Installment Payments: Help or Illusion?

Taxpayers who owe the wealth tax can elect to pay in five equal annual installments rather than all at once. That sounds helpful — until you see the 7.5% annual deferral charge on the unpaid balance. This charge is non-deductible. At 7.5%, the true cost of spreading a $50 million tax bill over five years balloons significantly beyond the 5% sticker price. For illiquid taxpayers, it may be the only available option — but it is an expensive one.

Dakessian Law monitors California tax legislation and litigation. More to come.