Changes to our direct deposit of refund (DDR) process July 2018 Tax News

Historically, when we made an adjustment to a refund requested in the form of a direct deposit, we would issue a paper check and mail a notice explaining why the tax return was changed. This often resulted in a delay in receiving the refund. 

Beginning July 2018, in most cases, if there is a change made to a refund, the taxpayer will still receive their refund via direct deposit. Only the notice explaining the change will be mailed. Because it is possible that the revised refund will be deposited prior to the notice explaining the change arriving in the mail, we ask that you advise your clients to wait for the notice before calling about their refund.

The notice explaining the change will also be available in MyFTB. If you have a Tax Professional MyFTB account, you can view the notice in your client’s account or they can view it themselves if they have their own individual MyFTB account. This is another good reason for you and your clients to sign up for MyFTB.

If a taxpayer requested the refund be deposited into 2 separate accounts, we will adjust the deposit using these rules:

• If the adjustment results in a reduced refund, we will deduct the difference from the second account. If the difference exceeds the amount requested for the second account, we will deduct the remainder from the first account.
• If the adjustment results in an increased refund, we will add the difference into the second account.

As a reminder, increased refund amounts to specific account types may need your client’s attention.

• If the refund was deposited in an account that has a contribution limit, the taxpayer may need to arrange to withdraw the excess contributions.
• If the refund was deducted as a contribution to a tax-favored account (such as an IRA or 401K), the taxpayer may need to file an amended return.