Tax Amnesty California Society of Enrolled Agents September 17, 2004

Tax Amnesty Tax amnesty is a limited-time opportunity for individuals and businesses to pay past-due income, franchise, sales or use taxes, and the related interest - avoiding most of the associated penalties and fees, and criminal prosecution.

Revenue Estimates millions

December 2004/January 2005 Public Education Media Campaign FTB Amnesty Mailings – 2.4 Million Direct Mailings FTB Amnesty Mailings – 2.4 Million Direct Mailings

Amnesty Eligible Universe Allowed Participants Allowed Participants –PIT and Corp –Nonfilers –Accounts Receivable –Bankruptcy –Audit/Protest/Appeal –Settlement Excluded Taxpayers/Transactions –Those under criminal investigation or prosecution on tax- related matters. –Abusive tax shelter transactions

General Amnesty Information File an application February 1, March 31, File an application February 1, March 31, –Postmarked by April 1, 2005, due to holiday. Most penalties and fees waived for taxable years 2002 and older. Most penalties and fees waived for taxable years 2002 and older. Within 60 days of the conclusion of the amnesty period, May 31, 2005: Within 60 days of the conclusion of the amnesty period, May 31, 2005: –Underreporters and nonfilers must file returns. –Pay in full taxes and interest or initiate an installment/payment agreement. Final payment on an installment/payment agreement due by June 30, 2006 (amnesty years only). Final payment on an installment/payment agreement due by June 30, 2006 (amnesty years only).

General Amnesty Information No refunds allowed on taxpayer balances paid prior to amnesty. No refunds allowed on taxpayer balances paid prior to amnesty. Taxpayers waive their rights to claims for refund or credit for amounts paid in connection with amnesty. Taxpayers waive their rights to claims for refund or credit for amounts paid in connection with amnesty.

Probation Period Must remain compliant for 2005 and 2006 FTB will revoke amnesty, reinstate the penalties and fees, and assess the new amnesty penalty for the failure to pay any amount of tax, including penalties and fees, for the 2005 or 2006 taxable years.

Amnesty Penalty Penalty equal to: Penalty equal to: –50% of the post-amnesty unpaid interest amount on any tax year eligible for amnesty. –50% of the unpaid interest subsequently assessed on deficiency amounts. Penalty would not apply to a taxpayer that: Penalty would not apply to a taxpayer that: –Initiates and is compliant with an installment/payment agreement under amnesty. –Has an existing (“grandfathered”) installment agreement and does not participate in amnesty (PIT only).

Accuracy Related Penalty Increase An increase in the penalty for a taxable year eligible for amnesty from 20% to 40% of the understatement for any assessment issued post amnesty. An increase in the penalty for a taxable year eligible for amnesty from 20% to 40% of the understatement for any assessment issued post amnesty. Increase does not apply to: Increase does not apply to: –A taxpayer in audit, protest, appeal, settlement, or litigation as of the start of amnesty. –Understatements relating to tax shelter items.

Tax Professional Services FTB Amnesty Mailings - Copy to Power of Attorney FTB Amnesty Mailings - Copy to Power of Attorney Practitioner Hotline Practitioner Hotline Amnesty Application provided to CTPs Amnesty Application provided to CTPs Tax News Articles Tax News Articles Special Fax Number Special Fax Number 60 Day Extension to File and Pay 60 Day Extension to File and Pay BOE and FTB Amnesty Portal BOE and FTB Amnesty Portal

Where can I obtain the latest information?

Services on FTB Amnesty Website Information for Tax Professionals Information for Tax Professionals Amnesty Application - pdf form Amnesty Application - pdf form Tax Forms/Tax Rate Schedules Tax Forms/Tax Rate Schedules Balance & Payment Options Balance & Payment Options Amnesty PIT Installment Agreement Amnesty PIT Installment Agreement Amnesty Tax Balance Calculator Amnesty Tax Balance Calculator FAQs in English & Spanish FAQs in English & Spanish Payment Options Payment Options

Questions?