Tax News July 2024

Bill Payment vs. Amended Tax Return Payment

It is important to choose the correct payment type when you make an online payment. The most common error occurs when users choose between bill payment or amended tax return payment. If you select the wrong payment type, it may cause a delay in the process of the tax payment.

The “Bill Payment” type should be selected for a taxpayer to:

• Pay a bill or notice.
• Make a payment on an existing balance due.
• Make a payment intended for a payment plan.
• Pay a dishonored payment penalty.
• Pay the mandatory e-pay penalty.

Users sometimes select the “Amended” payment type because they received a Notice of Tax Return Change (NTRC). However, the “Amended” payment type would notify the system to wait for an amended return to complete processing before applying to any balance due. Although the tax return was changed, there would be no need to file a separate amended return.

The “Amended Tax Return Payment” type should only be selected when a taxpayer files a current or prior year amended tax return with an attached Schedule X, California Explanation of Amended Return Changes, with a balance due.

Text Messages from the Franchise Tax Board

FTB may contact you, or a taxpayer, by text message for the reasons described below. FTB does not however, send text messages to request personal or financial information or account numbers.

Personal and Business Notices

We will send a notice or letter for issues that may include, but are not limited to:

• A balance due.
• A larger or smaller refund due.
• Notify you of delays in processing of a return.
• Clarify a question about a tax return.
• Request additional information.
• Notify of a change made to a return.

One-Time Text

If you call FTB’s Liens Program Interactive Voice Response (IVR) at 916-845-4350 and select the option to receive a text, the text will provide a link to ftb.ca.gov and instructions for how to make a payment.

Ongoing Texts

Individuals with a MyFTB account can update their profile to receive text message alerts from FTB if one of the following activities occur on their account:

• A new notice or document is available to view online.
• FTB approved a new Tax Information Authorization (TIA) relationship or approved a tax professional’s request to renew the TIA.
• A tax professional submitted a Power of Attorney (POA) declaration that needs to be approved or rejected.
• A tax professional with a TIA or POA relationship requested full access to their MyFTB online account pending authorization.
• An update to contact preferences made online to add, change, or remove SMS text notifications.

Individuals and tax professional representatives can manage the text message notifications through their MyFTB account. They can choose to receive text messages, change which number we send texts to, or stop receiving text messages.

Security

FTB will not request personal or financial information or account numbers by text message.

If you did not request to be contacted by text message, do not respond or click on any links. You can report the incident through our Scams page where we also have additional information for you.

Court-Ordered Debt

If an individual owes money to a California court and the balance is not paid, it may become court-ordered debt. If it does, the courts may send the debt to the FTB for collection. FTB may then collect money from the individual's paycheck or bank account to satisfy the debt.

If you, or your client, does not agree with the debt, paid the debt, served time (like community service), or have other questions or issues regarding the balance due, you must contact the court or county listed on the notice.

Individuals should contact FTB if:

• The wage garnishment or bank levy is causing a financial hardship.
• The letter you received doesn’t belong to you.
• You want to give us permission to discuss your account with your representative.

Employers should contact FTB if:

• The social security number on the notice does not match the employee’s social security number.
• You have questions about wage garnishment.
• FTB records show you did not make a garnishment payment, and you mailed the payment more than 60 days ago.

Tax representatives must complete FTB 3520, Power of Attorney Declaration, to discuss their client’s account without the debtor on the call. The form can be submitted through one of the following channels

MyFTB login

Fax

916-843-5440

Mail

POA/TIA Unit Franchise Tax Board
PO Box 2828
Rancho Cordova CA 95741-2828

To contact FTB Court-Ordered Debt:

Phone

916-845-4064
Monday through Friday, 8 AM to 5 PM

Identity Theft and Scams

FTB works diligently to secure taxpayer information and prevent tax-related theft and fraud.

How to Recognize Identity Theft

Identity theft is someone using taxpayer information, including name, Social Security Number (SSN), employment information, or credit card number, for an unlawful purpose.

Taxpayers may discover tax-related identity theft in one or more of the following ways:

• Tax is owed, but the taxpayer did not file a tax return.
• FTB rejected an e-filed tax return.
• Taxpayer received an unexpected refund.

Identity Theft Notices

FTB sends the following letters to taxpayers who may be subject to identity theft:

• FTB 3904: Tax return was filed and confirmation is required to process the return.
• FTB 4734D: Additional information is needed to confirm wage and withholding discrepancies.
• FTB 4502: Additional information is needed to approve the California Earned Income Tax Credit, Young Child Tax Credit, and/or the Foster Youth Tax Credit.

If a taxpayer receives any of these notices, the quickest way to have their tax return processed is to call the phone number on the notice. Typically, the account can be resolved during the call. FTB’s fraud experts can quickly resolve these notices.

Report Identity Theft and Fraud

Taxpayers are urged to report suspected tax scams and identity theft schemes to FTB as soon as possible, preferably using our online notification tool.

Unfortunately, tax preparers have increasingly become targets for cybercriminals as well. Tax preparers and business owners who believe they have been targeted should contact FTB at 916-845-7088 and select option “1.”

Scams

The main types of scams are through email, mail, phone, text messaging, and websites. You should be suspicious of anyone that contacts you and:

• Asks for passwords for credit cards, bank accounts, bank debit cards, MyFTB account, email account, or personal or business accounts.
• Threatens to contact law enforcement to have you arrested if a tax debt is not paid.
• Demands payment by third-party issued or pre-paid debit cards. FTB does not accept these forms of payments.
• Claims there is a problem with your account. FTB agents already have access to your account information and will explain the nature and details of your tax or nontax debt.

Visit FTB websites for more information about identity theft, tax fraud, and scams.

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. We are excited to share this information; however, if you have questions about the content, you will need to contact the IRS directly.

IRS warns against scams targeting seniors; joins other federal agencies to recognize special awareness day 

IR-2024-164, June 12, 2024 — As part of continuing efforts to protect the senior community, the IRS issued a warning about the rising threat of impersonation scams.

2024 IRS Nationwide Tax Forum: Educational seminars, special events announced focusing on tax security, scams, practice management and beneficial ownership information

IR-2024-163, June 12, 2024 — The IRS announced the continuing education agenda for the 2024 Nationwide Tax Forum featuring 45 seminars on a wide array of topics that will help tax professionals serve their clients.

IRS has options to help people who missed the April filing deadline

IR-2024-162, June 10, 2024 — The IRS highlighted a number of options available to help taxpayers who missed the April deadline to file their 2023 federal income tax return.

IRS reminder: June 17 estimated tax payment deadline fast approaching

IR-2024-161, June 10, 2024 — The IRS reminded taxpayers whose income is not subject to withholding that the second quarter estimated tax payment deadline is June 17.

Treasury, IRS update procedures for qualified manufacturers, dealers, and sellers of certain qualified clean vehicles under the Inflation Reduction Act

IR-2024-158, June 7, 2024 — The Department of the Treasury and IRS issued Revenue Procedure 2024-26 for the submission of information by qualified manufacturers of new clean vehicles and dealers and sellers of new clean vehicles and previously-owned clean vehicles.

Treasury, IRS release guidance for the Energy Community Bonus Credit under the Inflation Reduction Act

IR-2024-157, June 7, 2024 — The Department of the Treasury and IRS issued Notice 2024-48 that publishes information taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category in Notice 2023-29 for purposes of qualifying for the Energy Community Bonus Credit.

Document Upload Tool reaches key milestone; 1 million submissions received

IR-2024-155, June 5, 2024 — The IRS announced reaching another key milestone in the agency’s transformation work with the Document Upload Tool accepting its one millionth taxpayer submission.

Treasury, IRS issue guidance on Clean Fuel Production Credit

IR-2024-153, May 31, 2024 — The Treasury Department and IRS issued Notice 2024-49 for the Clean Fuel Production Credit.

Treasury, IRS issue proposed regulations for owners of qualified clean electricity facilities and energy storage technologies

IR-2024-150, May 29, 2024 — The Department of the Treasury and the IRS issued proposed regulations under the Inflation Reduction Act for owners of qualified clean electricity facilities and energy storage technology that may want to claim relevant tax credits.

Department of Treasury, IRS and Department of Energy announce opening of application portal for 2024 program year of the Low-Income Communities Bonus Credit Program

IR-2024-149, May 28, 2024 — The Department of Treasury, IRS and Department of Energy announced the application portal for the 2024 Low-Income Communities Bonus Credit Program is now open.

Department of Treasury, IRS and Department of Energy announce opening date for the Qualifying Advanced Energy Project Credit new allocation round

IR-2024-144, May 22, 2024 — The Department of Treasury, IRS and Department of Energy (DOE) announced the DOE Qualified Advanced Energy Project Credit Program Applicant Portal (48C Portal) is now open for any interested applicants to register for a new round of allocations. 

Ask the Advocate: Systemic Issue Management System

Thank you, tax professional community! I appreciate tax professionals who report potential systemic issues on FTB’s public website.

FTB’s Systemic Issue Management System (SIMS) helps FTB identify issues that affect multiple taxpayers. SIMS facilitates and enhances communication between taxpayers and tax professionals with FTB. It provides a structured way for taxpayers and tax professionals to report issues and signals my team to research and evaluate. It also provides FTB with information to allocate resources more efficiently and prioritize issues that affect the largest volume of taxpayers, and the most significant issues get addressed.

Although we do not respond to all SIMS submissions, we actively review, research, and evaluate all submissions. If we determine an issue is systemic, we will collaborate with the appropriate FTB business areas to resolve the issue.

We recently received submissions regarding the Power of Attorney (POA) validation process. As a result, I am sharing my findings.

The POA unit aims to process a POA within 15 business days. As of this writing, the average processing time is 12 business days which exceeds the processing goal. In 2023, the unit processed 87,000 POAs with a 28% rejection rate. Of those rejections, 27% were the result of no response from the taxpayer during the validation process.

I realize the validation process poses some customer inconveniences. Unfortunately, there are bad actors and FTB must safeguard your client's private and confidential information.  While convenience is essential, compromising data security can lead to identity theft, financial loss, and compromise the trust between you and your client. Prioritizing privacy builds a foundation of trust, which ultimately enhances the customer experience in the long run. FTB will soon deploy user-friendly verification methods for MyFTB, such as multi-factor authentication, which strengthens security and facilitates a smooth customer experience.  (Submit a POA in MyFTB)

During my review, I inquired about re-occurring factors that result in POA rejections and tips to ensure your client's POAs are processed without rejection. The following tips address the top seven issues POAs get rejected:

1. Ensure POA forms are filled out correctly. Common errors include:
• Taxpayer information in Part I of the declaration does not match FTB records. (Social Security Number, Individual Taxpayer Identification Number, Federal Employee Identification Number, California Corporation Number, California Secretary of State Number, or taxpayer name.)
• Authorized tax years are entered incorrectly. (Carefully follow Part III instructions.)
• Forms are incomplete or illegible.
2. If there is an error on the POA declaration, or you are resubmitting a POA in response to a POA rejection notice, the best practice is to complete a new form and obtain a new wet signature from your client, and then upload the signed form into MyFTB.
3. Ensure correct forms are submitted. Avoid these common errors:
• Mismatched form types/revisions (i.e., one submission includes Page 1 and 2 from POA form, but page 3 from a Tax Information Authorization).
• Non-FTB forms used (i.e., IRS Form 2848 submitted to FTB)
4. Signatures:
• POA forms must be signed with an original “wet signature.” FTB does not accept digital/electronic signatures on POA forms.
• Copied or recycled signatures are not accepted.
5. Avoid MyFTB submission errors, such as:
• Information keyed into MyFTB POA Wizard does not match all the fields on the uploaded POA form.
• Submitting any documents other than the POA form and supporting documents that support each signer’s authority to execute the POA will result in a rejection.
6. Ensure you include all documents required to authorize fiduciary signatures. (i.e., trusts, estates, decedents, minors, etc.)
7. Ensure Relationship Verification (RV) occurs:
• Taxpayers can call 916-845-5525 to pre-approve the relationship. This number is not for tax professionals.
• If contacted, tax professionals receiving POA courtesy calls should try to answer FTB’s call and pass the security questions to approve RV.
• Taxpayers should respond to RV letters.

I recommend not waiting until the last minute to submit your POA declarations in consideration of the 15-day processing time frame. Also, ensure your client is aware of the relationship verification process. While this may not occur on every case, verification is a crucial processing step to validate the authenticity of the relationship and protect taxpayer information.

I hope you find these tips useful to ensure your POA declarations are processed securely and successfully. I thank you again for reporting potential systemic issues and submitting your ideas. When you report in SIMS, it benefits taxpayers, tax professionals, and FTB to help resolve big-picture issues, enhance communication, and continuously improve tax administration systems and processes.