Tax News July 2026

June Tax News Flash

June 16, 2026 – MyFTB tax professional client notices page

Upcoming Enhancements to the Fiduciary e-file Program - Form 541B Charitable Remainder and Pooled Income Trusts Tax Return

Beginning January 2027, the California Fiduciary e-file program will expand to allow trusts filing Form 541B, Charitable Remainder and Pooled Income Trusts, to electronically file their returns.

Our existing Fiduciary e-file program already supports electronic filing for original, amended, and superseded Form 541, Fiduciary Income Tax Return. 

You may contact your software provider to determine if they will support e-filing for Form 541B, Charitable Remainder and Pooled Income Trusts. 

For ongoing updates about the Fiduciary e-file program, visit our website and subscribe to Tax News. 

Close a Business Entity

Small business owners often ask about the proper steps required to close a business entity in California. To support them effectively, it’s important to provide clear guidance on how to conclude their operations and formally end their entity’s legal existence.

Business entities that operate in California or are registered with the California Secretary of State (SOS) may dissolve, surrender, or cancel when they cease doing business and choose to terminate their legal status. Understanding these requirements helps ensure clients complete the process correctly and avoid unintended obligations.

Business Entity Classification

• Domestic corporations (those originally incorporated in California) may legally dissolve.
• Foreign corporations (those originally incorporated outside California) may legally surrender.
• Limited liability companies and partnerships (both domestic and foreign) may legally cancel.

Steps to Dissolve, Surrender, or Cancel a California Business Entity

To dissolve, surrender, or cancel a California business entity, the business owner must follow the requirements for both FTB and SOS:

FTB Requirements

• File all delinquent tax returns and pay all tax balances, including any penalties, fees, and interest.
• File the final/current year tax return. Check the applicable Final Return box on the first page of the return and write “final” at the top of the first page. All tax returns remain subject to audit until the statute of limitations expires.
• Must cease doing business in California after the final taxable year.

SOS Requirements

• File the appropriate dissolution, surrender, or cancellation form(s) with the SOS within 12 months of filing the final tax return.

If a business entity is suspended or forfeited, it will need to go through the revivor process and be in good standing before it is allowed to dissolve, surrender, or cancel. To revive a suspended or forfeited business entity, an entity must:

• File all delinquent tax returns.
• Pay all delinquent tax balances, including penalties, fees, and interest.
• File a revivor request form.

Get more information on how to revive a suspended or forfeited business entity.

Voluntary Dissolution/Cancellation

If certain qualifications are met, a business entity may be able to voluntarily dissolve. A qualified domestic corporation or qualified domestic limited liability company can request for voluntary administrative dissolution/cancellation. With a written request, a business must certify it:

• 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.
• Does not have any remaining assets.

Once the SOS formally dissolves or cancels a business, FTB may abate:

• Unpaid qualified taxes.
• Interest.
• Penalties.

Get more information for Voluntary administrative dissolution/cancellation.

Additional Steps

There are additional steps to take while closing a business entity. These steps include:

• Notify all creditors, vendors, suppliers, clients, and employees of intent to go out of business.
• Close out business checking account and credit cards.
• Cancel any licenses, permits, and fictitious business names.
• Consider publishing a statement the business has closed on social media accounts and/or in a local newspaper of general circulation near the principal place of business.

Additional Resources

• Franchise Tax Board
• FTB Publication 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity
• FTB Publication 1123, Common Forms of Ownership
• Business Help
• Sell or Close Your Business in California
• Secretary of State
• Frequently Asked Questions
• How do I terminate (dissolve, surrender or cancel) my business entity?

FTB Improves Fraud Reporting Tools

Franchise Tax Board (FTB) is committed to protecting Californians from fraud and safeguarding the integrity of our tax system. As part of this commitment, we are excited to introduce some new enhancements to make it easier to report fraud.

Easy to find Fraud Reporting button

You’ll notice a new link to “Report fraud or identity theft” on the FTB homepage to make reporting and researching fraud more accessible and easier to find.  

Fraud portal

There’s also a new, easy to navigate fraud portal webpage, available here: Report fraud.  

Through this webpage, you can learn more about common fraud types and report fraud 24 hours a day.   

Common fraud types detailed on the fraud portal include: 

• Scams – Impersonation attempts that misuse FTB’s name through text messages, emails, phone calls, or mail. 
• Tax fraud and evasion – False filings, unreported income, or other misconduct or schemes, intended to avoid paying taxes. 
• Identity theft – When someone uses another person’s personal information to commit tax related fraud. 
• Data breaches – Unauthorized access to a business’s confidential financial or client information. Any data loss should be reported as soon as possible. 

Users can report fraud incidents targeting California taxpayers under each fraud type. We encourage taxpayers to act quickly and report any fraud, which helps ensure comprehensive investigations and assists those impacted. Timely reporting plays a vital role in combating fraud. 

Attend a Virtual Withholding Presentation

We offer two, 25-minute virtual withholding presentations followed by a Question-and-Answer session conducted through Microsoft Teams or Zoom.

California Nonresident Withholding

The California nonresident withholding presentation is held on the second Wednesday of each month at 10 AM PST.

We will review:

• California nonresident withholding requirements
• Income subject to withholding 
• Withholding agent requirements 
• Withholding exceptions, waivers, and reductions 
• Withholding liability and penalties  
• Resources 
• Questions 

To attend this presentation, email us at FTB CA Nonresident Withholding Education. 

California Real Estate Withholding

The California real estate withholding presentation is held on the third Tuesday of each month at 10 AM PST.

We will review: 

• Real estate withholding requirements
• Common mistakes made on Form 593, Real Estate Withholding Statement
• Withholding responsibilities
• Installment sales
• Trusts
• Foreign sellers
• Limited liability companies
• Resources
• Questions

To attend this presentation, email us at FTB Real Estate Education.

For the latest information, subscribe to nonresident withholding and real estate withholding.

Internal Revenue Service Updates

We partnered with the IRS to provide monthly articles to assist our tax professional and small business communities and are excited to share this information; however, questions about the content should be directed to the IRS. 

National Taxpayer Advocate issues 2026 mid-year report to Congress

IR-2026-79, June 24, 2026 — National Taxpayer Advocate Erin M. Collins today released her Fiscal Year 2027 Objectives Report to Congress, highlighting a largely successful 2026 filing season in which the IRS processed nearly 139 million individual tax returns, issued more than 90 million refunds, and successfully implemented extensive tax law changes despite significant operational challenges.

Electronic Tax Administration Advisory Committee 2026 Annual Report includes recommendations to Congress and IRS

IR-2026-77, June 17, 2026 — The IRS Electronic Tax Administration Advisory Committee released its 2026 annual report with a total of 18 recommendations – six of which are directed to Congress.

More than half the U.S. States signed up to participate in the federal scholarship tax credit program enacted under the One, Big, Beautiful Bill

IR-2026-76, June 8, 2026 — The IRS announced that 27 states have elected to participate in the Federal Scholarship Tax Credit (FSTC) program, which enables eligible taxpayers to claim a federal tax credit for qualified contributions to Scholarship Granting Organizations (SGOs) providing scholarships for qualified elementary and secondary education expenses.

IRS and Security Summit partners announce new framework to better protect taxpayers and tax revenue from fraud

IR-2026-75, June 8, 2026 — The IRS and Security Summit partners announced a restructuring of the public-private partnership designed to strengthen protections and enhance information sharing across the tax system.

IRS describes agency’s activities in fiscal year 2025 Data Book

IR-2026-74, June 5, 2026 — The IRS issued the 2025 Data Book detailing the agency’s activities during fiscal year 2025.

Treasury, IRS announce intent to issue proposed regulations for excise tax on excess tax-exempt organization executive compensation under the One, Big, Beautiful Bill

IR-2026-73, June 5, 2026 — The Department of the Treasury and the IRS issued Notice 2026-36 announcing intent to issue proposed regulations addressing the tax on excessive compensation and excess parachute payments to employees of tax-exempt organizations under the One, Big, Beautiful Bill.

IRS announces nationwide hiring events for customer service representatives and tax examining technicians

IR-2026-72, June 4, 2026 — The IRS announced a series of hiring events to take place across the country through July.

It’s not too late; use IRS Free File today

IR-2026-71, June 2, 2026 — The IRS reminds taxpayers who missed the filing deadline that they can still file their 2025 federal tax return at no cost using IRS Free File.

IRS releases new look-back interest calculator for long-term contracts

IR-2026-70, May 29, 2026 — The IRS announced the release of a new calculator to help businesses working on large, multi-year construction or manufacturing projects more easily figure interest related to those contracts.

Treasury, IRS issue Section 892 proposed regulations to provide grandfathering protection and transitional relief to sovereign investors

IR-2026-69, May 29, 2026 — The Department of the Treasury and the IRS issued additional guidance addressing the applicability dates of recent proposed regulations under Section 892 of the Internal Revenue Code, which exempts foreign governments, including sovereign wealth funds, from tax on certain income derived from passive U.S. investments.

Ask the Advocate

Transitions and New Beginnings

The Taxpayers’ Rights Advocate’s Office (TRAO) is delighted to welcome our dedicated staff, whose commitment and contributions are truly valued in their important roles. As we bid fond farewell to one valued team member, we look forward to working with another.

Judy Leid has accepted a new position and leaves us for new opportunities but fortunately remains at FTB. She will provide her expertise to enhance the Audit Technical Resources Bureau.

TRAO was significantly enhanced by her outstanding service to the tax community and she will be missed. Judy established many wonderful, collaborative relationships fostered both within FTB and with you, our tax practitioner and trade media partners. We wish Judy much continued success in her new career endeavor.

As we say farewell to Judy, we welcome Arassely Zamora Garcia as our new Trade Media and Tax Practitioner Liaison!

Arassely brings extensive experience in tax policy, legislative analysis, and accounting to her new role, backed by advanced degrees in Accountancy and Taxation and a strong commitment to service. 

Arassely joined FTB in 2024 as a Program Specialist I in the Legislative Services Bureau (LSB). She promoted to the Program Specialist II classification, where she expanded her work on complex legislative proposals, addressed emerging tax policy issues, provided technical guidance, and improved LSB operations. 

Before FTB, Arassely spent nine years in public and private accounting. Her background includes extensive tax compliance work, supervising engagements for domestic and international clients, and conducting in-depth research on tax laws and regulations.

She holds a Bachelor of Science in Business Administration (Accountancy) from CSU Sacramento and a Master of Science in Taxation from Golden Gate University. TRAO is pleased to welcome Arassely, whose expertise and education will contribute significantly to the team. 

While our team evolves, our commitment to serving California taxpayers and tax professionals remains our utmost importance.