Tax News May 2025

FTB Celebrates Over 30 years of the e-file Program!

In March 1994, FTB implemented a pilot program that allowed some California taxpayers to file their tax return electronically versus by mail. This paperless return filing process was originally called the Electronic Filing program. Starting with just the individual Forms 540A and 540EZ and bringing in over 400 returns the first year, the program was fully implemented in January 1995, and included the Form 540 and 20 additional schedules.

Over the years, the program expanded to include e-filing for various business entities, exempt organizations, estates and trusts, and fiduciary returns. In addition, we introduced our stand-alone Electronic Funds Withdrawal program that allows taxpayers to submit their electronic payment request separate from the e-filed return via their tax preparation software.

Today, the e-file program receives over 21 million returns annually.

We would like to take this moment to thank the tax preparation software industry for their continued collaborative partnership in our e-file program.

As we celebrate over 30 years of the e-file program, we continue to look ahead and strive to provide more customer-centric services electronically and online to California taxpayers.

Don’t forget about CalFile, FTB’s own program that allows taxpayers to e-file their state returns directly to us.

We appreciate your continued interest and support in the e-file program.

For information about e-file, CalFile, and other online electronic services, please visit FTB.ca.gov.

Identity Verification Letters and Documentation Requests

One of FTB’s foundational principles is to safeguard taxpayer information and prevent tax-related theft and fraud. We implement measures to protect taxpayers and generate notices to ensure the information we have is accurate and up to date.

FTB issues notices to verify taxpayer identity and validate refund claims, especially when discrepancies or missing information are identified. A timely response to these notices is essential to avoid delays or denial of a refund.

Our Identity Theft Unit handles these issues, with agents assigned to particular cases. The taxpayer must contact the number on the notice or call 916-845-7088. Our call center and Tax Practitioner Hotline are unable to assist with identity verification letters.

We included a list of the common notices we send to verify identity:

• FTB 3904 – Tax Return Filed – Confirmation Required
  This notice is sent when there is a question regarding the taxpayer’s identity and FTB suspects identity theft.
• FTB 4737D – Tax Information and Document Request
  This notice is sent when FTB needs to confirm the taxpayer’s identity to proceed with processing.
• FTB 4502 – Additional Documentation Required, Refund Pending
  This notice is sent when FTB requires additional information to validate a claim for the California Earned Income Tax Credit (CalEITC), Young Child Tax Credit (YCTC) and/or the Foster Youth Tax Credit (FYTC) prior to issuing a refund.

Go to the Letters webpage to view a list of common personal and business notices and learn about why you received a notice and what you need to do.

Amended vs. Superseding Tax Returns

Taxpayers may need to correct previously filed returns if they omitted income, underreported amounts, claimed incorrect deductions or credits, or in other instances. To correct a return, they can file an amended return or a superseding return. For California purposes:

• A superseding return is considered a replacement for the original return and is treated as if it were the original as long as it's filed within the original filing deadline (including extensions, in the case where the original return and the superseding return are both filed during the extension period).
• An amended return is a corrected return filed after an original return that does not replace the original filing because it is filed after the applicable filing deadline for the original return.

This distinction matters especially when it comes to making or revoking certain tax elections. In general, elections must be made on an original return. Therefore, those certain elections may be made or revoked on a superseding return, but not on an amended return.

To qualify as a superseding return, one of the following conditions must be met:

• The original return was filed before the original due date and the subsequent return was filed on or before the original due date.
• The original return was filed after the original due date, but before the extended due date, and the subsequent return was filed on or before the extended due date.

If the original return was filed on or before the original due date and the subsequent return was filed after the original due date, then the subsequent return is not a superseding return but is an amended return.

If the original return was filed after the original due date but before the extended due date and the subsequent return was filed after the extended due date, then the subsequent return is not a superseding return but is an amended return.

Update Your Clients’ Addresses

We understand there are many responsibilities when a person moves, or is displaced due to a disaster, and changing their address with FTB may not be a priority.

In order for us to effectively communicate it is important to ensure your clients’ addresses, including apartment and suite numbers is correct. Updating the apartment and suite number ensures accurate mail delivery to avoid misdirected or returned mail.

By having the correct address on file, we will be better able to assist your clients to receive the information they need, such as:

• Important notices and/or other correspondence.
• Refunds in a timely manner.

Here are a few ways your clients can report a change of address:

• Create an account on MyFTB. After they complete a one-time registration process to create an account, they can login to view their account information or update their address and phone number online. For personal income taxes, timely file a personal income tax return with the correct and up-to-date address information.
• For individuals, mail a change of address form (FTB 3533).
• For businesses, mail a change of address form (FTB 3533-B).

You can also use your MyFTB Account for Tax Professionals to ensure your clients have their most recent address on file. This will also allow you to manage your clients’ accounts online where you can view tax account information and notices and communicate with FTB through secure online chat.

For individuals or businesses, mail completed change of address forms to:

Franchise Tax Board
PO Box 942840
Sacramento CA 94240-0002

Learn more information about How do I change my address?

Attend a Virtual Withholding Presentation

We offer two 25-minute virtual presentations regarding withholding followed by a Question-and-Answer session conducted through Microsoft Teams or Zoom.

California Nonresident Withholding

Held the second Wednesday of each month beginning at 10 AM.

We will review:

• California nonresident withholding requirements
• Income subject to withholding
• Withholding agent requirements
• Withholding exceptions, waivers, and reductions
• Withholding liability and penalties
• Resources

California Real Estate Withholding

Held the third Tuesday of each month at 10 AM.

We will review:

• Real estate withholding requirements
• Common mistakes made on Form 593, Real Estate Withholding Statement
• Withholding responsibilities
• Installment sales
• Trusts
• Foreign sellers
• LLCs

To attend these presentations, email us at FTBCANonResidentWithholdingEducation@ftb.ca.gov.

For the latest information, Subscribe to nonresident withholding and real estate withholding.

Internal Revenue Service (IRS) Updates and More

We partnered with the IRS to provide monthly IRS articles to assist our tax professional and small business communities, and we are excited to share this information; however, questions about the content should be directed to the IRS.

IRS highlights key forms, topics for tax-exempt organizations ahead of May 15 filing deadline

IR-2025-54, April 25, 2025 — As the May 15 filing deadline approaches for tax-exempt organizations, the IRS highlights important forms and topics to ensure successful and timely filing.

IRS Whistleblower Office releases operating plan outlining integrated approach to advance program

IR-2025-53, April 18, 2025 — The IRS Whistleblower Office released its first-ever multi-year operating plan outlining guiding principles, strategic priorities, recent achievements and current initiatives to advance the IRS Whistleblower Program.

IRS encourages taxpayers to check withholding now for next year

IR-2025-52, April 17, 2025 — The IRS reminds taxpayers that proper tax withholding now is key to avoiding surprises when they file their tax return next year. Making any needed adjustments earlier in the year means taxpayers won’t have to make a big change later in the year to catch up.

Missed the April tax-filing due date? File promptly to minimize interest and penalties

IR-2025-51, April 16, 2025 — The IRS encourages taxpayers who missed the filing deadline to submit their tax return as soon as possible.

IRS marks 70th anniversary of April 15 tax filing deadline

IR-2025-50, April 15, 2025 — On this Tax Day, the IRS marks a major milestone: the 70th Anniversary of the April 15 federal income tax filing deadline.

IRS: All of Arkansas qualifies for disaster tax relief; various deadlines postponed to Nov. 3

IR-2025-49, April 14, 2025 — The IRS announced tax relief for individuals and businesses in the entire state of Arkansas affected by severe storms, tornadoes and flooding that began on April 2, 2025

IRS: All of Tennessee qualifies for disaster tax relief; various deadlines postponed to Nov. 3

IR-2025-47, April 14, 2025 — The IRS tax relief for individuals and businesses in the entire state of Tennessee affected by severe storms, straight-line winds, tornadoes and flooding that began on April 2, 2025.

IRS reminds taxpayers to access or create an IRS Online Account today

IR-2025-43, April 9, 2025 — The IRS reminds taxpayers that it’s not too late to access or create an individual IRS Online Account. An IRS Online Account makes it easy for people to quickly get the tax planning information they need.

IRS reminder: Disaster victims in twelve states have automatic extensions to file and pay their 2024 taxes

IR-2025-41, April 4, 2025 — The IRS reminds individuals and businesses in area covered by 2024 disaster declarations that their 2024 federal income tax returns and tax payments for tax year 2024 are due on Thursday, May 1, 2025.

IRS reminder to U.S. taxpayers living, working abroad: File 2024 tax return by June 16

IR-2025-39, April 2, 2025 — The IRS reminded taxpayers living and working abroad that they have until Monday, June 16, 2025, to file their 2024 federal income tax return and pay any tax due.

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