Category Archives: Special Announcements from FTB

FTB Of CA Penalties and their meaning


We help our clients understand the ever-changing federal and state tax laws so they can maximize their tax deductions, and adopt best recordkeeping practices.

Franchise Tax Board, State of CAMany of our clients have come to us after having a bad tax preparation experience that resulted in penalties and interest.  When we come across a reference document that we feel is valuable for the taxpayer – we promote it.

We have linked to the 18-page Penalties and Interest Reference Table published by the Franchise Tax Board of California.

  1. If I pay my taxes late, what interest and penalties will I be charged?
  2. What are past and current interest and estimate penalty rates?
  3. I have an extension of time to file my return. Why did I get a penalty?
  4. I filed my return on time. Why did I get a penalty?

FTB of CA Penalty Reference ChartPenalty reference chart (pdf)







FTB Top 500 State Income Tax Delinquents

Franchise Tax Board, State of CA275 individuals and 72 businesses owe CA more than $161M


Sacramento –The Franchise Tax Board (FTB) today updated its Top 500 Delinquent Taxpayers list with 275 individuals and 72 businesses comprising the new list. Combined they owe the state more than $161 million.

In October, FTB sent letters to 500 taxpayers who potentially could appear on the list if they failed to resolve their tax liabilities. 153 taxpayers resolved their accounts prior to the list’s publication. More than $316 million has been collected from the top debtors program since its October 2007 inception.

Being on the Top 500 Delinquent Taxpayer list carries added provisions, including:

  • Suspension of state-issued licenses including driver’s licenses and occupational or professional licenses.
  • Publishing professional license information.
  • Prohibiting state agencies from entering into contracts with listed debtors.
  • Returning noncompliant taxpayers to the list.
  • Publishing the names and titles of corporate officers of listed corporations.

FTB removes a taxpayer from the list once the tax is paid or the taxpayer agrees to make payments under an approved installment agreement or offer in compromise. Tax liabilities under appeal, in litigation, or in bankruptcy proceedings are not included on the list.

Individuals on the list can contact FTB at 888.426.8555 to resolve their accounts. Business taxpayers can call 888.426.8751.

The Top 500 list is published twice a year in April and October.

FTB administers two of California’s major tax programs: Personal Income Tax and the Corporation Tax. FTB also administers other non tax programs and delinquent debt collection functions, including delinquent vehicle registration debt collections on behalf of the Department of Motor Vehicles, and court–ordered debt. Annually, FTB’s tax programs collect more than 65 percent of the state’s general fund.

The Board of Equalization has a similar list of the state’s top sales and use tax delinquencies, which they update quarterly.

Statewide Median Income Up In 2012 in California

Franchise Tax Board, State of CAStatewide Median Income Up In 2012

California’s median income for all 2012 individual tax returns was $35,910, an increase of 3.5 percent over 2011’s median income amount. For joint returns, the statewide median income was $70,938, an increase of 4.1 percent over 2011.

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

California taxpayers filed nearly 16 million 2012 state income tax returns, reporting almost $1.5 trillion of adjusted gross income. This figure is an increase of 27.7 percent from the tax year 2011’s figure of $1.1 trillion. Adjusted gross income is a tax term that means the total income increased or reduced by specific adjustments, before taking the standard or itemized deduction.

Over the past 40 years, the Bay Area counties of Marin, San Mateo, and Santa Clara have consistently reported the highest median incomes. Marin County still has the highest median income for joint tax returns, reporting $127,471, an increase of 6.1 percent over 2011.

Top 10 Counties Reporting Highest Joint Tax Return Median Income

Rank County Median Income (Joint Returns)
1 Marin $127,471
2 San Mateo $109,827
3 Santa Clara $109, 309
4 Alameda $93,557
5 Contra Costa $93,367
6 San Francisco $87,446
7 Placer $83,869
8 El Dorado $82,706
9 Orange $78,108
10 Ventura $77,340

Los Angeles County taxpayers filed more than a quarter (26.6 percent) of all 2012 income tax returns in California. Los Angeles County reported median incomes of $31,144 for all individual tax returns, and $60,939 for joint tax returns, ranking 36 and 25 respectively.

The largest percentage gain in median income for all counties was 6.0 percent, reported in Contra Costa County. For joint-filed tax returns, the largest increase was in San Francisco County with a 7.7 percent increase.


Medical and Dental Expense Deduction – FTB CA


FTB CAFederal changed the allowable medical and dental expense deduction amount for federal purposes. A deduction is allowed for unreimbursed allowable medical and dental expenses that exceed 10 percent of federal adjusted gross income (AGI) California allows a deduction for medical and dental expenses that exceed 7.5 percent of federal AGI. For more information, go to and search for Schedule CA 540.

TRANSLATION:  If you have medical and dental expenses that exceed the 7.5% threshold in California, you will be able to claim these expenses under California Tax Law even if you don’t have enough  to meet the 10% federal threshold.

Tax information is not tax advice.  If you need your questions answered, call 619-589-8680 for an appointment.  Pat Michael and his team at  is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.

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Flash – 2013 Short Sellers Get State Tax Relief


Franchise Tax Board, State of CAFranchise Tax Board of California 

We updated our website to include information about mortgage debt relief for taxpayers who sold their principal residences through a short sale in 2013.

According to an Internal Revenue Service (IRS) Information Letter dated September 19, 2013, the IRS determined that California taxpayers who sell their principal residences for less than what is owed on the home as part of a short sale, in which the lender agreed to the short sale, do not incur cancellation of indebtedness income. Instead, the amount of forgiven debt is included in the amount realized in determining gain on the sale of that residence.

The IRS guidance is limited to California short sales only. The IRS guidance did not specifically address other types of real estate transactions such as non-judicial foreclosures and mortgage loan modifications.

We will update information and FAQs on our website soon. For more details and updates, please go to and search for mortgage forgiveness debt relief.


Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.
Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation   Incorporation-Choice of Entity    Business Support Services    Corporate Compliance    Audit Representation   Retirement Tax Planning   Wills & Trusts   Estate Planning   Bookkeeping   Payroll 

One Million+ getting a letter from the Franchise Tax Board!

uh oh signMore than 1 million Californians did not file a 2012 state income tax return!

Sacramento – Last year, the FTB collected more than $727 million dollars through their diligent campaign to find people who did not file!

The FTB receives more than 400 million income records from bank, employers, state departments, the IRS and other sources.

This program is designed to find wage earners and self-employed who did not file – it also tracks down other nonfilers through sources such as occupational licenses and mortgage interest payments.

If contacted,  you have 30 days to file or to show why one isn’t due.  For those who do not respond, the FTB will issue a tax assessment using income records to estimate the amount of state tax due.  It will include interest, fees and penalties.  If you get a letter, contact us immediately.  Do not wait.  Do not hesitate.  Call us at 619-589-8680.

The FTB administers two of CA’s major tax programs – Personal Income Tax and Corporation Tax.  They take their job seriously and are responsible for collecting more than 65% of California’s general fund.  For more information visit

Tax information is not tax advice.  Always speak with your tax professional before making decisions.  If you need to speak with a tax professional, give us a call today at 619-589-868.



Sacramento County Woman Sentenced to 3 years for Tax Evasion and Embezzlement Scheme

Franchise Tax Board, State of CASacramento –An Elk Grove Woman was sentenced to 3 years  in state prison for grand theft with a white collar crime enhancement, forgery,  and filing a false state income tax return, the Franchise Tax Board (FTB) announced.

Rosa Contreras, 45, was formerly employed as the  office manager for a Sacramento County dermatologist. Between 2007 -2010,  Contreras abused her position of trust and embezzled more than $182,000 through  forged checks, which she then deposited into her personal bank accounts.
Contreras also failed to claim this illegal income on her state income tax  returns for the same years. All income is subject to taxation including income  from illegal sources.

Contreras was also ordered to pay restitution  of more than $256,000 to her former employer representing the amount of the  embezzlement plus fees, penalties, and interest.

Sacramento County Superior Court Judge Laurel  D. White handed down the sentence Thursday, Jan. 2, in Department 8 of the  Sacramento County Superior Court. Sacramento County Deputy District Attorney  Ron Linthicum prosecuted the case.


Anyone who has knowledge of tax fraud may  call the FTB informant hotline at 1-800-540-3453.

FTB’s criminal investigation program identifies and  investigates cases of tax evasion and tax fraud to encourage compliance with  California income tax laws and maintain the public trust.

90,000 CA Businesses late on filing returns

State Contacting Businesses to File Last Year’s Tax Returns

Sacramento – Franchise Tax Board (FTB) is contacting more than 90,000 California business entities that have not filed their 2011 state income tax returns. Continue reading

Federal Income Tax Changes Summary for 2012

The Franchise Tax Board of California has provided their report of the Federal Income Tax Changes Summary for 2012.  60 pages of changes.  The FTB 2012 summary explains new federal laws, along with the effective dates, and the corresponding California law, if any. It includes an explanation of any changes made in response to the new federal law, and the impact on California revenue if California conforms to the federal changes.

Six Facts on Tax Refunds and Offsets

IRS Tax Tip 2013-60, April 22, 2013

Certain financial debts from your past may affect your current federal tax refund. The law allows the use of part or all of your federal tax refund to pay other federal or state debts that you owe.

Here are six facts from the IRS that you should know about tax refund ‘offsets’. Continue reading