Code Section Group

Revenue and Taxation Code - RTC

DIVISION 2. OTHER TAXES [6001 - 61045]

  ( Heading of Division 2 amended by Stats. 1968, Ch. 279. )

PART 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS [18401 - 19802]

  ( Part 10.2 added by Stats. 1993, Ch. 31, Sec. 26. )

CHAPTER 2. Returns [18501 - 18677]

  ( Chapter 2 added by Stats. 1993, Ch. 31, Sec. 26. )

ARTICLE 3. General Provisions Applicable to All Persons [18621 - 18628]
  ( Article 3 added by Stats. 1993, Ch. 31, Sec. 26. )

18621.
  

Except as otherwise provided by the Franchise Tax Board and in Section 18621.5, any return, declaration, statement, or other document required to be made under any provision of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), this part, or any applicable regulation shall contain, or be verified by, a written declaration that it is made under the penalties of perjury. Those returns, and all other returns, declarations, statements, or other documents or copies thereof required, shall be in any form as the Franchise Tax Board may from time to time prescribe, including, but not limited to, on paper, on magnetic media pursuant to Section 19524, or by electronic technology or electronic imaging technology pursuant to Section 18621.5, and shall be filed with the Franchise Tax Board. The Franchise Tax Board shall prepare blank forms for the returns, declarations, statements, or other documents and shall distribute them throughout the state and furnish them upon application. Failure to receive or secure the form does not relieve any taxpayer from making any return, declaration, statement, or other document required.

(Amended by Stats. 1994, Ch. 1243, Sec. 41. Effective September 30, 1994.)

18621.5.
  

(a) Any return, declaration, statement, or other document required to be made under this part that is filed using electronic technology shall be in a form as the Franchise Tax Board may prescribe and is not complete, and therefore not filed, unless an electronic filing declaration is signed by the taxpayer, in accordance with Section 18621 in the case of individuals, subdivision (a) of Section 18505 in the case of estates or trusts, corporations, or limited liability companies classified as corporations for California income tax purposes, subdivision (a) of Section 18633 in the case of a partnership, or Section 18633.5 in the case of limited liability companies classified as partnerships for California income tax purposes. The Franchise Tax Board may prescribe forms and instructions for requiring the electronic filing declaration to be retained by the preparer or taxpayer and may require the declaration to be furnished to the Franchise Tax Board upon request.

(b) Notwithstanding any other provision of law, any return, declaration, statement, or other document otherwise required to be signed that is filed in a traditional medium and captured using electronic imaging technology shall be deemed to be a valid original document upon reproduction to paper form by the Franchise Tax Board.

(c) Notwithstanding any other law, any return, declaration, statement, or other document otherwise required to be signed that is filed by the taxpayer using electronic technology in a form as required by the Franchise Tax Board shall be deemed to be a signed, valid original document, including upon reproduction to paper form by the Franchise Tax Board.

(d) “Electronic imaging technology” means a system of microphotography, optical disk, or reproduction by other technique that does not permit additions, deletions, or changes to the original document. The system may include, but is not limited to, any magnetic media or other machine readable form.

(e) “Traditional medium” means any return, declaration, statement, or other document required to be made pursuant to this article other than those made using electronic imaging technology.

(f) “Electronic technology” includes, but is not limited to, computer modem, magnetic media, optical disk, facsimile machine, or telephone.

(Amended by Stats. 1997, Ch. 605, Sec. 10. Effective January 1, 1998.)

18621.7.
  

The Franchise Tax Board shall not approve for electronic filing any proprietary filing software or electronic tax preparation forms that require a taxpayer to consent to the disclosure of any information for which a consent to disclose is required by Section 17530.5 of the Business and Professions Code as a condition of access to that software or to those electronic tax preparation forms.

(Added by Stats. 2000, Ch. 1084, Sec. 6. Effective January 1, 2001.)

18621.9.
  

(a) If an income tax return preparer prepared more than 100 timely original individual income tax returns that were filed during any calendar year that began on and after January 1, 2003, and if in the current calendar year that income tax preparer prepares one or more acceptable individual income tax returns using tax preparation software, then, for that calendar year and for each subsequent calendar year thereafter, all acceptable individual income tax returns prepared by that income tax preparer shall be filed using electronic technology, as defined in Section 18621.5.

(b) For purposes of this section:

(1) “Income tax preparer” means a person that meets both of the following:

(A) Any person that prepares, in exchange for compensation, or who employs another person to prepare, in exchange for compensation, any return for the tax imposed by Part 10 (commencing with Section 17001) (hereafter Part 10). A person that only performs those acts described in clauses (i) through (iv) of Section 7701(a)(36)(B) of the Internal Revenue Code, with respect to the preparation of a return for the tax imposed by Part 10, is not an income tax preparer for purposes of this section or for purposes of Section 19170.

(B) Any person that prepares returns for the tax imposed by Part 10 that is also required, by this article, to include an identification number on any return prepared by that tax preparer for the tax imposed by Part 10.

(2) “Original individual income tax return” means any return that is required, by Section 18501, to be made with respect to the tax imposed by Part 10. For purposes of subdivision (a), a “timely” original individual tax return means any original individual tax return that is filed, without regard to extensions, during the calendar year for which that tax return is required to be filed.

(3) “Acceptable individual income tax return” means any original individual tax return that is authorized by the Franchise Tax Board to be filed using electronic technology, as defined in Section 18621.5. For purposes of this section, Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any rule, notice, or guideline issued by the Franchise Tax Board that identifies a tax return as an acceptable individual income tax return.

(4) “Tax preparation software” means any computer software program intended for accounting, tax return preparation, or tax compliance.

(c) Subdivision (a) shall cease to apply to an income tax preparer if, during the previous calendar year, that income tax preparer prepared no more than 25 original individual income tax returns.

(d) (1) This section applies to acceptable individual income tax returns required to be filed on and after January 1, 2004.

(2) This section may not be interpreted to require electronic filing of acceptable individual income tax returns that are required to be filed before January 1, 2004.

(Amended by Stats. 2003, Ch. 455, Sec. 1. Effective January 1, 2004.)

18621.10.
  

(a) For taxable years beginning on or after January 1, 2014, if an acceptable return of a business entity was prepared using a tax preparation software, that return shall be filed using electronic technology in a form and manner prescribed by the Franchise Tax Board.

(b) For purposes of this section:

(1) “Acceptable return” means any original or amended return that is required to be filed pursuant to Article 2 (commencing with Section 18601), Section 18633, Section 18633.5, or Article 3 (commencing with Section 23771) of Chapter 4 of Part 11, other than the return for unrelated business taxable income required by Section 23771.

(2) “Business entity” means a corporation, including an “S” corporation, an organization exempt from tax pursuant to Chapter 4 (commencing with Section 23701) of Part 11, a partnership, or a limited liability company.

(3) “Tax preparation software” means any computer software program used to prepare an acceptable return or for use in tax compliance.

(4) “Electronic technology” includes, but is not limited to, the Internet, cloud computing, or an electronic information delivery system.

(5) “Technology constraints” means an inability of the tax preparation software used by a business entity to electronically file the acceptable return as required by this section as a result of the complex nature of the return or inadequacy of the software.

(c) Any business entity required to file a return electronically under this section may annually request a waiver of the requirements of this section from the Franchise Tax Board with respect to an acceptable return filed for a taxable year. The Franchise Tax Board may grant a waiver if it determines the business entity is unable to comply with the requirements of this section due to, but not limited to, technology constraints, where compliance would result in undue financial burden, or due to circumstances that constitute reasonable cause, and not willful neglect, as applicable with respect to the penalty imposed under Section 19171.

(d) This section applies to an acceptable return required to be filed on or after January 1, 2015.

(Added by Stats. 2014, Ch. 478, Sec. 5. (AB 2754) Effective January 1, 2015.)

18622.
  

(a) If any item required to be shown on a federal tax return, including any gross income, deduction, penalty, credit, or tax for any year of any taxpayer is changed or corrected by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or where a renegotiation of a contract or subcontract with the United States results in a change in gross income or deductions, that taxpayer shall report each change or correction, or the results of the renegotiation, within six months after the date of each final federal determination of the change or correction or renegotiation, or as required by the Franchise Tax Board, and shall concede the accuracy of the determination or state wherein it is erroneous. For any individual subject to tax under Part 10 (commencing with Section 17001), changes or corrections need not be reported unless they increase the amount of tax payable under Part 10 (commencing with Section 17001) for any year.

(b) Any taxpayer filing an amended return with the Commissioner of Internal Revenue shall also file within six months thereafter an amended return with the Franchise Tax Board which shall contain any information as it shall require. For any individual subject to tax under Part 10 (commencing with Section 17001), an amended return need not be filed unless the change therein would increase the amount of tax payable under Part 10 (commencing with Section 17001) for any year.

(c) Notification of a change or correction by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, or renegotiation of a contract or subcontract with the United States that results in a change in any item or the filing of an amended return must be sufficiently detailed to allow computation of the resulting California tax change and shall be reported in the form and manner as prescribed by the Franchise Tax Board.

(d) For purposes of this part, the date of each final federal determination shall be the date on which each adjustment or resolution resulting from an Internal Revenue Service examination is assessed pursuant to Section 6203 of the Internal Revenue Code.

(Amended by Stats. 1999, Ch. 987, Sec. 56. Effective October 10, 1999. Applicable, by Sec. 105 of Ch. 987, to federal determinations that become final on or after January 1, 2000.)

18622.5.
  

(a) Notwithstanding Section 18622, if any item required to be shown on a federal partnership return, including any gross income, deduction, penalty, credit, or tax for any year of any partnership, including any amount of any partner’s distributive share, is changed or corrected by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, and the partnership is issued an adjustment under Section 6225 of the Internal Revenue Code or makes a federal election for alternative payment with the Internal Revenue Service as part of a Partnership Level Audit, the partnership shall report each change or correction to the Franchise Tax Board for the reviewed year within six months after the date of each final federal determination. The report of adjustments or return reporting the adjustments shall be sufficiently detailed to allow computation of the California tax change resulting from the federal adjustment and shall be reported in the form and manner as prescribed by the Franchise Tax Board.

(b) For purposes of this section the following terms have the following meanings:

(1) “Administrative adjustment request” means an administrative adjustment request filed by a partnership under Section 6227 of the Internal Revenue Code, as in effect January 1, 2018.

(2) “California share of the adjustments” means the adjustments described in subdivision (a), subject to the provisions of Chapter 11 (commencing with Section 17951) of Part 10 and the provisions of Chapter 17 (commencing with Section 25101) of Part 11.

(3) “Date of each final federal determination” means the date on which each adjustment or resolution resulting from an Internal Revenue Service examination is assessed pursuant to Section 6203 of the Internal Revenue Code.

(4) “Direct partner” means a partner that holds an interest directly in a partnership or pass-through entity.”

(5) “Federal adjustment” means a change to an item or amount determined under the Internal Revenue Code that is used by a partner or partnership to compute state tax owed for the reviewed year whether that change results from action by the Internal Revenue Service, including a Partnership Level Audit, or the filing of a federal refund claim, or an Administrative Adjustment Request by the partnership. A Federal Adjustment is positive to the extent that it increases taxable income as determined under Part 10 (commencing with Section 17001) or net income as determined under Part 11 (commencing with Section 23001) and is negative to the extent that it decreases taxable income as determined under Part 10 (commencing with Section 17001) or net income as determined under Part 11 (commencing with Section 23001).

(6) “Federal election for alternative payment” refers to the election described in Section 6226 of the Internal Revenue Code, relating to alternative to payment of imputed underpayment by partnership, as in effect January 1, 2018.

(7) “Indirect partner” means a partner in a partnership or pass-through entity that itself holds an interest directly, or through another indirect partner, in a partnership or pass-through entity.

(8) “Partnership level audit” means an examination by the Internal Revenue Service at the partnership level pursuant to Subchapter C of Chapter 63 of Subtitle F of Title 26 of the Internal Revenue Code, as in effect January 1, 2018, which results in a federal adjustment.

(9) “Publicly traded partnership” means either of the following:

(A) A partnership that is a publicly traded partnership within the meaning of Section 7704 of the Internal Revenue Code.

(B) Any other partnership where more than 10 percent of the profits or capital interest is owned directly or indirectly by a partnership described in paragraph (A).

(10) “Reallocation adjustment” means a federal adjustment that changes the shares of items of partnership income, gain, loss, expense, or credit allocated to direct partners. A positive reallocation adjustment means a reallocation adjustment that would increase state taxable income for direct partners, and a negative reallocation adjustment means a reallocation adjustment that would decrease state taxable income for direct partners.

(11) “Reviewed year” has the meaning provided in Section 6225(d)(1) of the Internal Revenue Code, as in effect January 1, 2018.

(12) “Tiered partner” means any partner that is a partnership or pass-through entity.

(c) (1) Notwithstanding Section 17024.5, and except as otherwise provided in this subdivision, any election made for federal purposes under the provisions of Subchapter C of Chapter 63 of the Internal Revenue Code (commencing with Section 6221), as in effect January 1, 2018, shall be applicable for purposes of Part 10 (commencing with Section 17001), this part, and Part 11 (commencing with Section 23001), and a separate election shall not be allowed.

(2) In the case of any unitary partner whose distributive share of a partnership’s income and apportionment factors would properly be included in the computation of that partner’s business income (within the meaning of subdivision (a) of Section 25120) apportioned to California on that partner’s original California franchise or income tax return, subparagraph (A) of paragraph (1) of subdivision (d) shall not apply and instead such partner shall be treated as having filed an amended return within the meaning of Section 6225(c)(2) of the Internal Revenue Code for purposes of this section and that partner shall file an amended return to separately report its California share of the adjustments under Section 18622.

(3) Notwithstanding paragraph (1), and subject to the requirement of paragraph (2), a partnership may file a request, in the form and manner specified by the Franchise Tax Board, to make an election different from their federal election under this section, and the Franchise Tax Board shall grant such request, provided that the partnership is able to establish to the satisfaction of to the Franchise Tax Board that the Franchise Tax Board’s ability to collect any state income or franchise taxes would not be impeded, and the partnership properly computes the amount of tax due under the provisions specified in subparagraph (A) of paragraph (1) of subdivision (d) or properly follows the provisions specified in paragraph (2) of subdivision (d) as appropriate.

(4) (A) Each tiered partner and each indirect partner of an audited partnership shall be subject to the applicable election, reporting and payment requirements for audited partnerships and their direct partners under this section.

(B) Each tiered partner and indirect partner must make all reports and payments required to be made by such partners under this section no later than 90 days after the time for filing and furnishing statements to tiered partners and their partners, as required under Section 6226 of the Internal Revenue Code and any regulations thereunder.

(d) (1) (A) If the change or correction described in subdivision (a) results in an increase of the amount of tax payable under Part 10 (commencing with Section 17001), this part, or Part 11 (commencing with Section 23001), and if paragraph (2) does not apply, then a tax is hereby imposed on the partnership determined as follows, in lieu of taxes owed by its direct partners and indirect partners:

(i) Exclude from federal adjustments and any positive reallocation adjustments the distributive share of these adjustments made to a tax-exempt partner that is not unrelated business taxable income within the meaning of Section 23731.

(ii) Exclude from federal adjustments and any positive reallocation adjustments the distributive share of the adjustments made to a partner that has previously filed an amended return under Section 18622 reporting the distributive share and paid any additional state tax liability due.

(iii) With respect to any corporate partner or tax-exempt partner that is not excluded under paragraph (2) of subdivision (c) or clauses (i) or (ii), determine the total distributive share of all federal adjustments and positive reallocation adjustments, and apportion and allocate the adjustments as provided in Chapter 17 (commencing with Section 25101) of Part 11, and multiply that amount by the highest marginal tax rate provided in Sections 23151 or 23501, as applicable, for the reviewed year.

(iv) With respect to all tiered partners, nonresident individual partners, or nonresident fiduciary partners not excluded under paragraph (2) of subdivision (c) or clause (i) or (ii) or taken into account under clause (iii), determine the total distributive share of all federal adjustments and positive reallocation adjustments and compute the amount of California source income attributable to the adjustments as provided in Chapter 11 (commencing with Section 17951) of Part 10 and the provisions of Chapter 17 (commencing with Section 25101) of Part 11, and multiply that amount by the highest marginal tax rate applicable to individuals for the reviewed year.

(v) With respect to all resident partners, resident fiduciary partners, or any other partners not excluded under paragraph (2) of subdivision (c) or clauses (i) or (ii) or taken into account under clauses (iii) or (iv), determine the total distributive share of all federal adjustments and positive reallocation adjustments that are subject to tax under subdivisions (a) or (c) of Section 17041, and multiply that amount by the highest marginal tax rate applicable to individuals for the reviewed year.

(vi) The total tax imposed under this paragraph shall be equal to the sum of the amounts determined under clauses (iii), (iv), and (v). The tax imposed under this subdivision shall be due and payable as provided in Section 19001 and treated as if imposed under Part 10 (commencing with Section 17001).

(B) Penalties and interest, as applicable, shall be imposed under Article 6 of Chapter 4 (commencing with Section 19101) and Article 7 of Chapter 4 (commencing with Section 19131) from the original due date of the partnership return for the reviewed year.

(2) If the partnership makes a federal election for alternative payment under Section 6226 of the Internal Revenue Code, then the partnership shall file an amended California Nonresident Group Return for all nonresident direct partners under Section 18535 and pay the additional amount of tax due that would have been due had the federal adjustments been reported properly as required. For any partners not included in the amended California Nonresident Group Return, the amount reported to each partner shall be an adjustment to the partner’s share of partnership items as a result of the change or correction in subdivision (a) and each partner shall report any adjustments in accordance with Section 18622.

(e) Subject to the approval of the Franchise Tax Board, an audited partnership or tiered partner may enter into an alternative agreement with the Franchise Tax Board regarding any issue resulting from a federal audit adjustment, amended federal return, or administrative adjustment that would otherwise be subject to this section, including, but not limited to, the reporting and payment of tax, applicable time requirements, or any other provision that will provide, to the satisfaction of the Franchise Tax Board, for the reporting and payment of any taxes, penalties, and interest due pursuant to this section.

(f) (1) If a partnership files a report or return as required under subdivision (a) after the six-month period specified in subdivision (a) or if the partnership or partner does not pay the tax required under subdivision (c) when due and payable, the Franchise Tax Board shall mail notice to the partnership of the deficiency proposed to be assessed pursuant to Section 19033. The deficiency proposed to be assessed must be mailed within four years from the date the change or correction was reported pursuant to subdivision (a), the return or payment was due, or within four years from the date the return was filed, whichever period expires later.

(2) If a partnership files a report, or files a return required under subdivision (a) within six months of the final federal determination, the Franchise Tax Board shall mail notice to the partnership of the deficiency proposed to be assessed pursuant to Section 19033. The deficiency proposed to be assessed must be mailed within two years from the date the change or correction was reported pursuant to subdivision (a).

(3) If the partnership fails to file a report or return as required by subdivision (a), a notice of proposed deficiency assessment resulting from the federal determination may be made at any time.

(g) (1) Nothing in this section is intended to prevent the Franchise Tax Board from assessing direct partners or indirect partners for taxes they owe in the event that an audited partnership or tiered partner fails to timely make any report or payment required by this section for any reason.

(2) If a partnership’s report of the California tax changes resulting from the adjustments filed pursuant to subdivision (a) results in an overstatement of California taxable or net income, the adjustment shall be applied as follows:

(A) If the original adjustments were passed through to the partners under paragraph (2) of subdivision (c), the revised adjustment shall be passed through to the partners. The partnership shall file or amend the return as described in subdivision (a).

(B) If the tax on the adjustments was originally paid by the partnership under paragraph (1) of subdivision (c), the partnership may amend the return filed under paragraph (1) of subdivision (c) to claim a refund of that overpayment within the time periods provided by Section 19311. This subparagraph shall not allow a partnership to claim an overpayment for amounts not actually paid by the partnership.

(3) If properly reported and paid by the partnership or tiered partner, the amount determined in subparagraph (A) of paragraph (1) of subdivision (d) or similarly under an optional election, will be treated as paid in satisfaction of taxes owed by its direct and indirect partners on the same federal adjustments. The direct partners or indirect partners may not take any deduction or credit for this amount or claim a refund of the amount in this state. Nothing in this subdivision shall preclude a partner from claiming a credit against taxes paid to this state pursuant to Chapter 12 (commencing with Section 18001) of Part 10 of Division 2, with respect to any amount paid by the partnership, or any amount paid by any tiered partnership that is a direct partner or indirect partner in the partnership, on that partner’s behalf to another state.

(h) (1) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section, including any requirements or procedures necessary to seek a written consent under paragraph (3) of subdivision (g).

(2) The Franchise Tax Board may prescribe regulations necessary or appropriate to implement the purposes of this section, including regulations to determine the California share of adjustments.

(i) A publicly traded partnership that is otherwise in compliance with this section shall not be subject to paragraph (2) of subdivision (d). For purposes of the reporting requirements set forth in subdivision (a), a publicly traded partnership shall only be required to report their direct partners’ distributive share of a federal adjustment to the Franchise Tax Board. A publicly traded partnership shall be deemed to have made a federal election for alternative payment pursuant to Section 6226 of the Internal Revenue Code unless the publicly traded partnership files a request to make an election different from their federal election pursuant to paragraph (3) of subdivision (c).

(j) In order to reduce the administrative burden on taxpayers that may be imposed by additional filings and payments that do not contribute materially to revenue, the Franchise Tax Board shall convene a meeting or meetings of interested parties for the purpose of determining appropriate de minimis partner reporting and payment requirements as the result of a partnership level audit.

(k) (1) With respect to an action required or permitted to be taken by a partnership under this section and a proceeding under this part with respect to federal adjustments arising from a partnership level audit or an administrative adjustment request, the state partnership representative for the reviewed year shall have the sole authority to act on behalf of the partnership, and its partners and indirect partners shall be bound by those actions.

(2) The state partnership representative for the reviewed year is the partnership’s federal partnership representative, unless the partnership designates in writing another person as its state partnership representative.

(3) The Franchise Tax Board may establish reasonable qualifications for and procedures for designating a person, other than the federal partnership representative, to be the state partnership representative.

(l) This section shall apply to final federal determinations assessed pursuant to amendments made to Subchapter C of Chapter 63 of the Internal Revenue Code as in effect January 1, 2018.

(Added by Stats. 2018, Ch. 729, Sec. 1. (SB 274) Effective September 23, 2018.)

18623.
  

(a) The Franchise Tax Board is authorized to provide, with respect to any amount required to be shown on any return, form, statement, or other document required to be filed with the Franchise Tax Board, that if the amount of the item is other than a whole dollar amount, either of the following shall apply:

(1) The fractional part of a dollar shall be disregarded.

(2) The fractional part of a dollar shall be disregarded unless it amounts to one-half dollar ($0.50) or more, in which case the amount (determined without regard to the fractional part of a dollar) shall be increased by one dollar ($1).

(b) Any person making a return, statement, or other document shall be allowed, under regulations prescribed by the Franchise Tax Board, to make the return, statement, or other document without regard to subdivision (a).

(c) Subdivisions (a) and (b) shall not be applicable to items which must be taken into account in making the computations necessary to determine the amount required to be shown on a form, but shall be applicable only to the final amount.

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

18624.
  

(a) Section 6109 of the Internal Revenue Code, relating to identifying numbers, shall apply, except as otherwise provided.

(b) Identifying numbers shall be required on state tax returns, statements, or other documents in the form and manner as the Franchise Tax Board may require.

(c) Section 6109(h) of the Internal Revenue Code, relating to identifying information required with respect to certain seller-provided financing, shall not apply.

(d) The amendments made to Section 6109(a) of the Internal Revenue Code, relating to identifying number of income tax return preparer, by Public Law 105-206 shall apply.

(e) The amendments made by the act adding this subdivision shall be operative on the effective date of the act adding this subdivision.

(Amended by Stats. 1999, Ch. 931, Sec. 7. Effective October 10, 1999.)

18625.
  

An income tax return preparer shall furnish a copy of any state tax return to a taxpayer and retain information in accordance with Section 6107 of the Internal Revenue Code.

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

18626.
  

For purposes of Chapter 9 (commencing with Section 19701), which relates to criminal penalties in the case of fraudulent returns, the term “return” includes any return filed under this part using electronic technology pursuant to Section 18621.5.

(Added by Stats. 1995, Ch. 845, Sec. 1. Effective January 1, 1996.)

18628.
  

(a) Section 6111 of the Internal Revenue Code, relating to disclosure of reportable transactions, applies, except as otherwise provided.

(b) (1) Except as provided in subdivision (e), a material advisor is required to send a duplicate of the federal return, if applicable, or the same information required to be provided on the federal reportable transactions return for California reportable transactions to the Franchise Tax Board not later than the date specified by the Franchise Tax Board or the Secretary of the Treasury.

(2) (A) The information provided to the Franchise Tax Board pursuant to paragraph (1) shall also include any other information required by a Franchise Tax Board Notice.

(B) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any additional information requested under this section.

(c) Section 6111 of the Internal Revenue Code is modified by substituting the phrase “Secretary or the Franchise Tax Board” for the word “Secretary” in each place it appears.

(d) The reportable transactions return requirements of this section shall apply to any material advisor with respect to any reportable transaction, as defined in Section 6707A(c) of the Internal Revenue Code with respect to a material advisor that satisfies any of the following conditions:

(1) Is organized in this state.

(2) Is doing business in this state.

(3) Derives income from sources in this state.

(4) Provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction with respect to a taxpayer that meets any of the following requirements:

(A) Is organized in this state.

(B) Does business in this state.

(C) Derives income from sources in this state.

(e) In addition to the requirements set forth in subdivision (a), for any transactions entered into on or after February 28, 2000, that become listed transactions (as defined under Section 6707A(c)(2) of the Internal Revenue Code) at any time, a return for those transactions shall be required to be filed with the Franchise Tax Board by the later of:

(1) Sixty days after entering into the transaction.

(2) Sixty days after the transaction becomes a listed transaction.

(3) Sixty days after the effective date of the act amending this section.

(f) In addition to the requirements set forth in subdivisions (a) and (e), for any transactions entered into on or after September 2, 2003, that are specifically identified by the Franchise Tax Board for California income or franchise tax purposes (under the authority of paragraph (4) of subdivision (a) of Section 18407) as a “listed transaction” at any time, a return for those transactions shall be required to be filed with the Franchise Tax Board by the later of:

(1) Sixty days after entering into the transaction.

(2) Sixty days after the transaction becomes a listed transaction.

(3) Sixty days after the effective date of the act amending this section.

(Amended by Stats. 2005, Ch. 691, Sec. 42.5. Effective October 7, 2005.)

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