News and Views for the California Enterprise Zones » FTB

The Dicon Opinion

StevenDotan — Fri, 27 Apr 2012 17:52:00 +0000

Here is the actual Opinion. The Supreme Court ruled in favor of the FTB based primarily on the FTB’s general audit powers which, as the Court cited, are not supplanted or limited by the regulatory scheme concerning an employer obtaining a voucher. “The FTB may rely upon this certification if it so chooses, and the Attorney General has acknowledged that the FTB likely will do so ―perhaps even in most cases, to the employer‘s benefit.”

“As the FTB explains in its opening brief: ―It is . . . reasonable to conclude that vouchers provide for an additional level of review which may satisfy the Board in some cases, while not in others. For example, in some cases the Board‘s review of a statistically significant sample of an employer‘s vouchers may convince it that the vouchers were properly issued only for eligible workers. In this case the Board may accept the vouchers without demanding the production of specific documentation of worker eligibility, or without any additional investigation. In other cases, though, the review of the employer‘s vouchers may raise concerns with the Board, or even reveal that vouchers were improperly issued. In these cases the Board will prudently demand evidence or documentation of worker eligibility. The Board is not required to audit every voucher in every case, just as it is not required to audit every taxpayer‘s return; in fact, the Board‘s limited budget effectively prevents this as a practical matter. In fact, given budgetary constraints, one would expect that the Board‘s review of employee eligibility would probably occur only in those cases where it has information that vouchers may have been improperly issued.‖ The FTB cites several weaknesses in the vouchering process that could lead the FTB to audit a voucher, noting that ―at the time the vouchers were issued in this case there were no statutory or regulatory requirements regarding the documentation required to obtain or issue a voucher. In addition, there is no requirement for an agency that issues vouchers to communicate at all with the employees for whom it is required to supply vouchers, and vouchers may be retroactively issued years after the employment takes place. [¶] Nor, until new regulations that became effective November 27, 2006, was there even a requirement that enterprise zone agencies keep voucher records. [Citation.]

We find reasonable the FTB‘s view that ―[t]he voucher process complements the review/audit process and enhances its efficiency by allowing the Board to rely on vouchers in those situations where it has confidence in their accuracy, while requiring evidence in those cases where it does not.‖ Because the FTB‘s interpretation of section 23622.7 is reasonable, there is no statutory conflict that requires the certification process to be harmonized with the laws governing the FTB‘s authority in the particular way urged by Dicon and the Court of Appeal.”

Supreme Court Rules In FTB’s Favor in Dicon Case

StevenDotan — Thu, 26 Apr 2012 18:18:18 +0000

In an unanimous opinion today, the California Supreme Court ruled that the FTB can in fact audit behind the EZ voucher. The voucher certificate is no longer considered “prima facie” evidence that the worker is qualified for the EZ program. The opinion states:

We reverse the Court of Appeal’s holding that a certification issued by a governmental agency for purposes of the hiring tax credit under Revenue and Taxation Code section 23622.7 constitutes “prima facie proof of a worker is a ‘qualified employee,’ ” which shifts to the Franchise Tax board the “burden of demonstrating an employee is not a qualified worker for which no voucher should have issued. ” In all other respects, the Franchise Tax Board does not challenge the Court of Appeal’s judgment, and it is affirmed. Majority Opinion by Liu, J. — joined by Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, and Corrigan, JJ.

Nassco Only Applies to Corporate Taxpayers

StevenDotan — Tue, 01 Feb 2011 05:20:45 +0000

This from Steve Sims, Taxpayer Advocate in theFTB’s February Tax News:

The Board of Equalization recently ruled in the Appeal of NASSCO Holdings, Inc 2010-SBE-001, November 17, 2010, that a corporate taxpayer may use Enterprise Zone credits and/or the Manufacturing Investment Credit (MIC) to reduce corporate alternative minimum tax (AMT). Since then, I have received many questions on how the FTB is going to implement this ruling. We will be revising Form 100 Schedule P in February 2011. In addition, the NASSCO decision applies only to corporate taxpayers, and does not apply to personal income taxpayers, due in part to differences in how the corporate and personal income tax statutes are drafted. Consequently, personal income taxpayers may not claim the credits at issue in NASSCO in the manner that a corporation could.

The most frequent questions I have heard on this issue are “Can I file an amended return?” and “How will this affect my credit carryover?” Unfortunately, we have yet to determine answers to these questions. Stay tuned however as we are working to get the answers to these questions and more as soon as possible. We will update you in a future Tax News article and possibly a Tax News Flash as information becomes available. In addition, you can go to ftb.ca.gov and search for nassco for additional information.

Steve Sims, EA

The Latest Tax News

StevenDotan — Sun, 02 Jan 2011 23:53:23 +0000

The FTB’s January Tax News.

December Tax News

StevenDotan — Mon, 06 Dec 2010 17:45:57 +0000

Here is the FTB’s December Tax News.

November Tax News

StevenDotan — Mon, 01 Nov 2010 16:55:47 +0000

Here is the FTB’s November Tax News.

FTB October 2010 Tax News

StevenDotan — Mon, 04 Oct 2010 17:56:47 +0000

Enjoy.

October Tax News

Analyses Posted This Past Week by the FTB

Steven Dotan — Mon, 21 Jun 2010 11:39:13 +0000

Assembly Bills

AB 1779 (Niello, et al.) Mortgage Forgiveness Debt Relief Modification and Extension – Amended 05/03/10
AB 1899 (Eng/Lieu) State Agencies Post Specified Audits & Contracts To The Reporting Transparency In Government Internet Web Site – Amended 05/28/10
AB 2017 (Hall, et al.) California YMCA Youth And Government Fund – Amended 05/28/10
AB 2041 (Villiness/Smyth) Health Savings Account Deduction Conformity – Amended 05/11/10
AB 2126 (Garrick, et al.) Minimum Franchise Tax/Small Businesses That First Commence Business On Or After January 1, 2011, Exempt First Taxable Year And $100 Succeeding 9 Taxable Years – Amended 05/18/10
AB 2148 (Tran/Portantino) Deduction For Physician’s Medical Services Performed Free Of Charge To Local Community Clinic Or Emergency Department Of General Acute Care Hospital – Amended 05/18/10
AB 2403 (Strickland) State Agencies Post Specified Audits & Contracts To The Reporting Transparency In Government Internet Web Site – Introduced 02/19/10 & Amended 04/26/10
AB 2528 (Knight) Exclusion/Payments Or Vouchers From Federal Consumer Assistance To Recycle & Save Act Of 2009 (aka “Cash For Clunkers”) – Amended 05/05/10
AB 2559 (Perez, John A.) State Agencies/Prohibits Requiring Social Security Numbers For Benefit, Service, Privilege, Or Participation In Any Program – Introduced 02/19/10
AB 2589 (Tran) Dual Renewable Energy Device Credit – Amended 04/08/10
AB 2605 (De La Torre) State Property Sales Or Long-Term Leases – Amended 06/01/10
AB 2630 (Emmerson/Cook, et al.) Jobs Tax Credit – Amended 05/18/10

Senate Bills

SB 1008 (Padilla) Limited Partnerships & Foreign Limited Partnerships/Engineers & Land Surveyors – Amended 03/15/10 & 04/28/10
SB 1391 (Yee) Employer Tax Credit/Reporting Information/New Credits Chaptered After January 1, 2011, Would Be Recaptured If Taxpayer Has Net Decrease In Full-Time Employees – Amended 05/19/10
SB 1426 (De Saulnier, et al.) State Budget/ Two-Year Spending Plan – Introduced 02/19/10
SB 1463 (De Saulnier) Corporate Flexibility Act Of 2010/Flexible Purpose Corporation – Introduced 02/19/10 & Amended 04/05/10
SBX6 19 (Florez) FTB Compile Specified Corporation Tax Expenditure Information & Include On The State Reporting Transparency In Government Internet Web Site – Introduced 05/26/10

Mixed results as median incomes rise while total income falls

Steven Dotan — Fri, 07 May 2010 11:14:40 +0000

Sacramento — The statewide median income for all personal income tax returns rose slightly to $35,923 (0.78 percent over 2007), while the median income listed on joint returns grew to $68,981 (0.27 percent over 2007) according to statistics released today by the Franchise Tax Board (FTB).

The four Bay Area counties of Contra Costa, Marin, San Mateo, and Santa Clara counties have led California for 37 years in reported highest median incomes.

“Median income” is the point where one-half of the tax returns are above and one-half are below the midpoint of the range of values. Median income represents the amount reported by a typical California individual or couple.

California taxpayers filed 15.53 million 2008 state income tax returns reporting $1.113 trillion, a 7.2 percent decrease over 2007 figures. Adjusted gross income is a figure taken from tax returns that reports total income after specific tax deductions are subtracted.

Marin County had the highest median income for joint returns at $118,704, a decrease of 3.85 percent over 2007.San Mateo County ranked second with $100,165,Santa Clara County ranked third with $100,077, Contra Costa County ranked fourth with $90,956, and Alameda County ranked fifth with $88,138.

Los Angeles County taxpayers filed 25.5 percent of all 2008 income tax returns in California. They reported median incomes of $31,679 for all returns, and $59,950 for joint returns, ranking 36th and 28th, respectively for all counties. The largest percentage gain in median income for all counties was 5.36 percent, reported in Colusa County. The largest increase in joint filings was also in Colusa County with a 4.55 percent increase.

Analyses Posted This Week by the FTB

Steven Dotan — Mon, 03 May 2010 11:08:03 +0000

Assembly Bills

AB 1836 (Furutani) PIT Rates/Increase Maximum Rates To 10 Percent & 11 Percent & AMT To 8.5 Percent Beginning On Or After January 1, 2011, & Before January 1, 2016 – Amended 04/05/10
AB 1990 (Anderson) Unemployed Worker’s Child Care Costs Contributions Credit – Amended 04/05/10
AB 2041 (Villines/Smyth) Health Savings Account Deduction Conformity – Introduced 02/17/10 & Amended 03/10/10
AB 2177 (Beall) Allow Electronic Communication To Taxpayers To Inform Of Tax Change Or Obligation – Amended 04/14/10
AB 2492 (Ammiano) Property Taxes/Change In Ownership – Amended 04/08/10
AB 2591 (Feuer/Perez) State Budget/Nonrecurring Revenue/FTB & BOE identify Each Source Of General Fund Proceeds Of Taxes Higher Than Tax Proceeds Received In Preceding Fiscal Year & Report To Legislature, Governor, Controller & Public By May 15 Each Year – Amended 03/17/10
AB 2630 (Emmerson, Cook, et al.) Employer Hiring Credit – Introduced 02/19/10
AB 2640 (Arambula) Section 1245 Property Credit For Manufacturer’s Investment In Qualified Property/Eliminate Income Exclusion Of Free Or Subsidized Parking For Participating In A California Ridesharing Arrangement – Amended 04/08/10
AB 2641 (Arambula/Solorio) Tax Expenditures/Legislative Review Of Each Tax Expenditure/Add 5 Year Sunset – Amended 04/27/10
AB 2656 (De Leon) Postsecondary Education/Contracts For Academic Research – Amended 04/08/10
AB 2665 (Strickland) Service Station Emergency Standby Generator Credit – Amended 04/26/10

Senate Bills

SB 913 (Calderon) Principal Residence Credit – Introduced 01/28/10
SB 952 (Wyland) Repeal PIT Temporary Rate Increases/Repeal Decreased Personal Exemption Credit for Dependents/Withholding Tables/Eliminate 10 Percent Increase – Introduced 02/04/10
SB 952 (Wyland) Repeal PIT Temporary Rate Increases/Repeal Decreased Personal Exemption Credit for Dependents – Amended 04/05/10
SB 1073 (Ashburn) Research Expense Credit/20 Percent Of Qualified Green Technology & Renewable Energy Research And Development Costs – Introduced 02/17/10
SB 1185 (Maldonado) Adopted Animal Food And Supply Costs Deduction – Introduced 02/18/10
SB 1216 (Cedillo) Low-Income Housing Credit/Allocation Of Surplus Credits By The California Tax Credit Allocation Committee – Amended 04/05/10
SB 1244 (Walters) Limited Liability Company Employment Taxes – Amended 04/21/10
SB 1272 (Wolk) Tax Expenditures/Add 7 Year Sunset – Amended 04/21/10
SB 1391 (Yee) Employer Tax Credit/Reporting Information/New Credits Chaptered After January 1, 2011, Would Be Recaptured If Taxpayer Has Net Decrease In Full-Time Employees – Amended 04/06/10
SB 1430 (Walters) Renter Credit & Homeowners’ Property Tax Exemption/Increase Credit & Exemption Amounts For Taxpayers 62 Or Older – Introduced 02/19/10 & Amended 03/24/10

Senate Special Session Bills

SBX6_14 (Calderon/Correa) Mortgage Forgiveness Debt Relief Extension – Introduced 03/11/10
SBX8_58 (Dutton/Runner) Research Expense Credit/20 Percent Of Excess Qualified Expenses/Conformity To Election Of Alternative Incremental Credit – Introduced 02/12/10