FTB seeks tax returns from 750,000 nonfilers
You may soon experience some of the consequences from a recent FTB outreach effort. If you notice an increase in new clients who need to file overdue tax returns, it may be because we "reached out" to more than 750,000 people who earned California income but failed to file state income tax returns last year.
Each year, we receive more than 350 million income records from third parties such as the IRS, banks, employers, state departments, and other sources. In addition to wage earners and self-employed people who have not filed, our filing enforcement program detects other nonfilers through occupational licenses and mortgage interest payments.
We match this information against the records of tax returns filed. When we find that there is no return on file, we will notify nonfilers that they have 30 days to file their return or show why a tax return is not due. If a return is required but not received, we will issue a tax assessment based on the state’s estimate of tax due along with penalties and fees that can add up to 50 percent of the taxes owed.
This effort is nothing new – we have used similar annual filing enforcement programs since the 1950s. The good news is that the majority of nonfilers who respond and become current in their tax filings voluntarily comply in subsequent years.