The FTB is extending the timeline to enter into a closing agreement as part of a limited-time resolution program for eligible taxpayers who engaged in certain micro-captive insurance or syndicated conservation easement transactions. (FTB Notice 2023-03)
Taxpayers will now have until January 31, 2024, to enter into closing agreements to reverse the tax benefits from these transactions and receive reduced penalties for any applicable tax year. All outstanding taxes, interest, and penalties must be paid at the time the taxpayer submits the closing agreement. However, if the taxpayer can demonstrate financial hardship, they can enter into an agreement to pay the tax over a 12-month period.
For additional information see the July 2023 article entitled “Limited time to avoid penalties for certain abusive transactions” in Spidell’s Strategic Tax Advisor.