As the end of the 2016 tax season draws near, Board of Equalization (BOE) Member Jerome E. Horton urges taxpayers who have not filed their 2015 tax returns to do so by April 18, 2016, or risk the assessment of costly interest, fees, and penalties. As an example of one possible penalty, five hundred individuals and businesses that collectively owe the state more than $119 million in income tax can now find themselves listed on the Franchise Tax Board’s (FTB) recently published Top 500 Delinquent Taxpayers list.
“Honest people make honest mistakes, but tax cheats rob Californians of employment, and educational and public safety funding, when they don’t pay their fair share,” said Horton. “I also contend that tax fraud can disproportionately foster crime, the distribution of unsafe medicines and other products in communities of color, and the exploitation of workers.”
The FTB publishes its Top 500 list twice a year in April and in October. Delinquent taxpayers on the list face several consequences:
If they hold a professional or occupational license, it may be suspended until the tax bill is resolved.
The state may suspend the delinquent taxpayer’s driver’s license until the tax bill is resolved.
State agencies are prohibited from entering into contracts for the acquisition of goods or services with listed taxpayers.
FTB publishes the names and titles of principal corporate officers of corporations on the list.
In addition to publishing the Top 500 delinquents, FTB is contacting nearly 1 million individuals who earned income in California in 2014 but have not filed a tax return claiming that income. Those contacted by FTB have 30 days to file a state tax return or show why one is not required. For those who do not respond, FTB estimates a tax bill based on income records. The assessment includes interest, fees, and penalties that can total as much as 50 percent of the tax due.
There is no penalty for filing a late return that qualifies for a refund. State tax law allows taxpayers four years to claim a refund. For 2011 returns, that window generally closes on April 18, 2016. “If you didn’t file because you earned too little to owe any tax, you may be owed a refund if you had too much withheld or if you overpaid your estimated taxes – but you must file a return to claim it,” Horton said.