State Offers Amnesty Programs to Those Who Misreported Taxes (0111)

REDWOOD CITY, Calif. — 
If your conscience is bothered because you haven’t been entirely truthful in reporting your state taxes, both the Franchise Tax Board (FTB) and the Board of Equalization (BOE) are in forgiving moods.

You’ll have to confess, nevertheless. You’ll also have to pay up.

The FTB is offering amnesty to taxpayers who did not file returns, underreported income, claimed excessive deductions, or did not make required payments for tax years prior to Jan. 1, 2003.

Similarly, the BOE is offering amnesty for Californian businesses that underreported sales and purchases and for individuals and businesses that misreported use taxes for the same period.

“The tax amnesty programs give individuals and businesses the opportunity to clean the slate and avoid significant penalties for not being entirely truthful in the past,” explains Steve Duben, a member of the California Society of CPAs’ tax committee. “They are also a great way for the state to collect much needed funds without having to spend additional monies for enforcement.”

Individuals and businesses have until March 31 to claim amnesty. They must apply for amnesty by using forms available at www.taxes.ca.gov or by calling (800) 852-5711 for FTB forms and (800) 400-7115 for BOE forms. BOE field offices also have copies of its forms.

Those applying for amnesty must pay any taxes due in full along with appropriate interest no later than May 31. Both the FTB and BOE, however, may allow payment in installments through June 30, 2006, if the taxpayer so requests.

“Taxpayers, including businesses, should consult with their tax preparers before they submit their forms,” Duben says. “Doing so will help ensure that the forms are accurately completed and cover the appropriate reporting periods.”

Those who do not participate in the amnesty programs and owe taxes for years prior to Jan. 1, 2003, will be subject to significant penalties beginning April 1.

Duben notes that taxpayers under criminal investigation for tax evasion as of Feb. 1, 2005, and those involved in abusive tax shelter transactions may not be eligible for the tax amnesty programs.