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Protesting a California FTB tax audit assessment

On Behalf of | Jan 29, 2020 | Uncategorized |

The state of California is notoriously Scroogelike when it comes to taxes. The Franchise Tax Board (FTB) is more than willing to audit individuals, and hit them with a Notice of Proposed Assessment (NPA) claiming the individual owes far more in taxes than they had paid.

As a taxpayer, you can push back against the conclusion of an audit. . To do so, you have to play by the state’s rules. Here are four things to keep in mind with FTB audit protests.

1.Timing is critical

As with all government processes, there strict deadlines. If you receive an NPA you disagree with, you generally have 60 days from the date listed on the NPA to file a protest. If you don’t file a protest by that time, the assessment takes effect and you must pay up.

2.You can request a hearing and have representation

The initial step to protest an FTB audit assessment requires a written submission. However, you have additional options. You can request an oral hearing in your case. It is a chance to present your position and provide additional supporting evidence.

Also keep in mind you do not have to do all of this on your own. You can hire a representative such as an accountant or tax attorney to support you at any time during the protest.

3. Interest will accrue during a protest

If an FTB audit determines you owe money, interest will begin to accrue on that amount – not just from the time of the tax return’s original due date, but additionally, interest from the NPA date until you submit your payment. However, if you pay your balance in full within 15 days, the FTB will not charge that additional interest.

But what happens if you file a protest? It can take months before there is a resolution. Unfortunately, that additional interest continues to accrue throughout the process.

In order to prevent this, you can pay off your balance in full within 15 days of the NPA date in the form of a tax deposit. If the assessment stands, it will go toward what you owe. If your protest is successful, that money will be held as a tax deposit.

4. There are more options

A protest is not necessarily the final word. You might consider a civil settlement option to resolve the case, though whether to accept the proposal is fully up to the FTB. The department says it will not consider your ability to pay – only the costs and risks of going to court.

In addition, if you disagree with the FTB’s final conclusion following your protest, you can file an appeal with the Office of Tax Appeals.

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