California Tax Amnesty Deadline is Approaching, but Problems Abound

SACRAMENTO, Calif., March 15 /PRNewswire/ -- Taxpayers who are delinquent in their California Personal Income Tax, Corporation Tax, or State Sales and Use Tax payments have until March 31 to take advantage of the state's amnesty program. Beginning April 1, the FTB and the Board of Equalization can impose new penalties on delinquent taxpayers who fail to take advantage of the program.

The Franchise Tax Board (FTB) originally projected that the program would generate up to $550 million of revenue for the state. Instead, as of last week the total of amnesty payments deposited totaled less than $26 million.

"The amnesty program isn't working well, simply because the reason people don't file is that they don't have any money," states Richard Quarterman, EA, President of the California Society of Enrolled Agents. "The amnesty program stipulates that penalties and fees are forgiven but the full balance of tax and interest must be paid by May 31, 2005, or by June 30, 2006 if an Installment Agreement is signed. With cash flow the main problem of tax debtors," Quarterman states, "unless funds can be borrowed the debtors simply won't be able to pay in full by the deadlines." Quarterman expects that many taxpayers will be forced to consider bankruptcy as an option due to the program.

"I have a few clients who qualify for the amnesty program," says Al Bundoc, EA from Torrance. "Unfortunately, not a single one of them is in a financial position to pay off their debt in one year to comply with the program." He adds, "Hindsight is 20/20, but the program is too harsh to reach the taxpayers that would benefit from it."

The FTB sent targeted letters to individuals it thought might qualify for the program, but innocent taxpayers have also been inadvertently snared. "I know of one person, a senior citizen, who hasn't filed for years because she hasn't needed to file," says San Jose Enrolled Agent Rosemary Hernandez. "She got a letter from the FTB, and needless to say she was upset and worried that her savings account was going to be wiped out to pay for taxes. I assured her that this was not the case."

Even taxpayers who want to take advantage of the program and can afford to pay are having problems. "One of my clients received an inquiry for the 1982 tax year," Hernandez reports. "It took six weeks and several phone calls to get the basic information from the state, and the FTB advised us they had no 1982 tax forms. I had to take an old form from my files, white out all the previous information, and make a new form to be completed and signed."

For additional information or for assistance with your tax situation, locate an Enrolled Agent in your area by calling toll-free 800-TAXPRO-5 or online at http://www.csea.org. Enrolled Agents are tax professionals who are licensed by the federal government to represent taxpayers and assist them with tax planning and the preparation of tax returns.