Law firm implications

The California Franchise Tax Board recently issued a bulletin to inform its staff of changes to the extended due dates of Form 565 (Partnership Return of Income) tax returns, offering law firms a one-month "grace period" for the 2016 tax year transition period and a seven-month (instead of a six-month) extension to file beginning with the 2017 tax year.

Extended due dates

As a result of recent California Franchise Tax Board (FTB) legislation, the extended due date of California partnership tax returns was shortened by one month. However, in response to requests from the tax practitioner community requesting that partnerships be granted one additional month to file, such entities were allowed a seven-month extension to file, opposed to a six-month extension, beginning with the 2017 tax year, according to recently issued California FTB Public Service Bulletin No. 17-17, 09/13/2017.

Additionally, California authorized a one-month "grace period" for the 2016 tax year transition period, granting the FTB authority to use reasonable cause provisions to abate some late filing penalties.

To the extent law firms believe they were assessed a late filing penalty incorrectly on their 2016 tax filing, they should contact the FTB immediately to request a review of their case.

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