Tax News October 2024

Extended Due Date for C Corporations

The extended due date to file Form 100, California Corporation Franchise or Income Tax Return, is the 15th day of the 11th month after the close of the C corporation's taxable year. For example, for C corporations operating under a calendar year, the extended due date is November 15, 2024. The original due date for this return is the 15th day of the fourth month after the close of the C corporation's taxable year, which is April 15th for calendar year filers.

Please note this seven-month automatic extension to file does not apply to the payment of the C corporation's tax liability. The C corporation is required to pay its tax liability by the original due date of April 15th, whether or not it files its return later using the seven-month extension.

2024 Indexing

Announcing the 2024 tax tier indexed amounts for California taxes.

We update the following annually:

• State income tax brackets
• Filing requirement thresholds
• Standard deduction
• Certain credits for inflation (based on the California Consumer Price Index (CCPI)

This year the inflation rate, measured by the CCPI for all urban consumers from June 2023 to June 2024, was 3.3%. Last year, California's inflation rate measured at 3.1%.

The complete 2024 tax rates and exemption amounts will be available on FTB's website in late December. The following are some of the changes:

2024 California tax rate schedules

Single or married/RDP filing separately

If the amount on Form 540, line 19 is:

Schedule X

Married/RDP Filing jointly or qualifying widow(er)

If the amount on Form 540, line 19 is:

Schedule Y

Head of Household

If the amount on Form 540, line 19 is:

Schedule Z

Schedule A and Schedule C Review Letters

Select taxpayers who reported large Schedule A itemized deductions or large Schedule C expenses will continue to receive "Review Your State Tax Return" letters.

In 2022, the Franchise Tax Board (FTB) began an outreach effort by sending letters to taxpayers who reported Schedule A itemized deductions or Schedule C expenses on their 2019 tax returns that were "significantly higher than expected." FTB continued this outreach effort in May 2024 by sending review letters to taxpayers who reported these deductions or expenses on their 2021 income tax returns.

The purpose of the review letter is to encourage taxpayers to review their 2021 tax return, and current tax year returns, for any discrepancies. The letters inform taxpayers of the type of deductions commonly overstated, where to find more information regarding what is deductible, and to file an amended tax return, if necessary. If no changes are needed to the items reported, then no action or response is necessary.

These review letters do not constitute an audit. The tax returns remain subject to audit until the expiration of the applicable statute of limitations. The taxpayer should maintain documentation to substantiate their itemized deductions or to substantiate their expenses are in line with their business activity.

These outreach efforts are part of FTB's overall strategies to encourage voluntary compliance, which includes providing taxpayers with the information they need to meet their filing requirements.

Internal Revenue Service (IRS) Updates and More 

We partnered with the IRS to provide monthly 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.

IRS issues proposed regulations for Corporate Alternative Minimum Tax

IR-2024-235, Sept. 12, 2024 — The IRS issued proposed regulations to provide guidance on the Corporate Alternative Minimum Tax. 

IRS provides relief to victims of severe storms and flooding in Connecticut and New York; various deadlines postponed to Feb. 3, 2025

IR-2024-234, Sept. 10, 2024 — The IRS announced tax relief for individuals and businesses in Connecticut and New York affected by severe storms and flooding from torrential rainfalls that began on Aug. 18, 2024. Some communities in western Connecticut also experienced landslides and mudslides from these storms.

U.S. Department of the Treasury, IRS announce $1.3 billion recovered from high-income, high-wealth individuals under Inflation Reduction Act initiatives 

IR-2024-233, Sept. 6, 2024 — U.S. Secretary of the Treasury Janet L. Yellen and Commissioner of the IRS Danny Werfel are delivering remarks at the Austin, Texas, IRS campus to announce new milestones under Inflation Reduction Act initiatives to ensure wealthy individuals pay taxes owed, improve service for taxpayers through the Digital First Initiative and modernize foundational technology.

Treasury and IRS request comments on issues related to Saver’s Match contributions

IR-2024-232, Sept. 5, 2024 — The Department of the Treasury and the IRS issued a notice requesting comments on Saver’s Match contributions to be paid by Treasury under the SECURE 2.0 Act of 2022.

IRS reminder: Third estimated tax payment due Sept. 16; disaster-area taxpayers have more time

IR-2024-231, Sept. 5, 2024 — The IRS reminded taxpayers the deadline to submit their third quarter estimated tax payment is Sept. 16, 2024.

Funding from the Inflation Reduction Act improves taxpayer service with modern online tools

IR-2024-230, Sept. 4, 2024 — With the funding from the Inflation Reduction Act (IRA), the IRS continues to modernize online tools for taxpayers to take advantage of clean energy credits.

Reminder: September is National Preparedness Month; taxpayers should prepare for natural disasters

IR-2024-229, Sept. 3, 2024 — With the peak of hurricane season arriving and an elevated wildfire risk across much of the West, the Internal Revenue Service reminds taxpayers to develop an emergency preparedness plan or, if they already have one, to update it for 2024.

Treasury, IRS and DOE announce full applications are open for Qualifying Advanced Energy Project Tax Credit

IR-2024-228, Aug. 29, 2024 — The U.S. Department of Treasury, the IRS and the U.S. Department of Energy announced they received over 800 concept papers — project proposals — seeking a total of nearly $40 billion in tax credits, representing $200 billion in total project investments, for Round 2 of the Qualifying Advanced Energy Project Tax Credit (48C) Program.

IRS reminder: Employer educational assistance programs can still be used to help pay off workers’ student loans through Dec. 31, 2025

IR-2024-227, Aug. 28, 2024 — The IRS issued a reminder that employers who offer educational assistance programs can also use them to help pay for their employees’ student loan obligations through Dec. 31, 2025.

IRS encourages people to do an end-of-summer tax checkup to avoid tax surprises next year

IR-2024-225, Aug. 27, 2024 — The IRS encouraged taxpayers to consider using the end of the summer to make tax withholding or payment updates to avoid a potential surprise next year at tax time.

Jozel Brunett Bids a Fond Farewell

As some of you may know, I am retiring in October. I would like to take this opportunity to thank you, the tax representatives, with whom I worked over the past thirty years, twelve of which as the Franchise Tax Board’s Chief Counsel.

I strived to create a culture of customer service and reasonableness in how we approach interpretation of the law. In doing so, I maintained an open-door policy as issues arose on your clients' matters, and I was always happy to talk through concerns with you. We worked through many complex issues, and while we did not always agree in the end, I hope you and your clients felt respected and heard.

I learned a lot from each of you, and I appreciate the regard and thoughtfulness you've shown me. This has been the best of careers, and the relationships built over time with you has been a big part of that.

Thank you and best wishes.

Janie Tran Retires After 37 Years of Dedicated Service

After better than 37 years of service to the State of California, Janie Tran is retiring from FTB. Janie was a pioneer and led many new projects and teams over the years where she shared her expertise and insight as a Collection Manager, Auditor, Technical Lead, Hearing Officer, and finally as the Technical Advisor to the Advocate. Janie also served as the FTB Liaison and tax advisor to former Board of Equalization Chair, John Chiang. She enlightened thousands as an advocate, public speaker, and panelist to taxpayers and the tax professional community. We will miss her smile and contagious laughter. We are privileged she chose FTB and never left. We wish her all the best in this next chapter and thank her for years of dedication and service!

Taxpayers’ Rights Office Welcomes New Technical Advisor

We welcome Blake Cunningham as the new Technical Advisor to the Advocate for the Taxpayers’ Rights Advocate’s Office, filling the position vacated by Janie Tran.

Blake’s FTB career spans over 21 years where he spent most of his time as an auditor and protest hearing officer in the Audit Division. Blake’s breadth of technical knowledge includes personal income tax, apportioning, and non-apportioning pass-through entities. Over the last year and a half, Blake also worked with complex docketed protests and appeals in FTB’s Legal Division’s General Tax Bureau and has extensive experience with like-kind exchanges and Pass-Through Entity Elective Tax.

Blake graduated from California State University, Sacramento with a degree in business and concentration in accounting. In his free time, Blake is a swim official at his daughter’s swim meets, avid traveler, and a fan of the Sacramento Kings and San Francisco 49ers.

Blake’s experience, knowledge, and significant accomplishments in the Audit and Legal Division make him a perfect fit for the Taxpayers’ Rights Advocate’s Office. I am very pleased to have Blake on our small yet mighty team.

Ask the Advocate: Executive Officer’s Advisory Board Meeting

Each year my team has the responsibility and honor of planning our Executive Officer's, Selvi Stanislaus, meeting with her Advisory Board. The Advisory Board is comprised of representatives from industry, state, and federal government, who meet with FTB Leadership to gain insight into the issues, challenges, and concerns faced by industry and our government partners. We were excited to meet in-person for the first time since the pandemic.

During our time together, subject matter experts from FTB program areas shared:

• Legislative Update

• Litigation Update

• EDR2 Update

• 2026-2030 FTB Strategic Plan

We appreciate the valuable insights, new ideas, and lively discussions at this year's meeting. We will use the information gained as we continue to improve our processes and services in support of California taxpayers.

We look forward to meeting with the California Society of Enrolled Agents (CSEA) on Thursday, October 31, 2024, for the annual State Tax Agency Liaison Meeting.

For members of the California Society of Certified Public Accountants (CalCPA), keep an eye out for more information from CalCPA about our annual liaison meeting on Tuesday, November 19, 2024.

Since becoming your Advocate, I've learned how valuable it is to listen to your voice to understand the issues and challenges facing tax professionals.

Thank you for our connection as we strive to improve tax administration for all Californians.