Head of Household Audit Program – 2015 Tax Year

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November 29, 2016

Purpose of Bulletin

To inform staff that we began mailing our Head of Household (HOH) Audit letters in October.

Background

We review returns filed by taxpayers who claim the HOH filing status annually. Occasionally taxpayers misunderstand the qualifications for the HOH filing status.

Beginning in October through December 2016, we will send approximately 62,000 HOH notices weekly. The following is the approximate total volume of notices we will send for the 2015 tax year:

  • 59,000 HOH Audit Demand (FTB 3071)
  • 176,000 educational letters (FTB 3072)
  • 3,000 HOH Information Document Request letters (FTB 3070)

We mailed approximately 20,000 apology letters on November 22, 2016, to taxpayers that were sent the FTB 3071 and FTB 3072 in error.

HOH Audit Letter

The Head of Household Audit Demand letter tells taxpayers:

  • Complete and return the FTB 3071
  • How to return the completed schedule and respond by the date on letter
  • Requirements to qualify for the HOH filing status

The Head of Household Information Document Request letter tells taxpayers:

  • Complete and return the FTB 3070
  • Type of documentation they must provide to substantiate that they qualify to use the HOH filing status
  • How to return the completed schedule and respond by the date on letter
  • Requirements to qualify for the HOH filing status

The Head of Household Information letter or education letter reminds taxpayers to attach the FTB 3532 to their 2016 tax return.

Letters Mailed in Error

FTB incorrectly mailed 5,887 HOH audit demand letters and 16,629 HOH information letters to taxpayers stating they did not attach FTB schedule 3532 to their 2015 return.  It was determined these taxpayers did in fact attach the 3532 with their 2015 return. Apology letters mailed to impacted taxpayers on November 22, 2016.

Taxpayers should be advised to disregard the original notice.  A comment was added to TPF if taxpayer received the notice in error.

Audit Process

Taxpayers should complete the FTB 3532 2015 HOH Schedule and send it with supporting documentation by the response due date on the letter.

HOH audit staff will review completed information to determine if each taxpayer qualifies for the HOH filing status. They will do one of the following based on their determination:

  • If responses are incomplete or contain conflicting information we will issue a Notice of Proposed Assessment (NPA).
  • Send an HOH acceptance letter to qualified taxpayers. Acceptance letters only apply to the specific tax year examined and do not qualify the taxpayer for any other tax year.
  • Send a Notice of Proposed Assessment (NPA) disallowing the HOH filing status to taxpayers who do not respond to the audit demand or Information Document Request letter, or do not qualify for the HOH filing status based on their responses.

Taxpayers Who E-Filed

Taxpayers who submitted a FTB 3532 HOH Schedule with their return may still receive a follow up audit letter if the information they provided electronically was conflicting or missing.

Taxpayer Inquiries

We cannot take the 2015 HOH information over the telephone or in person. Inform the taxpayers to respond by the date specified on the letter.

Taxpayers may:

  • Return the information to us by mail.
  • Go to ftb.ca.gov and log in to MyFTB to upload the HOH information. They must provide their account number (FTB ID) located at the top of the letter.

For more information and frequently asked questions, go to ftb.ca.gov and search for HOH filing status.

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