First-time abatement of certain penalties
First-time abatement of certain penalties being considered by California once again.
“Federal and state law impose both a failure to file and a failure to timely pay penalty, which can be abated if the taxpayer can demonstrate that the failure was due to reasonable cause and not willful neglect. In addition, the IRS allows a “first-time” abatement procedure, which requires the agency to abate these penalties if the taxpayer has not previously been required to file a return, or if no prior penalties have been assessed in the past three years.
California law does not automatically conform to changes to federal tax law. Instead, the Legislature must affirmatively conform to federal changes. Senate Bill 375 would allow individual taxpayers in California to also request first-time abatement of the failure to file and the failure to timely pay penalties.
Any Bill that exceeds the $50,000 threshold impacting revenue is placed into the Appropriations Suspense file and reviewed by the Appropriations Committee. On May 25th, the Appropriations Committee will review SB-375 to determine whether it moves forward to Assembly. If SB-375 does not pass Appropriations, it will be ineligible for further legislative process this year.
The California Bar, new Tax Section program to provide comments on proposed legislation is drafting comments in order to provide written comments by the May 17 deadline.”
This is conformity that I pushed for while Taxpayers’ Rights Advocate at FTB, but was not successful in making it happen. Big thanks to the California Bar, and Roger Royse, TPPL (rroyselaw.com) for bringing attention to this proposed change.
Steve Sims, EA