40% Penalty for Failure to pay sales tax or USE tax on time

The State Board of Equalization has gone crazy. A 40 PERCENT penalty can apply to a person who knowingly collects and fails to pay sales tax or USE tax to the BOE.  There are a few ways out of the penalty - say your average tax is less than $1,000, or if you suffer from a natural disaster, or if there is an death in your immediate family.  

Failure to file penalty for change in ownership statements

Beginning January 1, 2010 any partnership, LLC, and corporation return that has a change in ownership MUST file a Form BOE-100-B with the State Board of Equalization with 45 days of the event date for change in ownership or control.  If you do not, you will be subject to penalty.

Filing your tax return, even if you don't think you have to

The Franchise Tax Board (FTB) uses a variety of sources to look for non-filer.  They will look at income reported on the W-2, federal tax returns with California addresses, mortgage interest statements on California properties, and DMV information.   The latest in the FTB "nonfiler program" is a pilot program in which the FTB gets information from the DMV on any vehicle valued at more than $40,000 when the vehicle was acquired.  If that person has failed to file a return, the FTB will contact the car owner requesting a tax return.  Another situation involves a taxpayer with a mortgage.  They did not file a return because they had non-taxable income.  That income, along with an inheritance provided enough funds to pay the mortgage.  But because California did not get a tax return, they made one up.  The income was 4 times the mortgage interest.  The California sent a bill to the taxpayer, and lots of notices which were ignored because the taxpayer knew they had no filing requirement.  But the account was sent to collections and the property had a lien.  [These facts were discovered during a refinance attempt]. 

Prepayment of LLC Fee

LLC must prepay by June 15 their LLC fee. You can penalty proof yourself by paying in last year’s fee by June 15.

Example: A calendar year LLC must for estimate its 2015 gross receipts by June 15, 2015 and pay the LLC based on this estimate or pay in the 2014 LLC fee to avoid any penalty. The penalty is 10% of the amount of any underpayment.

Mandatory Electronic Submission of Individual Extensions & Estimated Tax Payment

Taxpayers with California estimated tax payments of $20,000 are now required to submit their payments to the Franchise Tax Board electronically. You should be used to this by now.  It started in 2009. Once you meet this threshold, all payments current and future must be submitted electronically even if you do not meet these minimum thresholds in the current year. Failure to submit electronically will subject you to a 1% penalty of the amount.

Payments can be made electronically using the web pay option on the ftb website at www.ftb.ca.gov under the individuals tab pay tax .

You can also pay by credit card however, this will result in an additional charge of 2.5% of the amount

For all California taxpayers - Quarterly payments means 3 payments

Prior law indicated that you could pay in 4 equal installments (e.g. 25% )

New Law says that you must pay in the following percentages:

• 30% 1st Qtr - April 15th
• 40% 2nd Qtr- June 15th
• 0% 3rd Qtr - N/A
• 30% 4th Qtr - January 15th