The California Competes Tax Credit is an income or franchise tax credit available to businesses that come to California or stay and grow in California. Tax credit agreements will be negotiated by Governor’s Office of Business and Economic Development (GO-Biz) and approved by a newly created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz (Chair), and one appointee each by the Speaker of the Assembly and Senate Committee on Rules.

For fiscal year 2013/2014, applications for the California Competes Tax Credit will be accepted at from March 19, 2014, until April 14, 2014. Go to for more information on the California Competes Tax Credit. Read More

More than one million people who did not file a 2012 state income tax return are receiving letters seeking those returns or to verify that they do not have a tax filing requirement, according to the Franchise Tax Board (FTB).

Since the 1950s, FTB has contacted people who have California income, but did not file a tax return. Last year, FTB collected more than $727 million through these efforts.

Each year FTB receives more than 400 million income records from third parties such as banks, employers, state departments, the IRS, and other sources. FTB matches these income records against its records of tax returns filed. While this program mainly identifies wage earners and self-employed individuals who have not filed, it also detects Read More

TaxConnections Worldwide Tax Blogs gives our readers an opportunity to get to know these tax experts better through their writing. We highly recommend you read TaxConnections Worldwide Tax Blogs to stay informed of emerging tax trends. We highly recommend you interact with our bloggers through your comments on their blog posts. Commenting on a tax bloggers post is a great way to let them know you appreciate the knowledge they have shared. We also recommend you connect with our bloggers on their TaxConnections Microsite. Simply click on their name on their blog post and you will be guided directly to their Microsite where you can connect with them easily on the “ Connect With Me” button.

Here are TaxConnections Top Twenty Worldwide Tax Bloggers:

Peter Scalise
Daniel Erasmus
Harold Goedde
Kathryn Morgan
Hale Stewart
William Richards
Steven Potts
Virginia La Torre Jeker
Michael DeBlis
Annette Nellen
John Dundon
Manasa Nadig
Jerry Donnini
Ronald Cappuccio
Betty Williams
Claire McNamara
Robert McKenzie
James McBrearty

TaxConnections Blogger posts about bartered servicesThere are instances where a client cannot pay their bill. When this happens, some business owners will look to the goods or services provided by the client in her business, to see if a trade can be made to satisfy the debt. While most business owners would rather be paid for services rendered, a new copy machine, air conditioner or janitorial services are better than a past due account. However, what many taxpayers forget is that the value for the services exchanged is treated just like a cash payment, for income tax purposes. Consider a scenario where an attorney provides services to a client who owns a luggage store; the amount billed for legal services is $5,000. If the client offers $5,000 in luggage instead, then both the attorney and the luggage store owner must reflect $5,000 in income in the transaction. This is true whenever bartered services are made between businesses (except corporations) of $600 per more, per year. The payments are reported on Form 1099-MISC. For more information, view the IRS’ Bartering Tax Center

In accordance with Circular 230 Disclosure

iStock_000019078679XSmallIt may not initially make sense for an 18 year old to need an estate plan since most do not have assets about which to be concerned. However, in most states, an 18 year old is an adult in the eyes of the law, with legal rights relating to privacy and decision making. As soon as a child turns 18, parents will lose authority to view medical and financial records related to the child, as well as be prevented from making decisions on their child’s behalf.

In order to ease the transition into adulthood, parents and 18 year old children should consider two important estate planning documents. The first is an Advance Health Care Directive (sometimes called a Living Will or Health Care Power of Attorney). This document will allow the adult child to name an agent to make health care decisions for the child in the event the child is unconscious or otherwise unable to communicate. In conjunction with the health care document, the adult child should also execute a HIPAA waiver which will allow the agent to view medical records and discuss current health issues with medical professionals, assisting the young adult with the understanding and management of current health conditions.

The second important document is a Power of Attorney for Finances, which allows the adult child to name the parent to discuss the adult child’s finances Read More

TaxConnections Picture - Living Trust Estate PlanningPeople often assume that an estate plan is only necessary for those with a certain level of net worth. The reality, however, is always everyone needs an estate plan, regardless of the value of the assets. There are so many reasons to establish an estate plan, none of which have any relevance to the value of your estate. Below are four good reasons:

1. To name guardians for minor children. Admittedly, there is no one better to raise your children than you. But if the unthinkable happens and you are not around to do the job, the next best thing is for you to choose who will take on the responsibility of raising your children. And if you know that there is someone you do not want raising your children, then it becomes even more important for you to express your choice of guardian. If you haven’t committed your choice of guardian in a legally valid document, then a judge in the county probate court will decide who is best to raise your children without your input.

2. To avoid the cost, time, and public nature of a probate action in the county court. If you do not decide now how you would like to transfer your assets, then the probate court will be involved in distributing your assets. Almost everything that takes place in probate court is a matter of public record and anyone can see who will receive what. Additionally, the fees due to the lawyer and the representative of your estate are established by statute and are calculated on a percentage of the GROSS value of your estate (regardless of the amount of any debt).

3. To direct the disposition of your assets to your beneficiaries upon your death. With careful estate planning, you can direct your beneficiaries’ use of your assets long after your death. You can include conditions relating to the completion of education, require a certain level responsibility, or simply hold assets until a time you decide is best for distribution. If you Read More

TaxConnections Blogger Betty Williams updates readers on Signed BillGovernor Brown signed AB 1173 by Assembly Member Raul Bocanegra (D-Los Angeles), which reduces the excise tax penalty from 20% to 5% for taxable years beginning January 1, 2013, amounts deferred under a non-qualified deferred compensation plan that does not meet the requirements of Internal Revenue Code. This bill also clarifies the scope of the California Motion Picture Tax Credit utilization and simplifies the process by which certain nonprofit organizations may obtain tax-exempt status in California.

TaxConnections Blogger Betty Williams posts about continued services at the IRSDespite most lights being out at the IRS, taxpayers can still receive some services at the IRS. Crucial to many tax professionals are the IRS Transcripts of Account. Since it is an automated process, taxpayers can still use automated tools, such as, to request that a transcript of their personal tax records be sent to their address of record; the taxpayer will typically receive transcripts in the mail within five to 10 calendar days. Transcript requests by third parties cannot be processed at this time.

While audits, meetings with Appeals Officers and Taxpayer Advocate services are closed, taxpayers are still required to file tax returns and make tax deposits, preferably electronically, during the shutdown. IRS collection notices will continue to be automatically generated and levies remain in force. Refunds will not be issued.

For a summary of how taxpayers may seek assistance, Click HERE.

In accordance with Circular 230 Disclosure

TaxConnections Blogger Betty Williams posts about non-California businessesThe complexity of California income tax laws for non-California businesses is not new. Whenever nonresident businesses have income sourced to California, California will assess income tax in many cases. Public Law (PL) 86-272 still exempts out-of-state businesses from California income tax if their California activities qualify. This generally means the business’ only connection to California is that of soliciting orders for sales of tangible personal properties, in which the orders are sent outside of California for approval and filled from inventory maintained outside of California (and not shipped into California by the out-of-state business’ own vehicles into California). Beginning with taxable years on or after January 1, 2013, all apportioning trades or businesses must assign sales of “other than tangible personal property” under the new market-based rules. Some industries will follow the special industry apportionment and allocation regulations.

TaxConnections Blogger Betty Williams Posts about Tax AmnestyThe City of Los Angeles announced their tax amnesty program for qualified taxpayers owing Business, Utility Users Taxes (Telephone, Electricity, Gas), Commercial Tenant’s Occupancy, Transient Occupancy, and/or Parking Occupancy Taxes. The amnesty program is being administered by the City of Los Angeles, the Office of Finance from September 1, 2013 to December 2, 2013 and allows taxpayers to resolve outstanding balances without penalties.

To qualify, all the following requirements must be met between September 1, 2013 and December 2, 2013:

• All principal, interest, and fees must be paid

• A taxpayer must sign and return the Tax Amnesty Billing notice

• If unregistered, a business must complete, sign, and return a Tax Amnesty application

Participating taxpayers that are currently registered with the Office of Finance and have received a bill for outstanding taxes may file for amnesty and pay their bill online by accessing and utilizing the Amnesty Online Bill Pay.

Following the amnesty period, the Office of Finance will vigorously pursue a range of enforcement actions, as applicable.

In accordance with Circular 230 Disclosure

TaxConnections Blogger Betty Williams posts estate planningThere is one simple estate planning tool you can accomplish immediately and without having to call a lawyer-updating your beneficiary designations.

Many assets, including bank, retirement, brokerage, company benefit plan, life insurance, and 529 college accounts are passed at death via a beneficiary designation. It is easy to name the beneficiary by completing the proper form provided by the financial institution. It’s also easy to forget to turn the form in or to make sure the beneficiary you designated when the asset was acquired is still your intended beneficiary. In most cases, the beneficiary form will overrule your will, trust, and even state law so it is important to make a periodic review of your designated beneficiaries.

The Supreme Court has faced this issue on at least two occasions. In 2001, the court ruled that a decedent’s ex-wife was the legal beneficiary of his pension benefits and life insurance proceeds because the decedent failed to update the beneficiary designations after their divorce. The Court ruled that the beneficiary designations overruled the state law that would have automatically disinherited the ex-wife and so the decedent’s children from a prior marriage received nothing. Egelhoff v. Egelhoff, 532 US 141 (2001). In another matter, the Court determined that the beneficiary Read More

TaxConnections Blogger Betty Williams Post California's Small Businesses owing bigLast December, the Second District Court of Appeal for California ruled in Cutler v. Franchise Tax Board that a California business incentive program violated the United States Constitution’s Commerce Clause. The program was enacted twenty years ago to allow investors selling stock in a qualified small business to be taxed at half of the state’s capital gains rate or to roll the proceeds into a new qualified small business within sixty days of the sale. In order to qualify for the tax break, 80% of the business’s payroll at the time the stock was purchased must have been within California and 80% of assets and payroll must have been within California during the taxpayer’s holding period. This tax incentive was designed to encourage the establishment of small businesses in California. The Court found California’s tax incentive unconstitutional saying it discriminated against out of state businesses.

In response to the Court’s ruling, the Franchise Tax Board issued FTB Notice 2012-3, which states that similarly situated taxpayers should all be treated alike and therefore, the deferral provision is invalid for taxable years beginning on or after January 1, 2008 (within the four-year statute of limitations). Procedurally, the Notice states that accepted returns and returns that are currently in audit, protest, claim for refunds, or pending appeals will have the above-mentioned remedy applied by FTB staff. Furthermore, taxpayers may proactively self-assess any additional tax and remit the amounts to the FTB.

Not surprisingly, small business investors descended upon the California legislature to avoid having to pay nearly $120 million of taxes they never expected to owe. In May, the California Senate passed 34-3 a bill reducing the Read More