Employee Business Expenses (EBE) Deduction Education Letters

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November 19, 2015

Purpose of bulletin

To inform staff that we are mailing education letters to taxpayers who may have claimed unreimbursed employee business expenses (EBE) as an itemized deduction on their Federal Schedule A.

Background

California Revenue and Taxation Code Section 17201, except as otherwise provided, permits the deduction of all ordinary and necessary business expenses in accordance with the Internal Revenue Code (IRC) Section 162.

The letter provides taxpayers with general information to review their tax returns filed and verify if they correctly and accurately claimed the deduction.

Additional Information

As a pilot, FTB has sent out 1,200 EBE education letters to date and received 26 contacts.

We began mailing approximately 45,000 EBE education letters starting November 16, 2015.

Taxpayer Inquiries

Remind taxpayers who receive the letter to claim only the deduction amounts he/she is legally entitled to claim. Taxpayers may refer to IRC Section 162 and Treasury Regulations Section 1.162-1(a) to determine the unreimbursed employee business expenses they are allowed to claim.

The Internal Revenue Service (IRS) has many publications on this issue including Tax Topic 514 – Employee Business Expenses.

Taxpayers can call us at 800.852.5711, 7 a.m. to 5 p.m., Monday through Friday.

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