One-Time Penalty Abatement Relief

As our attorneys at Dallo Law Group have previously explained back in September 2022, we would like to share some additional information regarding the one-time penalty abatement relief.

It is an exciting time as the signing of AB 194, Section 19132.5 has come to full fruition. With this addition to the Revenue and Taxation Code (RTC) the California Franchise Tax Board FTB is now given the authority to administer to state taxpayers a one time abatement of timeliness penalties which may include a failure-to-file penalty imposed pursuant to RTC 19131 or a failure-to-pay penalty imposed pursuant to RTC 19132.

This relief should not be overlooked and if you qualify, it can become an important opportunity not to be missed. Outstanding tax liabilities to the FTB can grow fast, as the application of interest is fully mandated and the agency has no reason to hold back. This interest begins accruing from the tax due date and is compounded daily up until the bill is paid fully. If that is not enough, a delinquent penalty rate is also added. The rate is 5 percent of the total unpaid tax, and a further 0.5 percent for each month or part of a month over the due date.

Factors to Consider for the One-Time Penalty Abatement

There are certain grounds needed for the one-time penalty abatement. Bear in mind, this relief is a once in a lifetime abatement and will only be available to individuals subject to personal income tax law (no corporations) for applicable taxable years beginning on or after January 1, 2022.

To take advantage of this one-time abatement, taxpayers need to ensure they have been compliant with all tax return filing requirements and have not previously been granted abatement under RTC 19132.5. In addition, all outstanding liabilities must either be paid in full or have made arrangements to pay them pursuant to an installment agreement and be current on all installment payments. Naturally, the penalties the taxpayer is seeking to currently abate are not included.

Now Is the Time to Take Advantage

It can certainly be debilitating trying to deal with an outstanding tax liability that seems to be growing and growing. Do not be discouraged and do not wait. Our team at Dallo Law Group can set you on the right course. We are well trained in the process of the FTB’s one time penalty abatement program. We can explain the qualifications to you and assist you in successfully taking advantage of this opportunity.

The FTB will begin to accept one time penalty abatement requests on April 17, 2023, either verbally or in writing. Furthermore, for written requests, a new form will be available sometime in March 2023, which is right around the corner. That means the time to reach out to us is now so our tax attorneys at Dallo Law Group can thoroughly examine your case and establish the right course of action for you. If you qualify for this abatement, you should move fast with the application. Dallo Law Group is ready and here to help; give us a call at 619-795-8000.

Written by Jamie LeBeau, Dallo Law Group