Ask the Advocate
Underpayment of Estimate Tax PenaltyPeriodically, we feature a systemic issue reported to us by the tax professional community. The issue is that the estimate tax penalty should not become final without providing taxpayers a safe harbor to dispute the penalty. Based on my research, I have concluded the following:
Taxpayers can request a waiver of the estimate penalty by using FTB 5805, Underpayment of Estimate Tax by Individuals and Fiduciaries.
Taxpayers are asked to attach FTB 5805 to their tax return for processing. If completed appropriately and meeting the requirements, the penalty will not be assessed during return processing.
In instances where FTB 5805 is not submitted with the tax return or the taxpayer did not realize they had an estimate penalty, we will assess the estimate penalty and send a bill.
However, taxpayers do have the opportunity even after receiving a bill, and that bill becomes final, to request a waiver of the estimate penalty by contacting us and providing a completed FTB 5805. Taxpayers can contact us either by telephone or correspondence.
This is not a systemic issue.
Steve Sims, EA
Taxpayers’ Rights Advocate
Follow me on Twitter at twitter.com/FTBAdvocate.