White Paper

California’s Voluntary Compliance Initiative Two

 
R&T §19761 enacted as part of SB 86, signed March 24, 2011 established the Voluntary Compliance Initiative Two (VCI) which runs from August 1, 2011 – October 31, 2011. The VCI is targeted at two discrete groups. The initiative applies to tax liabilities attributable to the use of abusive tax avoidance transactions (ATAT) and to unreported income from the use of offshore financial arrangements. The program covers all tax years beginning before January 1, 2011. The FTB estimates that in the first year for the VCI the state will collect approximately $270 million. A reduction in assessable penalties in subsequent years will reduce the net revenue realization by approximately $82 million.

An abusive tax avoidance transaction (ATAT) is commonly referred to as a tax shelter. Tax shelters are tax plans that serve no significant purpose other than reducing tax. R&T § 19774 imposes a noneconomic substance transaction (NEST) understatement penalty of 20 percent if the transaction is adequately disclosed and 40 percent if it is not. A noneconomic substance transaction understatement is a loss, deduction, credit or addition to income that is the result of a transaction that lacks economic substance.

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Sanford I. Millar is the founder of MillarLaw a Professional Corporation. He is a Certified Specialist in Taxation Law and is admitted to practice before all courts in the State of California. Mr. Millar has received the highest rating by Martindale-Hubbell Law Directory and has been named a Southern California Super Lawyer from 2006 – 2017.

Faculty

Sanford Millar

MillarLaw, A Professional Corporation

Agenda

Faculty

Sanford Millar

MillarLaw, A Professional Corporation

Sanford I. Millar is the founder of MillarLaw a Professional Corporation. He is a Certified Specialist in Taxation Law and is admitted to practice before all courts in the State of California. Mr. Millar has received the highest rating by Martindale-Hubbell Law Directory and has been named a Southern California Super Lawyer from 2006 – 2017.

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