CA FTB Error Results In Individual Taxpayers Receiving Notices
December 1, 2021
Many Individual taxpayers have recently received tax notices from the California Franchise Tax Board for the 2020 tax year, which adjusts the tax payments claimed on the 2020 tax returns. We understand receiving a notice is unsettling and since this is based on an error in the processing system at the California Franchise Tax Board, is also frustrating. The CA FTB has acknowledged their electronic payment system was not updated properly to reflect the change in due date for 2020 income tax returns from April 15, 2021 to May 17, 2021. As a result, most extension payments made after the usual April 15th deadline (that were instead made around the extended May 17th deadline) were incorrectly coded as 2021 estimated tax payments. We wanted you to be aware this is a California wide issue and to expect that you could be on the list to receive such a notice, if you haven’t already.
If you receive one of these notices, it will indicate a ‘Notice of Tax Return Change’ and reflect a change to the amount of overpayment being applied to tax year 2021. This error creates a discrepancy between the payments shown on the income tax return for the 2020 tax year and what the FTB’s system shows as payments for the 2020 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