Ca. Tax Lawyer Summer 2015, Volume 24, Number 2

In California We Trust: A Sensible Expansion of the Voluntary Disclosure Program1

By Brian W. Toman, Mike Shaikh and Erin Mariano2


Trusts administered outside California often are susceptible to not filing California income tax returns. This is because California has an atypical legal threshold for filing: trusts must file if a trust fiduciary—typically, a trustee—or beneficiary resides in California. Trust administrators outside California, for a plethora of reasons, often oversee this requirement and do not file.

This problem with not filing is not limited to trusts. Individuals, corporations, partnerships and other legal entities all have issues with failing to file. The California Legislature ("Legislature") has mitigated this problem for all these entities. Through its Voluntary Disclosure Program ("VDP"), California allows these non-filers to come forward and begin paying taxes in exchange for penalty relief and a limited lookback period for catching up on prior non-filing. This fix applies to trusts administered outside California as well.

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