Ask The California Employment Tax And Payroll Tax Attorney ‐ Latest Press Release From The Franchise Tax Board Relating To Tax Treatment Of Various Benefits Necessitated By The Covid-19 Outbreak
By Robert S. Schriebman
2020
Introduction
The Franchise Tax Board (FTB), on April 8, 2020, issued a press release relating to the taxability of various benefits provided by the federal government including the CARES Act (Coronavirus A Relief, and, Economic Security Act.) The FTB also updated its online frequently asked questions page.
In this article I will give you a summary of how the FTB is going to tax, or not tax, various federal benefits provided due to COVID-19.
Economic Impact Payments
Benefits received under the CARES Act will not be subjected to FTB personal or corporate income taxes.
Increased Unemployment Compensation Benefits
Increases in UI benefits brought about by the COVID-19 pandemic will not be subjected to FTB personal or corporate income taxes.
Penalty Waivers for Distribution from Qualified Retirement Accounts
The IRS Commissioner recently issued a press release stating that due to COVID-19 there will be no penalties for early withdrawals from a qualified retirement plan.
Important Frequently Asked Questions
Can I visit one of the FTB Field Office Public Counters to make a payment or tax help?
No, most FTB Field Offices are closed until further notice.
How do I postpone my scheduled estimated tax payments to the new tax deadline?
If you arranged automatic payments from your bank account, you must be proactive and cancel these payments and reschedule them on July 15, 2020. This is the new due date.
What business entities qualify for the July 15, 2020, extended deadline to file and pay taxes?
C-Corporations, S-Corporations, LLCs and Partnerships.
Are the payments that are provided to individuals pursuant to the CARES Act subject to California income tax?
You will not be taxed on the $1200 single benefit or the $2400 joint benefit, nor will you be taxed on the additional $500 per qualifying child.
Has the FTB delayed any collection activities?
Yes, there has been a temporary suspension on many collection activities through July 15, 2020. There will be no new bank levies or liens filed. If collection has been suspended due to economic hardship, the suspension will continue.
Will the FTB suspend monthly payments made pursuant to an installment payment arrangement?
If you want to stop making monthly I.A. payments you have to take affirmative action and request to skip payments online or by phone at (800) 689-4776.
Will I be able to get a tax lien release?
The FTB has provided a phone number that you can call to request a lien release: (916) 845-4350. While the FTB says it will evaluate each case on an individual basis, in my opinion, the chances of success are slim.
Conclusion
As the FTB releases more information, I will keep you posted. The number of questions that I have selected above are only a very small portion. I recommend you go online to see the FTB position on statutes of limitations, proposed assessments, and the suspension of audit activity.
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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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