When tax filing is missed, there could be serious penalties, but California has a strong safety net for taxpayers. The California Franchise Tax Board (FTB) has enacted Revenue and Taxation Code (R&TC) Section 19133.5, the One-Time Penalty Abatement.
This policy provides an opportunity for eligible individuals to waive administrative timeliness penalties without having to provide a complicated excuse, such as a medical emergency or a natural disaster.
When late filing or late payment penalties are looming, you need to know exactly how to qualify and save hundreds (or thousands) of dollars.
What is the California FTB One-Time Penalty Abatement?
The One-Time Penalty Abatement is an administrative relief program for individual taxpayers who have an otherwise clean compliance history and did not file or pay certain deadlines. This program does not require a lot of documentation of unforeseen hardships, as does the standard “Reasonable Cause” relief; it evaluates compliance, not your excuse. Penalty is just omitted if you meet the criteria. The experts (tax lawyers from San Diego or other places) can look at the file for the one-time abatement.
Who is Eligible for This Penalty Relief?
Only eligible personal income tax filers are eligible. In order to be eligible for this program, you must comply with the following four requirements:
- Individual Status: This relief is only for individuals who are subject to the California Personal Income Tax Law. This particular program is not for business entities (LLCs, corporations, or partnerships) or fiduciaries.
- Taxable Year Limitation: The penalty you wish to have abated needs to be for a taxable year starting on or after January 1, 2022.
- First-Time Advantage: Is not eligible if the FTB previously granted a one-time penalty abatement. It is an “admin once in a lifetime benefit” and does not reset after a few years, as is the case with other benefits per taxpayer.
- Filing Compliance: All California income tax returns to the present date must be filed. No returns should be missing or unfiled.
What Financial Conditions Must Be Met?
The FTB will not approve your waiver if you are not in good financial standing with the FTB. This translates to owing no taxes, fees, interest, or other penalties and must be in full payment (or current, approved installment agreement). The only remaining balance to be left in dispute is the particular timeliness penalty you seek the FTB to abate.
Which Specific Penalties Can Be Removed?
The one-time abatement program only applies to timeliness penalties. Specifically, you may request to have it removed if it is any of the following:
- Failure-to-File Penalties: These are penalties that are charged for failing to file your return by the extension deadline.
- Failure-to-Pay Penalties: Imposed if you don’t pay the underlying tax obligation on time, which is the original due date.
Note that this relief will not stop interest or accuracy penalties. Tax balances that are not paid will carry over interest until they are paid. The role of an IRS tax attorney or other experts who can work towards removing the penalties.
How Do You Apply for the Abatement?
This relief is only available on the application of individual taxpayers. To submit the request the quickest way possible is to log into your online MyFTB account and submit the request through secure chat or message. Remain on the form or fill out FTB Form 2918 (One-Time Penalty Abatement – Individual) and mail it in.
Conclusion
The California FTB One-Time Penalty Abatement is a great single-time option to remove fines for being late on filing and/or payment. As long as you’re an individual filer, have no history of wrongful claims, have filed past returns, and have paid or arranged your remaining basic tax debt, it’s easy to qualify. It’s also a lifetime benefit, so ensure that you use it wisely in the year when it will give you the maximum financial aid.
