Administrative remedies if the post amnesty penalty is miscalculated
A recent change in the law allows taxpayers to file a claim for refund for amounts paid in connection with the amnesty penalty, on the issue that the penalty was computed incorrectly (R&TC Section 19777.5(e)(2).
A taxpayer cannot file a formal protest of the post amnesty penalty before payment. Although there are no formal prepayment protest rights, FTB will administratively review and correct the penalty before payment, if the taxpayer believes that it was computed incorrectly. Here are the steps you should take if your client believes the penalty was computed improperly:
- If your client is under audit, or has filed a protest or appeal, please notify the auditor or hearing officer, who will review the computation. Note that the post amnesty penalty is not actually computed or imposed until there is a final, due, and payable amount determined for the tax year. Amounts shown on proposed assessments, protests, or deficiency appeals are only estimated amounts that may not take into account payments, other adjustments or interest netting allowed by R&TC Section 19777.5(a)(3).
- If your client is neither under audit, nor has filed a protest or appeal, please contact us. You can reach us Monday through Friday, from 7 a.m. until 7 p.m., at (800) 852-5711 within the United States, or (916) 845-6500 from outside the United States.
- When you call, please have available your client’s name, taxpayer identification/corporation number, address, the assessed penalty amount, and the tax year. We will review the penalty computation, and make any necessary adjustments.