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Earned Income Tax Credit Denied (Paragraph Code DW)

February 17, 2017

Purpose of Bulletin

Notify staff that we denied approximately 4,000 claims for Earned Income Tax Credit (EITC) on tax year 2016 Personal Income Tax returns.

Background

Due to a system error caused by the extra day for leap year we incorrectly denied the EITC from January 3, 2017 to January 24, 2017 as follows:

  • FTB issued a Notice of Tax Return Change (NTRC) to approximately 3,600 taxpayers with Paragraph Code DW that states, “We revised your Earned Income Tax Credit because one or more qualifying children did not live with you in California the required number of days”.
  • We identified approximately 400 additional accounts that were affected, and did not receive the NTRC.
  • Affected accounts received either a reduced or zero refund.

Additional Information

We corrected the system defect on 01.24.2017. We are drafting a letter to explain the issue and the appropriate resolution. The Information Validation Section and the Taxpayer Service Center Section will adjust the accounts when they receive a contact, or if they identify an affected account.

Taxpayer Inquiries

IF AND THEN

Taxpayer or preparer contacts FTB regarding an NTRC with paragraph code DW denying the Taxpayer’s EITC claim.

The NTRC does not contain any other paragraph code denying EITC for any other reason.

Review the account and, if warranted, perform any transactions necessary to adjust the account and to allow the credit.

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