Tax News

CCH (cch.taxgroup.com) reports:

  The California Franchise Tax Board (FT has released answers to frequently asked questions about the delayed payment of corporation franchise and income tax and personal income tax refunds, announced by the State Controller on January 16, 2009. (TAXDAY, 2009/01/19, S.8)

  The FTB indicates that taxpayers should not wait to file their returns if they have all of the documents and information needed to prepare their returns. The refund delay does not affect return due dates or the FTB's ability to process returns.

  It is anticipated that as soon as the state's cash and budget problems are solved, the refund delay will be lifted. However, refunds will not necessarily be issued as soon as a budget is enacted, as the state will need sufficient cash to pay other outstanding debts in addition to the tax refunds. If the state's cash flow problems do not improve, the State Controller may need to issue IOUs.

  Taxpayers' direct deposit requests will be honored when the state resumes payment of refunds. Whether taxpayers will be entitled to receive interest because of the delay will depend upon the length of the delay. For individual taxpayers, interest on current year refunds is payable only if the refund is not issued within 45 days after April 15, or the date that the return is filed, whichever is later.

  Taxpayers may request on their 2008 returns that their refunds be applied toward their 2009 taxes. If a taxpayer owes money to the state for another debt collected by the FTB, the taxpayer's refund will be applied toward that debt, and the taxpayer will be refunded the difference, if any, once the delay on issuing refunds is lifted.

  Subscribers can view the FAQs.

Tax Refund Delay FAQs , California Franchise Tax Board, January 28, 2009