I expect you're right about the individuals vs. corporate
taxpayers, Peter. The papers say the state took in a huge
amount of cash at the end of the amnesty period from
corporate taxpayers covering their bets. A lot of that money
doubtless will be refunded.

The auditor I am working with is in the individual residency
audit unit in West Covina. So he deals only with individual
taxpayers.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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"Katie" <katiej_1958[at]yahoo.com> wrote

- quote -

I assume the auditor means the only representative of an
"individual" taxpayer. I put that in quotes because I will
lump sole proprietors, small S- and C-corps and small LPs
and LLCs in the category of taxpayers who have no meaningful
tax representation.

There are very few businesses in CA with meaningful tax
representation that are participating in the amnesty
program. They are doing exactly what Katie has advised her
client to do: pay the worst-case scenario amount and
immediately file a claim for refund.

What CA will do at that point is put the claim in the normal
examination queue (as opposed to merely refunding the money
and then examining the return to see if CA is really owed
the money). If CA "wins", then the taxpayer has already
paid and there is none of the egregious penalty *crap*. If
the taxpayer "wins" on any or all issues, the applicable
amount of money is returned to the taxpayer.

Peter C. Gatto, CPA

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Katie wrote:
[snip]

- quote -

I agree, it is unconscionable to increase the penalty to 50%
to those taxpayers who are ignorant of their liability. I
also believe, that many of the senators and assembly persons
(do they still say assemblyman ?) who passed the legislation
were unaware that the 50% would apply to everyone.

--
Alan
http://taxtopics.net

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nospam wrote:

- quote -


There's another way: pay what you think you may owe, based
on a worst-case scenario, before March 31, but NOT under
amnesty. I just arranged this with the auditor on a case
that I have going. We are sending him the check and he will
make sure it gets applied properly. We will file a
protective claim for refund to get back the excess over the
actual liability when all is said and done. (You have a
year to file the claim, but we will do it right away.)

The auditor said I am the only rep he is working with who
has even asked about making a payment. Evidently a lot of
people are not aware of the problem.

As for the no-refund rule after amnesty, it's certainly
unconscionable. As for constitutionality, you may be right,
but somebody is going to have to litigate that issue at
great expense in time and treasure.

What's even more unconscionable is the application of the
50% interest penalty to people who aren't even under audit
yet and have no idea that they have a potential liability.
But it will apply to them too.

Katie in San Diego

The foregoing is intended for educational purposes only and

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Summary from
http://www.caltax.com/News/NewsDetail.cfm?DocID=681
If your client is going through an FTB audit, you must look
at defense tactics right now. Under amnesty, a taxpayer with
a pre- 2003 tax liability that is still unresolved on March
31, 2005, will be assessed a penalty of 50% of the interest
on the assessment. There are a few choices.

· Proceed with the audit. If you win - great, no penalties.
If not, any liability will be subject to the extra 50%
penalty.

· Agree to the assessment now, pay it, and file a claim for
refund, bringing the case back to audit. You avoid the 50%
interest penalty.

· Request amnesty during the amnesty period (February 1,
2005 through March 31, 2005), pay the tax, and avoid
penalties. However, by going through amnesty you lose the
right to a refund of the tax paid

that last requirement looks unconstitutional to me. Even a
business/private contract would be limited in how many
(civil?) rights could be signed away.

· File for partial amnesty by agreeing to the issues in
which your position is weak and avoid the 50% interest
penalty with respect to the tax on those issues. Proceed
with the audit with respect to the remaining issues.

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