Tax News October 2022
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Tax News is a monthly online publication to inform tax professionals, taxpayers, and business owners about state income tax laws, Franchise Tax Board (FTB) regulations, policies and procedures, and events that may impact or provide valuable information for the tax professional community.
We also periodically release Tax News Flashes to quickly notify subscribers of urgent time-sensitive information. Tax News Flashes are posted in the Newsroom with a Tax News Flash label.
Field Collections to Resume
We will resume in-person field collections for some cases
Effective immediately, in-person field work resumes on the most urgent collection cases. This is part of our phased in return to normal activities. During this phase, field collection staff will visit taxpayers and third parties to deliver FTB 4902, Collection Status Notices or business cards if they are unable to contact the taxpayer or third party by other means.
The notice provides an explanation of potential collection actions and payment options. It also provides direct contact information if any of the following applies:
- Making full payment creates an undue hardship
- The balance due was already paid
- Taxpayer believes they do not owe the balance due stated in the notice
Statute of Limitations (SOL)
Time limits imposed by law for legal proceedings, Assessments of Additional Tax, Penalties, and/or Fees
Generally, we have four years from the date a return is filed to issue a deficiency assessment. If the return is filed before the original due date of the return, the four-year period begins on the original due date of the return.
However, in cases where greater than 25% of gross income is omitted from the tax return, the SOL is within six years from the date the return is filed. Where no tax return has been filed, FTB can issue an assessment at any time for such tax year.
If the Internal Revenue Service imposes a federal adjustment on a return filed, Revenue and Taxation Code (R&TC) Section 18622 requires the taxpayer to notify us within six months. If FTB is notified within six months, we will have two years from the date of notification to issue an assessment. If FTB is notified after six months, we will have four years to issue an assessment. If FTB is not notified at all, an assessment can be issued at any time.
This is a review of a few of our more common SOLs, there are other SOLs that may apply in certain situations not covered in this article.
Claims for Refund
A claim for refund is a request for reimbursement of amounts previously paid. Generally, if the balance is paid in full, it will be a formal claim. If the balance is not paid in full, it will be an informal claim. Claims for refund can be received through amended returns, letters, or reasonable cause forms.
A claim for refund must be filed by the later of:
- One year from the date of overpayment
- Four years after the original return due date
- If return filed before the due date, four years from the original due date of the return
- If return filed after the extension, the return is late. Claim must be filed within four years from the original due date of the return.
- If payments were made but return never filed, the claim must be filed within four years from the original due date of the return.
- Four years after the date of a timely filed return, if filed within the extension period.
For additional guidance on claims for refund, refer to Claim for refund | FTB.ca.gov
For collections, R& TC 19255 establishes a 20 year SOL to collect on a liability. Generally, we can collect unpaid tax liabilities for up to 20 years after the date the latest tax liability becomes due and payable for that tax year.
The latest tax liability may include, but is not limited, to the following:
- Collection Cost Recovery Fee
- Lien Fee
- Installment Agreement Fee (payment plans)
- Final Notice of Proposed Assessment
Example: A tax liability became collectable in 2010 and was not resolved. In 2018, a collection cost fee was assessed on the account balance. This would reset the 20 year SOL.
Suspension of Collection SOL
The 20 year SOL is suspended when we cannot collect a balance due because of the following:
- Payment plans
- Service member deployed in a combat zone
- Child support collections
- Federally declared disaster, terrorist attack, or military action
- When we file a probate claim
- We have pending litigation
The normal SOL provisions do not apply when the amount collected through involuntary actions exceeds the amount that was legally allowed to be collected. FTB will refund or credit the over collected amount without interest if it is determined that an over collection has taken place.
Involuntary collection actions include:
- Earnings withholding orders
- Orders to withhold
- Offsets of other year overpayments
- Intercepts, such as lottery winnings
- Any combination of the above
Beginning late October, emails you receive from MyFTB will have a new look and feel. They will no longer have the blue background and will mirror other emails you receive from FTB (such as Tax News). This is our first step to improve usability and accessibility of MyFTB emails. The topics and content are not changing, and you will continue to receive emails same as you do currently.
You can update which email notifications you receive by updating your preferences in MyFTB.
- Log in to your MyFTB account
- Select Update Contact Information
- Select Manage Email Notifications
- You can then choose to be notified when we;
- Approve or reject a POA declaration
- A POA client has a new document available,
- When a client responds to your request for full online account access
- And when a POA or TIA relationship is revoked
- You can then choose to be notified when we;
For more information about MyFTB.
California's automatic extension for C corporations
The extended due date to file Form 100, California Corporation Franchise or Income Tax Return, is the 15th day of the 11th month of the C corporation's taxable year. For C corporations operating under a calendar year, that is November 15, 2022. The original due date for this return is the 15th day of the fourth month of the C corporation's taxable year, which is generally April 15th.
The seven-month automatic extension to file does not apply to the payment of the C corporation's tax liability. The C corporation is required to pay its tax liability by the original due date of April 15th, whether it files its return later using the seven-month extension or does not.
If a C corporation does not file its return by the extended due date, then the extension does not apply, and any applicable late filing penalties will be calculated from the original due date of April 15th.
For more information about C corporations and other business entity due dates, visit our Business Due Dates webpage.
October 17 Extended Due Date
The following resources may be helpful to you and your clients as the October 17 tax deadline approaches
e-file for faster processing
e-filing your clients' tax returns allows for faster refunds, increased accuracy, and immediate confirmation that we received a return.
Go to California e-file program for tax professionals or call 916-845-0353.
MyFTB account access
Use the MyFTB account service to view your clients' tax documents, check balances due, schedule tax payments, send secure messages to FTB staff, and more.
Customer service dashboard
The wait times dashboard displays real-time wait times for customer service phone lines including MyFTB Secure Chat and the Tax Practitioner Hotline 916-845-7057. It also includes time frames for processing refunds, payments, tax returns and correspondence.
Middle Class Tax Refund
Middle Class Tax Refund payments are expected to be issued between October 2022 and January 2023. Payments will range from $200 to $1,050 depending on a taxpayer's filing status, California AGI, and whether they claim any dependents.
If your client filed electronically and received their 2020 tax refund by direct deposit, then they should receive their Middle-Class Tax Refund payment the same way. Otherwise, they will receive their payment on a debit card.
State tax deduction for disaster losses
Taxpayers may claim a disaster loss if they were affected by disasters, including wildfires, in governor-declared or presidentially-declared disaster areas. Upon request, FTB will provide replacement state tax documents for free for those who lost them due to a disaster.
Visit our website for more information and a complete list of all disasters declared by the governor.
California Tax Education Council (CTEC)
We, once again, partnered with the California Tax Education Council (CTEC) for a "Taxpayer Beware" podcast.
During this "You're Facing a Tax Issue, Now What?" episode, our Taxpayer Advocate, Brenda Voet, shared tips with listeners for how the FTB Taxpayers Rights' Advocate team can best assist taxpayers and tax practitioners.
Ask the advocate
Brenda Voet, EA
Taxpayers’ Rights Advocate
Executive Officer's Advisory Board Meeting
Founded in 1992, this year's Advisory Board meeting marked our 30-year anniversary and opportunity to meet with Board members from industry, state, and federal government. Once again, we gained insight into the issues, challenges, and concerns faced by industry and our government partners, and shared ideas for improved California income tax administration.
During our time together, subject matter experts from FTB program areas shared:
- Legislative Update
- Litigation Update
- Refund Fraud Update
Two breakout-sessions were also facilitated to allow us to receive input from the Board members concerning:
- EDR2: Customer Self-Services
- Talent Supply Gap: How best to recruit junior talent
We appreciate the valuable insights, new ideas, and lively discussions at this year's virtual meeting. We will use all the information gained as we continue to improve our processes and services in support of California taxpayers.
Thank you members of the California Society of Enrolled Agents (CSEA), for participating in yesterday's Thursday, September 29, 2022, successful annual State Tax Agency Liaison Meeting.
For members of the California Society of CPAs (CalCPA), keep an eye out for more information from CalCPA about our annual liaison meeting on October 26.
Tax News Flash Links
Tax News Flashes are real-time FTB news releases which inform taxpayers of the latest breaking tax-related events. These articles are published separately from our monthly Tax News edition.
There were no Tax News Flashes sent for the month of September
FTB Career Opportunities
We have a wide variety of jobs that offer the growth and challenge you may be looking for
If you are a student, recent graduate, or experienced professional, we encourage you to apply. For more information Careers with the State of California at Franchise Tax Board.
As part of our education and outreach to the tax professional community, we participate in many different presentations and fairs. We provide a calendar that shows the events we attend, as well as other events happening with us, such as interested party and Board meetings.