Tax News March 2024

FTB Extends Filing Deadline for San Diego County Flood Victims to June 17, 2024

The California Franchise Tax Board (FTB) grants tax relief for San Diego County taxpayers impacted by severe storms and flooding that began on January 21, 2024. Individuals and businesses with their principal residence or place of business in San Diego County will have until June 17, 2024, to file certain California individual and business tax returns and make tax payments due between January 21, 2024, through June 17, 2024. Payments due on June 17, 2024, remain due on that date.

For example, the June 17, 2024, extension applies to the following for San Diego County taxpayers:

• Individuals whose tax returns and payments are due on April 15, 2024.
• Quarterly estimated tax payments due April 15, 2024.
• Business entities whose tax returns are normally due on March 15, 2024, and April 15, 2024.
• Pass-through entity (PTE) elective tax payments due on March 15, 2024.
• Tax-exempt organization returns normally due on May 15, 2024.

To claim tax relief that results from presidentially declared disasters, taxpayers should write the name of the disaster in blue or black ink at the top of their tax return or follow the instructions of their software provider.

For taxpayers who need an extension to file their federal 2023 tax return beyond June 17, 2024, the IRS encourages taxpayers to request an extension electronically by April 15, 2024. Though a disaster-area taxpayer qualifies to request an extension between April 15, 2024, and June 17, 2024, a request filed during this period can only be submitted on paper. A taxpayer with a valid federal extension will have until Oct. 15, 2024, to file their tax return, though payments are still due on June 17, 2024. Visit IRS.gov/extensions for details.

Taxpayers affected by the disaster, but expecting a refund, may benefit from filing before the disaster-postponed deadline to expedite any refund.

FTB reminds taxpayers to submit separate tax payments when making payments covering two tax years to avoid unintended notices, penalties, and potential erroneous refunds. Personal income tax payments should be made separate from business entity tax payments, and from pass-through entity elective payments.

Disaster-related tax returns may take longer to process than tax returns not claiming disaster relief. Should your client receive a late filing or late payment penalty notice relating to the extension period, you should call the number on the notice. You may also contact the Tax Practitioner Hotline at 916-845-7057 or Customer Service Line at 800-852-5711 for additional assistance.

For any given Emergency Measure or Major Disaster Declaration, that triggers IRS tax relief/postponement in California, the State will evaluate any filing and or payment postponement in response to each declaration or emergency on a case-by-case basis, consistent with existing authority per Revenue and Taxation Code section 18572.

FTB notes the following existing statutory provisions that could provide additional relief to taxpayers automatically or upon request and based on their facts and circumstances:

• Taxpayers have until October 15th to file returns with CA, however, payment is due on June 17, 2024 (for San Diego County taxpayers).
• Reasonable cause for individuals (upon request)
• Reasonable cause for business entities (upon request)
• Extreme financial hardship (upon request)
• One-Time Penalty Abatement (upon request)

Additional information on these items above can be found on FTB’s website. You may also refer to the News Release posted February 27, 2024, for additional information.

California Competes Tax Credit (CCTC)

The CCTC is available to businesses that want to locate 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.

The committee consists of:

• Director of GO-Biz (Chair)
• State Treasurer
• Director of the Department of Finance
• One appointee each by the Speaker of the Assembly and Senate Committee on Rules

For the last application period of Fiscal Year 2023/2024, GO-Biz will accept applications for the CCTC at calcompetes.ca.gov from March 4, 2024, through March 18, 2024. The application period has $164 million available for allocation, plus any remaining unallocated amount from the previous application periods.

Go to California Competes Tax Credit for more information.

Beneficial Ownership Information Reporting

Background

Beneficial ownership information (BOI) refers to identifying information about the individuals who directly or indirectly own or control a company. In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other unclear ownership structures.

Reporting Company

Companies required to report are called reporting companies. There are two types of reporting companies.

Domestic reporting companies are corporations, limited liability companies, and any other entity created by the filing of a document with a Secretary of State or any similar office in the United States.

Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a Secretary of State or any similar office.

Reporting Requirements

• A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
• A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
• A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

Penalties

As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information. Both individuals and corporate entities may be liable for willful violations.

Filing BOI

The United States Department of the Treasury Financial Crimes Enforcement Network (FinCEN) began accepting beneficial ownership information reports on January 1, 2024. There is no fee to submit a BOI report to FinCEN.

If a business is required to report their company’s beneficial ownership information to FinCEN, they can do so electronically through a secure filing system available via FinCEN’s BOI E-Filing website.

For more information go to: fincen.gov

Tax Practitioner Hotline Extended Hours

In our commitment to deliver excellent products and services, we will extend our hours for the Tax Practitioner Hotline from 8 AM to 6 PM, Monday through Friday from March 1, 2024, through April 15, 2024.

You can contact us through the following channels:

• Chat
• Phone / fax
• Office locations & appointments
• Mailing addresses

For personal income tax and business entity filing information:

• Personal
• Business

Go to ftb.ca.gov for additional online service options.

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 update frequently asked questions for the Premium Tax Credit

IR-2024-37, Feb 9, 2024 – The IRS updated its frequently asked questions (FAQs) for the Premium Tax Credit.

IRS warns tax professionals to be aware of EFIN scam email; special webinars offered next week

IR-2024-36, Feb. 8, 2024 – The IRS and Security Summit partners alerted tax professionals of a scam email impersonating various software companies in an attempt to steal Electronic Filing Identification Numbers (EFINs).

IRS Employer-Provided Childcare Tax Credit page helps employers determine eligibility for up to $150,000 business tax credit

IR-2024-34, Feb. 7, 2024 – The IRS announced the launch of a new page on IRS.gov explaining the Employer-Provided Childcare Tax Credit, an incentive for businesses to provide childcare services to their employees.

IRS revises and updates frequently asked questions about Form 1099-K

IR-2024-33, Feb. 6, 2024 – In an effort to provide more resources for taxpayers during this filing season, the IRS revised frequently asked questions for Form 1099-K, Payment Card and Third Party Network Transactions, in Fact Sheet FS-2024-03.

Ask the Advocate

Filing season is a great time to remind tax professionals about the many MyFTB self-service options.

MyFTB provides individuals, business representatives, and tax professionals online access to tax account information and online services. MyFTB has many self-service options available that eliminate the need to call the Tax Practitioner Hotline and wait on hold. Currently, there are 56,500 registered tax professionals utilizing the time saving MyFTB self-services. These services are available 24/7 which allow practitioners to take care of client’s needs at their convenience.

With a MyFTB account and a POA or TIA relationship, practitioners can chat with an FTB representative about their client’s confidential account, send a message, and view notices sent to your client within the last 12 months.

When your client authorizes your full online account access request, you have the additional ability to:

• Confirm estimated and business entity PTE elective tax payments.
• Review the history of payments and returns FTB received for your client.
• View your client’s account balance and the tax year details that make up that balance. (Specific tax years as listed on POA)
• Confirm credits available to be claimed on your client’s return including non-wage withholding credits (not available for business entity clients).
• View proposed assessments issued to your client.
• Update your client’s contact information and protest proposed assessments (POA required).

MyFTB also provides tools for managing your client relationships. For example, you can submit and update POA declarations, request and renew TIA relationships, and check the status of these relationships. A new feature added at the end of last year is the ability to connect a MyFTB message with a prior communication or application. If the message you are sending is regarding a bill or other item, you can select it from the list of recent items to keep all the notices and messages together.

FTB strives to continuously enhance the customers' experience by listening to their feedback. As a tax professional, your input is extremely valuable to FTB.

Please take a moment to complete this quick 3-minute MyFTB Self-Services Survey. Your valued feedback will be tremendously helpful.

Even if you do not currently utilize the available MyFTB Self-Service Options, the survey will provide the opportunity to share why, which will also be beneficial.

The survey is available through March 15, 2024.

For more information about MyFTB or how to register for a MyFTB account, visit MyFTB.

Thank you for your time to take the survey and hope your filing season is going well.