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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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What is the maximum penalty and interest California can charge

Customer Question

What is the maximum penalty and interest California can charge for back taxes owed on year 2001 for the amount due of $2161 filed by April 12, 2016? I was told by an FTB representative that I owe over $8000. That is close to or over 400 percent of the original amount owed. Is that correct?
Submitted: 8 months ago.
Category: Tax
Expert:  Lev replied 8 months ago.
The maximum penalty is 25 percent of the total unpaid tax.So - your penalty is $540.Interest will be charged on any delinquent or late payment from the original due date of the return to the date paid. Interest compounds daily - that means - it is added daily and interest to the following day included all previously compounded interest..Current interest rate is 3% - but because the interest rate is adjusted twice a year - it may varyhttps://www.ftb.ca.gov/individuals/faq/ivr/617.shtmlDuring the time it was compounded in your case - it was as high as 9%.
Customer: replied 8 months ago.
So, for the entire 15 years, it did not maintain a ~9% interest rate? Did it change each year according to the chart (including the rate adjustment twice a year)?
Expert:  Lev replied 8 months ago.
Yes - the interest rate is adjusted two times every year.
Expert:  Lev replied 8 months ago.
But because it is compounded daily - the debt is growing a little faster that with simple annual interest..I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you will all tax related issues.