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Correction of Tax Year 2016 Estimate Penalty Calculation

September 25, 2017

Purpose of Bulletin

We revised the tax year 2016 tax underpayment (FTB 5805) to correct the penalty calculation on line 11. The correction increased the penalty calculation multiplier from .0227 to .0239 (figures rounded). Taxpayers who filed this form before it was revised in May 2017 may have received a bill for an increased penalty amount.

Background

The underpayment penalty multiplier for the tax year 2016 FTB 5805 line 11 should have been .02393173. The form was originally published with an incorrect multiplier of .02269425.

Additional Information

The revised form was uploaded to the FTB website on May 16, 2017.

Tax preparation software companies were notified on May 22, 2017, so they could update their tax preparation software.

Taxpayers who filed the 5805 before the revision date may have received a bill with an increased penalty amount. It is estimated that up to 11,000 taxpayers may be impacted with an average difference of $30 in the penalty amount.

We are publishing a Tax News article instructing tax practitioners and taxpayers to call FTB at 1.916.845.7057 (practitioners) or 1.800.852.5711 (taxpayers) or write to FTB at PO Box 942840, Sacramento, CA 94240-0040 if they believe they were impacted due to the percentage correction. We will waive the difference between the correct and incorrect penalty calculation. We encourage taxpayers and tax practitioners to contact us by December 31, 2017, to request an adjustment.

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