Income taxation: timeliness penalty: abatement.
Under SB 375, the Franchise Tax Board is mandated to provide relief from penalties under certain conditions. Taxpayers who have not previously been required to file a return or who have not faced penalties in the past four years, and who file all required returns and pay all due taxes, are eligible to have their timeliness penalties abated. This change would ease the financial burden for compliant taxpayers and is likely to encourage timely filings by reducing the fear of penalties for genuine mistakes or changes in financial circumstances.
Senate Bill 375, introduced by Senator Bradford, focuses on providing income tax penalty relief for taxpayers who have failed to file their income tax returns or make payments on time. The bill stipulates that for taxable years beginning on or after January 1, 2018, taxpayers who meet specific criteria may request the Franchise Tax Board to abate penalties for failure to file or pay on time. This provision is intended particularly for first-time offenders or those with a clean record over the previous four years, granting them an opportunity to resolve their tax obligations without incurring penalties.
The sentiment around SB 375 appears to be largely supportive among taxpayers and advocacy groups that emphasize fair treatment of individuals struggling with tax compliance due to life circumstances. Supporters believe that the bill promotes accountability without being excessively punitive for honest mistakes, fostering a more cooperative relationship between the state and its taxpayers. On the other hand, anyone opposing such a measure might raise concerns about the potential for misuse or abuse by taxpayers who should face accountability.
Notably, while the bill aims to simplify the process of seeking penalty relief, some lawmakers may express concerns about the implications for state revenue. The reduction in penalties could potentially result in decreased revenue for the state if not carefully monitored. Furthermore, establishing clear guidelines to prevent potential misuse of the penalty abatement provisions could be a point of contention in discussions as the bill moves through legislative processes.