Adjustment to 2015 Tax Year to Allow Withholding

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June 13, 2016

Purpose of Bulletin

To notify staff that on June 13, 2016, we sent letters to taxpayers advising them that we reevaluated their 2015 tax year withholding credits and allowed the credit as filed.

Background

We have received an increase in calls about Notices of Tax Return Change for withholding credit denials or adjustments. The department has collected and investigated a number of complaints about the notices.

We have identified a population of taxpayers whose returns were affected by late withholding reports from employers. Some wage and retirement withholding data was not provided to the State of California before we processed and validated the returns.

Additional Information

We are re-validating these returns to allow the original withholding amounts claimed. Approximately 31,000 returns were impacted. Approximately 50,000 notices will be sent to taxpayers (each taxpayer on a joint return will receive a letter). These letters will be mailed on June 13, 2016, with a notice date of June 15, 2016, and will be viewable in the Taxpayer Folder.

Taxpayers should receive a paper check within 7-10 business days.

We will evaluate additional returns and the withholding amounts, and may send additional letters over the next two weeks.

An alert was added to the FTB website home page to explain the impact on contact centers, and that we are allowing two additional weeks for taxpayers to respond to the notices.

Taxpayer Inquiries

If a taxpayer receives this letter and contacts us, give the following information based on the appropriate scenario:

  • If the addition of the credit to their account resulted in a credit, they can expect the refund in 7-10 business days from the allowance on the system.
  • If the addition of the credit to their account resulted in a reduced balance, please provide them with their corrected balance due and follow normal procedures for collections.
  • If the taxpayer paid the balance from the Notice of Tax Return Change, and the withholding allowance creates an overpayment, they can expect the refund in 7-10 business days from the allowance on the system.

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