2023 Tax Season Toolkit
Extended Deadlines The FTB generally follows the IRS ’ s extended deadlines to file or pay taxes until the date indicated for the specific disaster . As of this writing , the current extended disaster deadline for qualifying California residents and California domiciled businesses for the 2022 tax year was Nov . 16 , 2023 .
Taxpayers should write the disaster name in dark ink at the top of their tax return to alert the FTB of the disaster to which the return is related .
Additional Designated Areas The IRS disaster relief webpage ( irs . gov / newsroom / tax-relief-indisaster-situations ) lists additional designated areas eligible for a postponement period .
If a taxpayer qualifies for the postponement period , any interest , late-filing , or late-payment penalties that would otherwise apply will be cancelled . The FTB also will follow these stipulations .
Other 2022 and 2023 Disasters Taxpayers may deduct a disaster loss sustained in a California city or county where the governor declares a state of emergency .
The list of California Qualified Disasters ( ftb . ca . gov / file / business / deductions / disaster-codes . html ) was published on the FTB website on Aug . 31 , 2023 . The list is regularly updated as new events occur . Visit the FTB website and Publication 1034 , Disaster Loss How to Claim a State Deduction ( ftb . ca . gov / forms / misc / 1034 . pdf ), for more information regarding California disaster losses .
Unclaimed Property
Tax professionals may have noticed a new set of questions on their business entity clients ’ income tax returns . Specifically , California has started inquiring as to whether corporate and pass-through entities have filed unclaimed property ( mossadams . com / articles / 2022 / 02 / unclaimed-property-on-business-tax-returns ) reports with the state and , if so , when the last reported was filed .
Financial assets left inactive by a legal owner beyond a set deadline — which varies depending on the property type — are transferable to the state . This can include uncashed checks , refunds , annuities , or security deposits .
For some taxpayers , these assets can accumulate and remain on financial records for several years even after they should have been reported , and paid over , to the state to administer on behalf of the public using a unified search tool . A historically under-reported area of tax law across all states , unclaimed property is now in California ’ s sights as an area to promote increased compliance .
In connection with this change , California has established a program to encourage compliance by otherwise-delinquent taxpayers by offering an opportunity to mitigate the potential impact associated with failing to report unclaimed property from prior periods .
Voluntary Compliance Program Gov . Newsom signed AB 2280 into law on Sept . 13 , 2022 . AB 2280 authorizes the controller to :
• Establish the California Voluntary Compliance Program ( VCP ) and ,
• Waive the 12 percent interest payable for untimely unclaimed property reports for certain qualifying taxpayers . At this time , California ’ s VCP is up and running , and applications
for the program can be submitted at the California State Controller ’ s Office website at https :// sco . ca . gov / upd _ vcp . html .
Eligibility An unclaimed property holder that hasn ’ t reported unclaimed property can request to enroll in the program using a form prescribed by the controller .
The Controller , at their discretion , can enroll eligible holders in the program .
Ineligibility Some unclaimed property holders are ineligible for enrollment in the VCP . A property holder is ineligible for enrollment if , at the time the holder ’ s request to enroll is received by the Controller , the holder is the subject of :
• An examination of records or has received notification from the controller of an impending examination .
• A civil or criminal prosecution involving compliance with California Unclaimed Property Law . Additionally , property holders are ineligible if the Controller :
• Notified the property holder of interest due within the previous five years and the interest remains unpaid at the time of the holder ’ s request to enroll . A property holder subject to an outstanding interest assessment may file or refile a request to enroll after resolving the outstanding interest assessment .
• Waived interest assessed against the property holder within the previous five years . If a property holder acquired or merged with another entity within the five-year period , the holder may request to enroll in the program to resolve unclaimed property that may be due as a result of the acquisition or merger .
Disclosure of Records The Unclaimed Property Division will not require the disclosure of records and information provided to the Controller ’ s office related to statements of personal worth or financial data , or related to personal information , as defined by Section 1798.3 of the Civil Code .
Next Steps
The California tax landscape continues to evolve each year , with the state exploring new means of revenue collection , while revising existing policies once expected to remain unchanged .
Due to these changes and updates , taxpayers are always advised to stay on top of the most recent developments , whether they be legislative updates , the latest court decisions , or instructions from the respective tax departments responsible for administering these regimes .
Nick West has practiced public accounting since 2014 . He provides state and local consulting and compliance services for income and franchise taxes matters as well as sales and use tax issues . You can reach him at ( 408 ) 558-3265 or nick . west @ mossadams . com . Ossie Ravid has practiced public accounting and law since 1995 , specializing in state and local tax . You can reach him at ( 628 ) 267-6014 or ossie . ravid @ mossadams . com .
Assurance , tax , and consulting offered through Moss Adams LLP . ISO / IEC 27001 services offered by Cadence Assurance LLC , a Moss Adams company . Wealth management offered through Moss Adams Wealth Advisors LLC .
14 CALIFORNIA CPA DECEMBER 2023 www . calcpa . org