California Changes Amended Return Process

The California Franchise Tax Board (FTB) provides guidance on a variety of corporation franchise and income and personal income tax issues, including:

  • California Competes Credit;
  • Enhancements to the “stand-alone” electronic payment process;
  • New amended return process for tax years 2017 and beyond;
  • Delayed 1099G.

California Competes Credit

The FTB states that the California Tax Credit (CCTC) is an income or franchise tax credit available to businesses who want to come to, stay in, or grow in California. For fiscal year 2017-2018, $230.4 million of the California Competes Tax Credits is available for allocation during three application periods. Also, for the second application period, $100 million is available for allocation.

Applications for the credit will be accepted at calcompetes.ca.gov from January 2, 2018, until January 22, 2018.

In addition, the Governor’s Office of Business and Economic Development (GO-Biz) negotiates the CCTC agreements, and the California Competes Tax Credit Committee approves them.

Enhancements to the “stand-alone” electronic payment process

Beginning January 2018, business entities and tax practitioners can submit an electronic fund withdrawal (EFW) request for additional payment types using tax preparation software. These payment requests will be accepted as “stand-alone,” and can be submitted separately from the e-filed return.

New Amended Return Process for Tax Years 2017 and Beyond

The FTB has replaced Form 540X with the new Schedule X, California Explanation of Amended Return Changes. Thus, for tax years 2017 or later, individual filers will no longer use Form 540X, Amended Individual Income Tax Return, to amend:

  • Form 540;
  • Form 540NR Long;
  • Form 540NR Short; or
  • Form540 2EZ.

As a result, taxpayers and tax practitioners can now e-file individual amended returns if the tax software used to prepare the return supports this.

The new form reconciles the differences between the original and amended return to determine any additional amount owed or refund due. Use of Schedule X begins in January 2018.

Delayed 1099G

Finally, when a refund is issued in the 2018 tax year, the 1099G will be issued for the tax year the taxpayer received the refund. Taxpayers must report the refund in the year the refund was received, not the year the tax return was filed.

Tax News, California Franchise Tax Board, January 2, 2018, ¶406-762

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