Michael Gray, CPA's Tax and Business Insight

***Special Alert***

May 15, 2008

© 2008 by Michael C. Gray

ISSN 1539-395X

A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!

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Erroneous Franchise Tax Board Notices are being issued.

Yesterday, two of my clients contacted me about notices they received from the California Franchise Tax Board for their 2007 income tax returns.

The notices indicated charges for penalties plus interest for late payments of income taxes received after the due date of the 2007 income tax return.

Both of the clients had e-filed their California income tax returns and sent their tax payments certified mail before April 15.

Evidently, the Franchise Tax Board erroneously recorded the payments according to when they were received and not when they were mailed.

Under the "timely mailed as timely filed rule", payments mailed by the due date are considered to be made on time, and not subject to late payment penalties.

These two notices could be an indication that there will be a widespread problem this year of erroneous notices from the Franchise Tax Board. Taxpayers should not assume notices they receive are correct.

If the payment was sent certified mail, the taxpayer can prove timely payment with the certified mail receipt and a copy of the cleared check. If the payment was sent with a stamp as postage, the taxpayer should ask the Franchise Tax Board to determine the postmark date on the envelope they received. (They record that information when they receive mail from a taxpayer.)

The Franchise Tax Board should then cancel the charges. If a taxpayer needs more assistance, he or she should consult with a qualified tax advisor.


Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.

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If you have employee stock options, have you subscribed to Michael Gray, CPA's Option Alert at no charge or obligation?

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If you have employee stock options, have you subscribed to Michael Gray, CPA's Option Alert at no charge or obligation?

To learn more, visit stockoptionadvisors.com/subscribe.shtml.

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Real estate investors, have you subscribed to Michael Gray, CPA’s Real Estate Tax Letter at no charge or obligation?

For details, visit www.realestatetaxletter.com.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

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P.S. My daughter and her husband, Holly and Dan Baker, have a Southern French Restaurant at 23 Ross Common, Ross, California, about 15 minutes north of the Golden Gate Bridge. The name of the restaurant is Marché Aux Fleurs and their website address is marcheauxfleursrestaurant.com. For the best meal of your life, call 415-925-9200 for a reservation and give them a try! For directions, visit our website at taxtrimmers.com/directions.shtml.

They also have a second restaurant, AVA, at 636 San Anselmo Ave., San Anselmo, California. AVA serves food and drinks produced in California. For reservations, call 415-453-3407. The web site is avamarin.com.

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Michael Gray, CPA
2190 Stokes St. Ste. 102
San Jose, CA 95128
(408) 918-3162
FAX: (408) 998-2766
Hours: 8am - 5pm PDT Monday - Friday

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