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your client is going through an FTB audit, you must lookat defense tactics right now. Under amnesty, a taxpayer witha pre- 2003 tax liability that is still unresolved on March31, 2005, will be assessed a penalty of 50% of the intereston the assessment. There are a few choices. · Proceed with the audit. If you win - great, no penalties. If not, any liability will be subject to the extra 50% penalty. · Agree to the assessment now, pay it, and file a claim for refund, bringing the case back to audit. You avoid the 50% interest penalty. · Request amnesty during the amnesty period (February 1,
2005 through March 31, 2005), pay the tax, and avoid penalties. However, by going through amnesty you lose the right to a refund of the tax paid that last requirement looks unconstitutional to me. Even a business/private contract would be limited in how many (civil?) rights could be signed away. · File for partial amnesty by agreeing to the issues in which your position is weak and avoid the 50% interest penalty with respect to the tax on those issues. Proceed with the audit with respect to the remaining issues.
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