Interest Computation Adjustments - Update

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November 2, 2015

Purpose of bulletin

To provide staff with additional information about interest adjustments in certain circumstances involving:

  • May Department Stores v. United States (IRS Revenue Ruling 99-40)

Background

We previously provided estimates on the number of impacted taxpayers and the fiscal impact of the interest adjustments, as follows:

Tax Type Computation Type Maximum Taxpayers Impacted Estimated Maximum Fiscal Impact
Personal Income Tax May Dept Store 24,000 $1.5 million
Business Entities May Dept Store 2,000 $14.5 million
Business Entities Corporate Interest Netting 1,000 To Be Determined
Total   27,000  

Next Step

We are ready to begin performing interest adjustments ((**********)) in ((**********)) Taxpayers impacted by the May Department Store Ruling. Impacted taxpayers will receive a contact letter (FTB 3545) telling them about the adjustment, as well as a subsequent refund check, if appropriate. Additionally, each adjusted account will have a comment added in TI to indicate the adjustment was completed.

Taxpayer Inquiries

For more information about the interest computation adjustments, go to ftb.ca.gov and search for interest adjustments, or go to the original PSB 15-07, Interest Computation Adjustments.

Taxpayers can call us at 800.852.5711, weekdays, 7 a.m. to 5 p.m., except state holidays.

NOTE: ((***)) = Indicates confidential and/or proprietary information that has been deleted.

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