declaration forms for additional actions that your client may authorize you to take, such as adding additional representatives.

California Competes Tax Credit

The California Competes Tax Credit (CCTC) is an income tax credit available to businesses that want to locate in California or stay and grow in California. The CCTC agreements are negotiated by the Governor's Office of Business and Economic Development (GO-Biz) and approved by a statutorily created CCTC committee.

For Fiscal Year 2024/2025, the CCTC is available for allocation in three separate application periods:

• July 22, 2024, through August 12, 2024
• January 6, 2025, through January 27, 2025
• February 24, 2025, through March 10, 2025

For the first application period, $215 million is available for allocation. Applications for the credit will be accepted at calcompetes.ca.gov from July 22, 2024, through August 12, 2024.

In addition, GO-Biz is hosting online webinars on how to apply for the credit on August 1, 2024, from 3 p.m. – 4 p.m. PDT.

Visit GO-Biz's Program for more information on the California Competes Tax Credit.

Internal Revenue Service (IRS) Updates and More

We partnered with the IRS to provide monthly IRS articles to assist our tax professional and small business communities. We are excited to share this information; however, if you have questions about the content, you will need to contact the IRS directly.

Treasury, IRS issue updated guidance on required minimum distributions from IRAs, other retirement plans; generally retains proposed rules

IR-2024-190, July 18, 2024 — The Department of the Treasury and the IRS issued final regulations updating the required minimum distribution (RMD) rules.

IRS enhances FATCA registration website by requiring users to authenticate their identities

IR-2024-189, July 17, 2024 — The IRS announced the agency will enhance the identity authentication process that financial institutions can use to register under the Foreign Account Tax Compliance Act (FATCA).

Security Summit warns tax pros to remain vigilant against phishing emails and cloud-based attacks

IR-2024-188, July 16, 2024 — In the second installment of a special series, the IRS and Security Summit partners warned tax professionals to be aware of evolving phishing scams and cloud-based schemes designed to steal sensitive taxpayer information.

IRS warns taxpayers about misleading claims about non-existent “Self Employment Tax Credit;” promoters, social media peddling inaccurate eligibility suggestions

IR-2024-187, July 15, 2024 — The IRS issued a consumer alert following bad advice circulating on social media about a non-existent "Self-Employment Tax Credit" that's misleading taxpayers into filing false claims.

IRS reminds car dealers and sellers to be aware of phishing scams

IR-2024-186, July 11, 2024 — The IRS would like to remind car dealers and sellers to be aware of evolving phishing and smishing scams that could impact day-to-day operations of the business.

IRS tops $1 billion in past-due taxes collected from millionaires; compliance efforts continue involving high-wealth groups, corporations, partnerships

IR-2024-185, July 11, 2024 — As part of continuing compliance efforts under the Inflation Reduction Act, the IRS announced the agency has surpassed the $1 billion mark in collections from high-wealth taxpayers with past-due taxes.

Treasury, IRS issue frequently asked questions regarding registration for the Clean Fuel Production Credit

IR-2024-184, July 10, 2024 — The IRS issued frequently asked questions (FAQs) in Fact Sheet 2024-25 related to which entities must apply for registration for the Clean Fuel Production Credit.

New, evolving scams threaten tax professionals; Security Summit warns extra attention needed on trending threats that could affect businesses, clients

IR-2024-183, July 9, 2024 — The IRS and the Security Summit renewed a warning to tax professionals to be on the lookout for a variety of new and evolving schemes aimed at stealing business and taxpayer information.

IRS warns of new scam targeting Clean energy tax credit

IR-2024-182, July 3, 2024 — The IRS warned taxpayers not to fall victim to a new emerging scam involving buying clean energy tax credits.

Tax pros continue to be targeted by identity thieves; IRS, Security Summit urge continued vigilance against evolving threats as special summer education series, Nationwide Tax Forums begin

IR-2024-180, July 2, 2024 — With new and evolving scams emerging, the IRS and the Security Summit partners announced the start of the special summer "Protect Your Clients; Protect Yourself" campaign to help tax professionals protect themselves against new and ongoing threats involving tax-related identity theft.

Ask the Advocate: Call Center Wait Times

Angela Jones, Taxpayers' Rights Advocate

Tax practitioner community! I hear you loud and clear. Over the past few months, several expressed concerns with call center wait times. I understand your time is valuable and waiting on hold can be extremely frustrating and not an efficient use of your time.

As a result, I met with FTB call center bureau directors to evaluate the root causes for the current, long customer wait times. FTB is committed to provide California taxpayers and tax professionals with the best customer service possible. Exceptional customer service is one of FTB's top priorities.

Call Volumes

During my evaluation, I collected the 2024 call data available as of this writing (January through June 2024) and compared it to the same period in 2023 (January through June 2023). The results revealed an overall 27% increase in total calls received and a drastic 63% increase in the Tax Practitioner Hotline.

I confirmed staffing levels remained unchanged; therefore, the biggest and most obvious factor is supply and demand. The call volumes exceed the capacity of agents available to take calls.

Factors

The unforeseen surge is the result of many factors:

• Residual Effects of 2022-2023 California Winter Storms Disaster
  Historically, there has never been a filing deadline extended to November 16. This unprecedented filing season and disaster relief delayed return processing and billings. As a result, FTB held business entity notices past their normal time frames. This hold necessitated a large volume of 2022 notices sent within a very compressed period.
• San Diego Flood Disaster Postponement
  San Diego County taxpayers who did not mark "disaster" on their return may have received penalty notices. Taxpayers may have also received erroneous notices due to the timing of peak season notices and the posting of payments. Taxpayers should check their MyFTB account before they contact FTB.
• Pass-Through Entity (PTE) Elective Tax Questions 
  There are many calls related to PTE elective tax payments. If you have PTE elective tax questions, review FAQs.
• SOS Modernization Project
  FTB temporarily ceased the business entity pre-suspension and suspension process from February 1, 2022, through August 31, 2023, to accommodate the modernization project. FTB resumed normal business processes starting fall 2023. If your client received a pre-suspension or suspension letter, go to my business is suspended for more information.

FTB's legacy systems experienced programming challenges due to the unprecedented extended 2022-2023 winter storm disaster postponements, extended filing season and the enactment of new statutory programs (PTE elective tax) simultaneously. There were downstream impacts due to these challenges. These impacts include an increase in correspondence, calls, and chats, as well as delays in processing, notices, and billings. All of these create the perfect storm for higher than usual call volumes.

Recommendations

To improve the customer experience, I recommend to have a Power of Attorney on file if calling on behalf of your clients. If your client is calling, they should have the associated notice for tax years in question and be prepared to provide the status of financial and payment information. Making timely installment agreement payments can avoid the need to call to reinstate the payment plan. Your clients should respond to all FTB notices promptly to avoid actions that require calling for resolution. Also, using the Virtual Hold feature allows callers to save their place in the phone queue and receive a call back instead of waiting on hold.

Self-Services

If you haven't already, I encourage you and your clients to:

• Register for a MyFTB account. Self-service options include view balance, make payments, view notices, confirm estimated and PTE elective tax payments.
• Check wait times dashboard to evaluate the best time to call.
• Use revive a business. Once the form is completed, allow 10 business days to process before calling for status. Use sos.ca.gov for business entity status.

These self-services are available to you and your clients 24/7 and can be accessed at your convenience. Coming soon, I am happy to share FTB will offer more self-service features to make you and your clients' lives easier.

Thank you for your patience and support as we continue to ride this perfect storm together.