The California Franchise Tax Board’s Voluntary Disclosure Program enables qualified taxpayers to file delinquent California income tax returns without incurring delinquency penalties. The program is designed for taxpayers who need to file California income tax returns and pay California income taxes but do not have sufficient nexus to California to be deemed California residents.
The program is a win for California and a win for the taxpayer. The program enables California to bring taxpayers into tax compliance and taxpayers can become California tax compliant without paying heavy penalties.
The voluntary disclosure program provides a procedure for qualified taxpayers to present to the FTB an explanation regarding why the taxpayer had reasonable cause for failing to file the delinquent returns. A taxpayer can expect a response from the FTB within a couple of months of the taxpayer’s submission. Moreover, the voluntary disclosure application is done anonymously. Consequently, a taxpayer can be relieved of worry that the FTB will pursue the taxpayer while the FTB is reviewing the taxpayer’s voluntary disclosure application.
However, to be eligible for the Voluntary Disclosure program, a taxpayer can have only minimal ties to California. A qualifying taxpayer’s ties to California cause the taxpayer to be liable for income tax in California but not as a California resident. For example, a corporation can be qualified for the program only if the corporation has never filed a return with the FTB, has never been the subject of an FTB inquiry and voluntarily comes forward. Further, the corporation cannot be organized under the laws of California, be qualified or registered with the Office of the Secretary of State of California or maintain and staff a permanent facility in California.
If you want more information regarding the FTB Voluntary Disclosure Program, please contact Michele Weiss at email@example.com or 310-550-6200.