CA A1043, which extends and expands Cal. Rev. & Tax. Cd. §7076.1, et. al, Managed Audit Program ("MAP"), is effective January 1, 2004 through January 1, 2009. The revised MAP allows taxpayers on a prepayment reporting basis to participate in the program. (The program now applies to taxpayers with a measure of tax liability averaging $17,000 or more per month.) The revised MAP also specifies that Section 6596, the statute that provides relief of tax, interest, and penalty in cases where the taxpayer relied on erroneous advice from the Board, applies to managed audits.
At the discretion of the Board, and consistent with the efficient use of audit resources, taxpayers that meet the following criteria can be considered candidates for a managed audit:
- Persons whose business involves few or no statutory exemptions
- Persons whose business involves a single or small number of clearly defined taxability issues
- Persons who agree to participate in the MAP
- Persons who have the resources to comply with the managed audit instructions provided by the Board
In return for performing the managed audit, upon completion and verification by the Board the taxpayer will be liable for only one-half of the interest imposed under the current law on any tax liability discovered. The managed audit program does not in any way limit existing statutory authority to examine the books, papers, records, and equipment of a taxpayer under Cal. Rev. & Tax. Cd. §7054.
If you have any questions regarding this information, please call Rich Carlson, Principal at Ryan & Company, at 213.627.1719. Mr. Carlson can also be reached by e-mail.