FTB Error Results In Individual Taxpayers Receiving Notices

January 26, 2021

Many Individual taxpayers have recently received tax notices for the 2019 tax year, which adjusts the tax payments claimed on the 2019 tax returns. These notices might show balances due for 2019, or merely adjust the 2019 overpayment without requesting a payment be made. In any case, receiving a notice can be scary, frustrating and confusing. Fortunately, we have discovered that almost all of the notices are generating as a result of a coding error in the Franchise Tax Board’s (FTB) payment system. In private discussions the FTB has acknowledged their electronic payment system was not updated properly to reflect the change in the due date for 2019 income tax returns from April 15, 2020 to July 15, 2020. As a result, most extension payments made after the usual April 15th deadline (that were instead made around the extended July 15th deadline) were incorrectly coded as 2020 estimated tax payments. This error creates a discrepancy between the payments shown on the income tax return for the 2019 tax year and what the FTB’s system shows as payments for the 2019 tax year, and hence results in a notice being issued.

Although the FTB is aware of this error, they have indicated they are unable to correct it on their end. For most taxpayers no action is required on this notice. If the notice shows a balance due the taxpayer (or their representative) will need to call the FTB and request they move the mis-coded payment manually to resolve the issue.

As always, be sure to send any correspondence you receive to your tax professional to review and guide you on the proper response.

Please do not hesitate to contact our office if you have any questions.

Gatto, Pope & Walwick, LLP
Certified Public Accountants