Last week we described a new Voluntary Compliance Initiative (VCI 2) that the legislature passed as a part of Senate Bill 86, and we informed our clients and friends that we expected Gov. Jerry Brown to approve the measure shortly thereafter. On March 24, the governor signed Senate Bill 86, and VCI 2 is now part of California law.
It is not too early for taxpayers to plan their next steps. To assist with that process, we have briefly summarized key points about the program and explained what taxpayers can expect next:
- VCI 2 applies to abusive tax avoidance transactions and offshore financial arrangements with respect to tax years beginning before January 1, 2011
- The period to comply with VCI 2 by filing amended returns and other forms the Franchise Tax Board may require will be August 1, 2011 through October 31, 2011
- The statute of limitations to mail a notice of proposed deficiency assessment for abusive tax avoidance transactions is extended from eight to 12 years
- Taxpayers participating in VCI 2 will have all but two penalties waived; the two penalties that are not waived are the Section 19138 large corporate understatement penalty and the Section 19777.5 amnesty penalty.
Please see full Alert below for further information.
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