Tax News
AB 672 Enacted, Eliminates Need for Estate Income Tax Clearance Certificate

On September 6, 2013, the governor signed Assembly Bill (AB) 672, which eliminates the need for an estate income tax clearance certificate. This legislation eliminates a burdensome process that is unnecessary to prevent assets under probate control from being distributed to nonresident beneficiaries before state income tax liabilities are paid.

Here are facts about AB 672 and some scenarios to clarify the effects of this new law.

Effective/operative date:

AB 672 is effective January 1, 2014, and operative with respect to final accounts by fiduciaries of estates that are allowed by a probate court on or after January 1, 2014.

Specific provisions of this law, beginning on January 1, 2014:

  • Eliminates the estate income tax clearance requirements for estates that have an appraised value in excess of $1 million and aggregate distributions to nonresident beneficiaries in excess of $250,000.
  • Removes our authority to provide estate income tax clearance certificates and any related expedited processing services.
  • Eliminates the form Request for Estate Income Tax Clearance Certificate
    (FTB 3571).
  • Eliminates the form Personal Income Tax Clearance Certificate (FTB 2571).
  • Renders FTB Public Service Bulletin (PSB 05-07) Estates-New Fee for Specialized Services Obsolete.

Requests Received Prior to January 1, 2014

Estate income tax clearance requests received prior to the effective date of AB 672 will be processed under the existing law provisions.

Requests Received on or After January 1, 2014

Estate income tax clearance requests, regardless of Estate tax return filing period, received on or after the effective date will not be processed.

However, requests received on or after the effective date will be returned to the sender with a letter explaining the repeal of the estate income tax clearance requirements for specified estates with nonresident beneficiaries.

If you have questions about a previous tax clearance request, please call us for tax clearance information at: 916.845.4210.

We will eliminate forms FTB 3571, Request for Estate Income Tax Clearance Certificate, and FTB 2571, Personal Income Tax Certificate, beginning on January 1, 2014, to reflect the changes enacted by AB 672. The current tax clearance related information in these forms no longer applies.

For more information, go to our legislative information or California’s Bill Information regarding the AB 672.

Back to December 2013 Tax News