Tax Guru – Ker$tetter Letter

During the months of February and March 2005, the California Franchise Tax Board (income taxes) and Board of Equalization (sales taxes) will have an amnesty program for people who haven’t filed their 2002 or earlier tax returns or did so but failed to include some income or claimed too much in deductions. People who ‘fess up during those two months and pay their back taxes and interest will be free from any penalties and criminal prosecution.

As the FTB says in their Tax Amnesty Quick Reference, this won’t apply to anyone who they have already started criminal proceedings against. The application to participate in the amnesty isn’t scheduled to be available until January 15, 2005.

As with any State amnesty program, this creates a new variety of tax planning decisions. As I’ve mentioned several times before, anyone who is ready to come clean with the State tax authorities had better be ready to do the same with IRS because all info provided to the State will be shared with IRS, which has no similar amnesty programs in the works.