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FTB TAX NOTICES 101

What Does My FTB Tax Notice Mean?

If you have an FTB tax liability, it is very important that you monitor the letters that you receive from the FTB. The FTB will send you notices to inform you of where your tax liability is on the FTB state of its collection process. You will have an opportunity to establish an installment agreement with the FTB; however, if you fail to respond to the FTB’s notices, you may be subject to enforced collection actions, such as wage garnishments and bank levies. And current FTB policy is that once a wage garnishment is in place, the FTB will not as a general rule release the garnishment; however, the FTB will reduce the garnishment to an affordable amount, similar to an installment agreement.

The FTB Personal Income Tax (PIT) billing cycle is the automated computer sequence of notices that provides an important element of due process to taxpayers and documents account history. Billing information is available on the Taxpayer Information System (TI) and the Accounts Receivable Collection System (ARCS).

FTB Return Information Notices

A return information notice (or “RIN”) is generated during return processing by the FTB computerized TI system, and a RIN is produced to inform taxpayers that an error was identified and an adjustment was made to their return. Adjustments made on the return are based on one of the following reasons:

  1. Application of credits to prior year liabilities.
  2. Unclaimed credits on the account.
  3. Discrepancies between the estimated tax payments claimed on the return and the payments posted to the account.
  4. Discrepancies between the withholding credits claimed on the return and the withholding credits indicated and verified on supporting documents.

There are four main types of RIN notices that may be issued to the taxpayer:

  1. Early filer RIN – Issued when an adjustment to the return resulted in a balance due and the payment due date is on or before April 15. Penalty and interest language is not used on this RIN.
  2. Zero balance RIN – Issued when an adjustment to the return results in a zero balance due.
  3. Balance due RIN – Issued when an adjustment to the return results in a balance due. If the due date is past April 15, penalties and interest will be included on the notice.
  4. Refund RIN – Issued by the State Controller’s Office when an adjustment has been made to a return, issuing or changing the amount of the refund.

When a RIN results in an additional balance due, the taxpayer is given the following time from the date on the RIN to pay without incurring penalties and interest.

  1. Tax year 1997 and prior – 10 calendar days.
  2. Tax year 1998 and after – 15 calendar days.

FTB Statement of Income Tax Due

One of the first notices you can expect to receive is the notice of state income tax due (or as the FTB calls it “STD”). This notice is generated by the FTB’s computerized TI system, as discussed above. The statement of income tax due notifies the taxpayer of their liability resulting from a new balance due or an adjustment in their balance due. If a balance due RIN was issued, the STD would be mailed to the taxpayer. The statement of income tax due notices requests payment in full (PIF) within 30 days. If the taxpayer does not pay the balance within the 30 days from the date on the notice, the notice informs the taxpayer that a state tax lien may be filed against their property per Government Code Section 7171.

This letter serves to provide notice to the taxpayer and to provide the taxpayer with an element of due process. Upon this notice being generated, ARCS will create an account using the external bill date. The external bill date tells ARCS the notice date; this will determine when involuntary collection action can occur to facilitate the payment of the FTB tax liability.

FTB Income Tax Due Notice

The income tax due notice (or “ITD”) is generated from the FTB’s computerized ARCS system and mailed to taxpayers who have a tax liability. This notices is mailed to taxpayers after the STD was mailed. This notice advises the taxpayers that if the balance due is not paid in full within 30 days from the date of the notice, the FTB may impose collection fees, contact third parties, file state tax liens, or take other collection actions.

FTB Past Due Notice

A Past Due Notice is issued by ARCS following the ITD. It is used as a reminder of a taxpayer’s balance due and a request for payment. The Past Due Notice advises the taxpayer that if they do not pay in full within 30 days from the date of the notice, we can impose collection fees, contact third parties, file state tax liens, and take other collection actions.

FTB Delinquent Notice

The delinquent notice is issued only when the FTB tax liability billing cycle is between the Past Due and Final Notice. The delinquent notice advises the taxpayer they may be eligible for the Installment Agreement (I/A) Program if they are unable to pay the balance in full. If the taxpayer does not PIF or contact the FTB to set up an installment agreement the delinquent notices advises the taxpayer that the FTB may garnish wages, impose collection fees, contact third parties, and take other actions, including a bank levy.

 FTB Final Notice

A Final Notice is issued to the taxpayer following the Past Due Notice and is a demand for full payment on a taxpayer’s liability. Like the Past Due Notice, the Final Notice advises the taxpayer they may be eligible for the installment agreement program if they are unable to pay the balance in full. The notice also advises the taxpayer that the FTB may begin collection action without further notice. The taxpayer is advised, again, that the FTB may garnish wages, impose collection fees, contact third parties, seize deposit accounts, and seize and sell real and personal property.

Contact a Tax Attorney Today for Assistance

If you have a tax liability with the FTB, you have options to resolve your tax liability. You may seek an installment agreement or you may seek to settle the tax liability with the FTB for less than the total amount. You don’t have to live with fear and anxiety regarding tax liability. The best course of action is to take on the situation and resolve it as soon as possible. Contact a tax attorney today at Disparte Tax Law for a free consultation.

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