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Incorrect 1099-G with Earned Income Tax Credit Amounts

February 22, 2017

Purpose of Bulletin

To inform staff that we identified approximately 18,000 taxpayers who claimed the Earned Income Tax Credit (EITC) and received an erroneous 1099-G.

Background

Federal law requires the Franchise Tax Board (FTB) to mail the following forms to taxpayers who received a refund or interest, of $10 or more:

  • Form 1099-G, Report of State Income Tax Refund
  • Form 1099-INT, Statement of Interest Income

Additional Information

On January 19, 2017, we identified some taxpayers who claimed EITC on a 2015 tax return that received a form 1099G with an inaccurate refund amount in box 2. EITC amounts should not be included on the 1099G because the credit is not taxable and should not be included in gross income.

On February 17, 2017, we began sending the FTB 4552A 1099G Letter of Explanation to approximately 18,000 taxpayers to reflect the correct 1099-G amount to report on their federal income tax return, if applicable. We will add a comment in TI for all affected accounts.

We are correcting the affected accounts in TI, TPF and MyFTB, and are reporting the correct 1099-G amount to the Internal Revenue Service (IRS).

Taxpayer Inquiries

If a taxpayer contacts us about a Form 1099G, determine if the amount reported is correct. If the refunded amount included the EITC, analyze the account to determine if we sent the FTB 4552A to reflect to correct amount, and advise them accordingly.

If they did not receive the Form 4552A, please send the form to them with the correct 1099G amount.

Follow your unit procedures when responding to questions regarding Form 1099G. Refer questions on how to report refunds on federal tax returns to the IRS at 800.829.1040.

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