Individual Tax Planning

Everything To Know About The California Penalty Abatement Program

Everything To Know About The California Penalty Abatement Program

After years of failed attempts, California has finally enacted a one-time penalty abatement program for individual taxpayers. The program, which was created by Assembly Bill 194, allows individual taxpayers to have their late filing or late payment penalties waived.

An overview of California’s penalty abatement program 

In California’s program, individual taxpayers can request a one-time penalty abatement for taxable years beginning on or after January 1, 2022. California taxpayers will not be able to take advantage of this new penalty relief until after the 2022 tax year payment and filing deadlines have passed.

For most taxpayers, this deadline will be October 16, 2023. Taxpayers who are located in any California county except Lassen and Shasta counties will not be able to file for late payment or late filing penalty relief until after October 16, 2023. This is because the recent disaster relief has postponed the payment and filing deadlines for these counties. Penalties imposed for pre-2022 tax shares do not qualify for California's new first-time penalty abatement program.

There are two key differences between California's penalty abatement program and the IRS's penalty abatement program:

  • California's program is only available to individuals. Business entities, including fiduciaries, trusts, and estates, are not eligible.
  • This program is a one-time program. The IRS's program is available every four years.

How taxpayers can qualify for California one-time abatement

The program is only available to individual taxpayers who filed late or paid their taxes late for the first time. The Franchise Tax Board started accepting abatement penalty requests on April 17, 2023. Penalty abatements can be requested verbally by calling the Franchise Tax Board, or in writing by filing FTB 2918. To qualify for California’s abatement program, taxpayers must meet certain requirements, including:

  • Compliance with tax filing requirements
  • No previous penalty abatement request granted under R&TC 19132.5
  • Payment of, or an installation agreement arranged and current for, all outstanding liabilities besides the penalties included in the abatement request

The Franchise Tax Board will review each request and make a decision on whether to grant the abatement. You can learn more about California's one-time penalty abatement program on the Franchise Tax Board website here.

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Cassidy Jakovickas

Cassidy Jakovickas

CEO

Cassidy is an active member of Intuit’s ProConnect community and CalCPA, a former member of Intuit’s Accountant Council, and a 2021 honoree of The CPA Practice Advisor's 40 under 40 award. Since 2011, Cassidy has led his accounting firm, MBS Accountancy, as it provides financial clarity for clients through insightful accounting and prudent tax planning.

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