1. FTB/CSEA Liaison Meeting September 17, 2004

2. e-Programs Update Franchise Tax Board

3. Mandatory e-fileMandatory e-file - Update Pro Forma Filing PilotPro Forma Filing Pilot - All the details Overview

4. e-file Program - Growth

5. Mandatory e-file Update Effective January 1, 2004 Mandates practitioners who prepared more than 100 returns, at least one of which was prepared using computer software, to e-file

6. New Tax Practitioner Increase 23,882 16,112 12,689 38,682 Number of Accepted Practitioners

7. Mandatory e-file Nationwide

8. Recent FTB survey shows: Majority of tax practitioners are satisfied or very satisfied with e-file 67% agree that e-file is easy Majority indicate that clients benefit from e-file Many indicate handling rejects can be difficult Some indicate that e-file should not be mandated

9. Approach to Enforcement: Focus on willfully noncomplying practitioners Sending reminder letters to noncomplying practitioners in late October Visiting noncomplying practitioners Publishing articles regarding the mandate

10. Dedicated Web page for mandatory e-file –FAQs (updated regularly) –Legislative actions –Copies of notices in Spanish –Letter from FTB to give to your clients Mandatory e-file Resources

11. Pro Forma Filing Pilot

12. What Is Pro Forma Filing? Pro Forma return filing is a tax concept designed to reduce taxpayer burden for taxpayers filing the simplest California returns. Current concept applies to: –Wage earners only –Single –No dependents

13. Reduce taxpayer burden Provide taxpayers online, secure and private access to their tax data Benefits of Pro Forma

14. Reach taxpayers who qualify for refunds who are not otherwise claiming them Reach certain non-filers and get them into the routine filing process Benefits of Pro Forma

15. Successful variations of pro forma filing in several countries including: –Germany –Japan –Denmark –Sweden Other Pro Forma Experiences

16. The IRS has studied pro forma filing and found: –Surveys indicate taxpayer support, however –IRS information systems cannot provide the data needed on a timely basis Other Pro Forma Experiences

17. FTB routinely receives and processes EDD wage information, which makes us perfectly suited for a pro forma filing program EDD Information

18. How Will Pro Forma Work? FTB will select a group of taxpayers to participate in the program, who must be: –Single –Have no dependents, and –Have one employer

19. FTB Will: Provide selected taxpayers with an invitation to participate Two versions of the invitation: 1.Letter and completed return 2.Letter only

20. The Taxpayer: May choose to: - accept the return, as presented - make minor modifications - come to FTB’s Website to file or modify the return and file it - ignore FTB’s invitation

21. The Taxpayer: Will enter SSN* and signature (on the the paper return or online) –Indicating that all their tax data is true and correct under penalty of perjury * In compliance with SB 25, SSN will not be preprinted on the letter or return. SB 25 mandates that state agencies will not publicly post or display an individual’s SSN or compromise the security of an individual’s SSN.

22. Ability to deploy and test pro forma filing concept by February 2005 Test taxpayer response to our new program Make recommendation to our Board after studying pilot results Why a Pro Forma Pilot?

23. Provide more taxpayers and their authorized representatives with online, secure access to wage and withholding data Future Benefits

24. FTB would like about 10,000 participants, resulting in a statistically valid study To achieve this, FTB may invite up to 50,000 taxpayers to participate who qualify to file a simple return Pro Forma Volumes

25. The cost to deploy the Pilot is about $200,000 No requests for new funding Leverage existing FTB systems to accommodate pro forma filing Cost

26. Thank you! Cathy Cleek Chief, Filing Division 916.845.6396 cathy.cleek@ftb.ca.gov