Sam Brotman, JD, LLM, MBA August 24, 2014 4 min read

Franchise Tax Board Protests – Part One

Franchise Tax Board Protests - Requirements of a Valid Protest

The California Revenue and Taxation Code provides that a taxpayer who disagrees with additional tax assessment can file with the Franchise Tax Board a written protest against the proposed additional tax. Protest letter must be filed with FTB within 60 days after notice of additional tax was mailed by FTB to taxpayer. Please note that clock starts ticking from the date of the notice mailing, not when taxpayer receives it. This letter notice is called the Notice of Proposed Assessment (NPA), and it contains a description of procedures to file a protest.

In summary, the following criteria must be met before a letter will be recorded as a protest:

The letter must be timely.

The letter must state the taxpayer's name, account number, and tax year.

The letter must state the basis of the protest.

The corporation must be active, not suspended.

An FTB employee compares the date the protest was received at Franchise Tax Board with the date of the NPA to determine that the protest was timely filed. Franchise Tax Board protests must be filed within 60 days of the date of the NPA. If the NPA was re-mailed to a better address, the 60-day period begins from the date the NPA was re-mailed. (The NPA copy will be stamped with "Re-mailed" and a date). If it is determined that the protest letter was timely, then the protest will be recorded. Untimely protests will only be treated as timely if the delay was caused by the Franchise Tax Board.

Franchise Tax Board Protests - Recording a Protest

All correspondence to California Franchise Tax Board is forwarded to Protest Section, Protest Control Desk, Mail Stop D-12. Protest Technicians record the protest, update internal systems and send an acknowledgment letter to the taxpayer who sent the protest to FTB. After recording, Franchise Tax Board protests are reviewed by a Protest Unit manager, supervisor or a designated employee, who determine if this protest case can be handled by the Protest Unit, must be returned to the Protest Section for additional work, or referred to FTB's legal department.

A copy of the protest letter from taxpayer is sent to auditor who conducted initial examination of the taxpayer. The auditor may respond to a letter and can provide additional information to the hearing officer who is responsible for resolving the dispute with protesting taxpayer.

Franchise Tax Board protests that lack enough information or are barred by statute of limitations (meaning that established by statute time period during which a taxpayer can protest is over), may be returned to original unit in Protest Section for further development and consideration. Hearing officers can discuss the case in such circumstance. After completion, such case is returned to the Protest Unit along with a report for final determination. Then the auditor who conducted taxpayer's audit is contacted for discussion of the case and possible revisions or withdrawal of the case against the taxpayer. If the taxpayer or his or her representative disagree with audit's recommendation, the taxpayer and representative must be informed of the protest and appeal process.

 

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Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

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