The Franchise Tax Board conducts audits of withholding agents to determine if they are in compliance with California’s nonwage withholding requirements, separate from a franchise or income tax audit on taxpayers.
More information about the withholding audit process can be found in FTB Pub. 936, Nonwage Withholding Audit Process.
Failure to Withhold Liabilities, Penalties, and Interest
We assess failure to withhold liabilities on withholding agents who pay California source income and fail to comply with withholding requirements.
We also assess the following penalties:
- Failure to withhold - R&TC Section 18668(a).
- Failure to remit withholding - R&TC Section 18668(a).
- Non-notification liability - R&TC Section 18668(d).
- Information return penalty - R&TC Section 19183.
We charge interest on balances due to us and we pay interest on balances due to you. (If you are a corporation, interest is computed in accordance with R&TC Section 19341.) If you pay the full amount within 15 days of the notice date, we do not assess interest for the time between the notice date and the payment date. Interest is not a penalty; it is a charge for the use of money (R&TC Section 18668(b)).
We notify the withholding agent of the withholding assessment on a Notice of Failure to Remit Withholding, Notice and Demand for Withholding Payment, or our Withholding Audit of Records Determination letter.
If you disagree with our withholding assessment, provide a written statement with supporting documentation by fax or mail within 30 days of receiving the notice. We will evaluate any new information before we make a final determination. Once the final determination is made, we issue a Notice of Balance Due which states the liability, penalty, and interest due. Our Notice of Balance Due includes instructions to submit payment. You cannot protest a Notice of Balance Due. If, after our efforts to resolve your issue(s), you continue to disagree with the assessed withholding liability or penalty, then you must pay the balance due and file an appeal.
Taxpayer Advocate Office
Rights as a Taxpayer
The California Taxpayers’ Bill of Rights (R&TC Sections 21001-21028) requires that we adequately protect the rights, privacy, and property of all California taxpayers during the process of assessing and collecting taxes. Our goal is to make certain we protect your rights. We want you to have the highest confidence in the integrity, efficiency, and fairness of our state tax system. FTB 4058, California Taxpayers’ Bill of Rights, includes information on state taxpayers’ rights.
Get FTB 4058 at ftb.ca.gov or call us at 800.338.0505 (select Personal Income Tax), or mail us at:
FRANCHISE TAX BOARD
PO BOX 942840
SACRAMENTO, CA 94240-0040.
Taxpayers’ Rights Advocate Review
You may contact the Taxpayers’ Rights Advocate if you have an ongoing state income tax problem that you have been unable to resolve through normal channels. Contacting the Taxpayers’ Rights Advocate, however, is not an appeal and does not extend the period of time for filing one. You have the right to an independent administrative review if we notify you that we may levy your income or assets, file or record a notice of lien, reject your request for an installment agreement, or terminate your existing installment agreement. You must submit your request for review within 30 days of the date of Final Notice Before Levy or within 30 days of the date of the Notice of State Tax Lien.(R&TC Sections 19008(e), 19225, and 21015.5) You may contact Executive and Advocate Services for additional information or to submit your request for review.
To request an independent administrative review, call: 800.883.5910, fax: 916.843.6022, or mail:
Executive and Advocate Services MS A381
PO Box 157
Rancho Cordova, CA 95741-0157.
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Last Updated: 04.27.2018