[quote=flu]I’m pretty sure CA is not going be looking much at anyting.

You really think CA has enough auditors to be auditing? They can barely process the tax returns on time with all the budget cuts.[/quote]

This is not rocket science, flu. All the FTB has to do is set their software up to trigger line 73? on Form 540, if filled, and if the scanned tax bill is not included with the return and an explanation of what is deductible and non-deductible, that return will be set aside and flagged for a letter to the taxpayer and/or refusal of the entire property tax deduction and a new tax calculated.

Obviously, they will have to have workers to go thru the mailed Form 540’s by hand (small percentage?), as well as biz returns filed by mail to flag the returns which did not include the proper paperwork for a property tax deduction.

Shorter Form 540’s (ES/EZ etc) don’t take itemized deductions so they are exempt from review.

I have no doubt there will be new forms invented by tax year 2012 to assist the CA taxpayer with itemizing their property tax deductions.

This is a big potential source of income to the state and they have been asleep at the switch all these years letting taxpayers get by with claiming improvement bonds that were not part of their “property taxes” to claim.