Sam Brotman, JD, LLM, MBA August 23, 2014 3 min read

Correction of Franchise Tax Board Notices

Sometimes a Notice of Proposed Assessment may require corrections when new information is received from taxpayer. After a Notice of Proposed Assessment has been issued, and the taxpayer submits supplemental information leading to correction of the assessment, the FTB makes the correction. Depending on the circumstances, the assessment may be corrected by a second Notice of Action or a Notice of Revision; it may be withdrawn and a new NPA (Notice of Proposed Assessment) issued; or in the case of protested NPAs, it may be restored to protest status.

If taxpayer does not protest the NPA, FTB must issue a Notice of Revision prior to the expiration of 60-day protest period or within the prescribed time if assessment is deferred, which can vary. Notice of Revision does not extend 60-day period for taxpayer to file his or her protest. The corrected additional tax may not be increased over the amount of the additional tax originally proposed.

In the case when Notice of Proposed Assessment is protested by a taxpayer, and a Notice of Action has already been issued, FTB must mail a corrected Notice of Action within the 30-day appeal period. If FTB does not mail it within 30 days, then the assessment is restored to original status, which was protested by taxpayer. When FTB does mail the corrected notice, then taxpayer now has 30 days to appeal the corrected amount of assessment counting form the date printed on the corrected notice. In this case, the corrected additional tax may be increased over the amount shown in the notice of action, but may not exceed the amount of the additional tax originally proposed to be assessed.

The Franchise Tax Board can withdraw Notice of Proposed Assessment and issue a correct one only if statute of limitations has not expired. In lieu of issuing a corrected Notice of Action or a Notice of Revision, FTB's internal manual suggests that FTB withdraw the assessment and issue a corrected one when:

1. The NPA contains a technical defect such as an error in the name, address, year, or transposition of numbers.

2. The supplementary information received form taxpayer introduces new items of income or disallowance that may not be made a part of the corrected Notice of Action or Notice of Revision.

3. The corrected amount of additional tax will exceed the original Notice of Action, Notice of Revision, or the original NPA.

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Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

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