ftb/csea liaison meeting september 17, 2004. e-programs update franchise tax board
TRANSCRIPT
FTB/CSEA Liaison Meeting
September 17, 2004
e-Programse-ProgramsUpdateUpdate
Franchise Tax BoardFranchise Tax Board
• Mandatory e-fileMandatory e-file- UpdateUpdate
• Pro Forma Filing PilotPro Forma Filing Pilot- All the detailsAll the details
Overview
e-file Program - Growth
05
10e-File Returns (in Millions)
1997
1999
2001
2003
e-File/ Practitioners
e-File/ Taxpayers
TeleFile
Mandatory e-file Update
• Effective January 1, 2004
• Mandates practitioners who prepared more than 100 returns, at least one of which was prepared using computer software, to e-file
New Tax Practitioner Increase
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
00 - 01 01 - 02 02 - 03 03 - 04
23,88216,11212,689 38,682 Number of Accepted Practitioners
Rank: based on
percentage of electronic
returns
State
Years
Mandate in Effect
Percent of Returns that
are Electronic
Number of Returns per Tax Pro to be Under Mandate
1 MN 4 59% 100
2 CA 1 51% 100
3 MI 1 51% 200
4 WI 2 49% 200
5 OK 1 42% 50
Mandatory e-file Nationwide
Recent FTB survey shows:
• Majority of tax practitioners are satisfied or very satisfied with e-file
• 67% agree that e-file is easy
• Majority indicate that clients benefit from
e-file
• Many indicate handling rejects can be difficult
• Some indicate that e-file should not be mandated
Approach to Enforcement:
• Focus on willfully noncomplying practitioners
• Sending reminder letters to noncomplying practitioners in late October
• Visiting noncomplying practitioners• Publishing articles regarding the mandate
•
Dedicated Web page for mandatory e-file
–
FAQs (updated regularly)
–
Legislative actions
–
Copies of notices in Spanish
–
Letter from FTB to give to your clients
Mandatory e-file Resources
Pro Forma Filing Pilot
What Is Pro Forma Filing?
• Pro Forma return filing is a tax concept designed to reduce taxpayer burden for taxpayers filing the simplest California returns.
• Current concept applies to:– Wage earners only– Single– No dependents
• Reduce taxpayer burden
• Provide taxpayers online, secure and private access to their tax data
Benefits of Pro Forma
• Reach taxpayers who qualify for refunds who are not otherwise claiming them
• Reach certain non-filers and get them into the routine filing process
Benefits of Pro Forma
• Successful variations of pro forma filing in several countries including:–Germany–Japan–Denmark–Sweden
Other Pro Forma Experiences
• The IRS has studied pro forma filing and found:
–Surveys indicate taxpayer support, however
– IRS information systems cannot provide the data needed on a timely basis
Other Pro Forma Experiences
• FTB routinely receives and processes EDD wage information, which makes us perfectly suited for a pro forma filing program
EDD Information
How Will Pro Forma Work?
• FTB will select a group of taxpayers to participate in the program, who must be:
–Single–Have no dependents, and–Have one employer
FTB Will:
• Provide selected taxpayers with an invitation to participate
• Two versions of the invitation:
1. Letter and completed return
2. Letter only
The Taxpayer:
• May choose to:
- accept the return, as presented
- make minor modifications
- come to FTB’s Website to file or modify the return and file it
- ignore FTB’s invitation
The Taxpayer:
• Will enter SSN* and signature (on the the paper return or online)
–Indicating that all their tax data is true and correct under penalty of perjury
*In compliance with SB 25, SSN will not be preprinted on the letter or return.
SB 25 mandates that state agencies will not publicly post or display an individual’s SSN or compromise the security of an individual’s SSN.
• Ability to deploy and test pro forma filing concept by February 2005
• Test taxpayer response to our new program
• Make recommendation to our Board after studying pilot results
Why a Pro Forma Pilot?
• Provide more taxpayers and their authorized representatives with online, secure access to wage and withholding data
Future Benefits
• FTB would like about 10,000 participants, resulting in a statistically valid study
• To achieve this, FTB may invite up to 50,000 taxpayers to participate who qualify to file a simple return
Pro Forma Volumes
• The cost to deploy the Pilot is about $200,000
• No requests for new funding
• Leverage existing FTB systems to accommodate pro forma filing
Cost
