California Franchise Tax Board (FTB) Issuing Erroneous Passthrough Entity (PTE) Tax Refunds

August 09, 2022

The California FTB has acknowledged that due to a systemwide issue with the 2022 Form 3893 (Passthrough Entity Elective Tax Payment Voucher) the first installment of the 2022 passthrough entity (PTE) elective tax prepayments due by June 15, 2022 were incorrectly applied to the 2021 tax year resulting in erroneous refunds of these payments. The FTB estimates this issue impacted approximately 3,000 PTE elective tax payments.

Erroneous refunds could have been issued by check in the mail or paid electronically via direct deposit. If you made a 2022 first installment payment of the elective PTE tax by June 15, 2022, please review your records and banking activity to confirm whether you received an erroneous refund. Please disregard this message if an erroneous refund was not received.

If you have received an erroneous refund, it is very important this refund be returned to the California FTB as soon as possible to preserve PTE election eligibility for the 2022 tax year. To be eligible for the passthrough entity tax election for 2022, taxpayers must have paid in the first installment by June 15, 2022. If the payment is not posted to the taxpayer’s account, the taxpayer will not be eligible to make the election for tax year 2022. 

The FTB is allowing taxpayers to return the erroneous refunds and preserve their right to make the PTE election for 2022. No specific deadline has been provided for which to return the refunds but we recommend doing this as soon as possible. The method for returning a payment is dependent on how the erroneous refund was received. 

If you still have the refund check and have not deposited it:

Mail the check, with a copy of the Form FTB 3893 Voucher, along with the explanation “PTE Elective Tax Erroneous Refund” to:

Franchise Tax Board
P.O. Box 2288
Rancho Cordova, CA 95741-2288

If you already cashed the refund check or received the erroneous refund via direct deposit:

You must resubmit the 2022 passthrough entity elective tax prepayment by submitting the payment on Web Pay or sending another check with a Form FTB 3893 Voucher, along with the explanation “PTE Elective Tax Erroneous Refund” to the same address noted above. For taxpayers paying by check, write the entity ID and tax year 2022 on the memo line.  

Remember that taxpayers subject to the mandatory e-pay requirements must use Web Pay to make this payment. To make the payment using Web Pay follow the link below.

If you receive an erroneous check please contact your GPW tax advisor and let them know you received an erroneous refund and returned it, and confirm which method you used to return the payment.

Gatto, Pope & Walwick, LLP
Certified Public Accountants