Beginning with returns filed for tax year 2019, the California Franchise Tax Board (FTB) will be able to determine if a taxpayer qualifies for Head of Household (HOH) when the return is processed. The FTB does this by using the information provided on FTB Form 3532, which is required to be attached when taxpayers file as the HOH. If a taxpayer does not qualify for HOH or did not provide FTB Form 3532, the FTB will issue a Notice of Tax Return Change (NTRC) to deny the HOH filing status. This is a change from prior years, when the FTB would have issued a Notice of Proposed Assessment (NPA).
NPA vs. NTRC
A HOH NPA is a proposed change in tax due with the return. If a taxpayer disagrees with a HOH NPA, they may file a protest. When a protest is filed, it is worked by a protest hearing technician, which may delay the resolution of the issue and often requires additional documentation from the taxpayer. Alternatively, a NTRC is a change to the tax due with the return. Refund amounts are reduced, possibly resulting in a bill, or if there is a balance due, that amount may increase. If a taxpayer believes it was issued in error, they may contact the Filing Contact Center via phone, chat, or correspondence, without having to file a protest. The taxpayer also has the option to pay the balance in full and submit a claim for refund. If the claim for a refund is denied, the taxpayer can appeal with the Office of Tax Appeals.
Why the change?
The FTB is always looking for ways to improve the taxpayer’s experience and this change was made with that goal in mind. With a NPA, a taxpayer may have already received a refund when the FTB contacted them several months later asking for some or all of their refund back. This can be frustrating and difficult to understand why the FTB issued the refund in the first place.
By issuing a NTRC, the FTB can dramatically shorten the process. If someone does not qualify, they will know immediately why they do not qualify and what they need to do to resolve it. A NTRC can often be resolved by one contact with the FTB’s contact center.
How do I resolve a NTRC?
If taxpayer disagrees with a NTRC issued, the taxpayer may contact the FTB by:
- Phone: Filing Contact Center
- Chat: through MyFTB
- Correspondence: by mail or online
Reminder: In order to ensure that the FTB makes an accurate determination, the taxpayer should make sure a completed FTB Form 3532 is attached when submitting the 2019 tax returns claiming HOH filing status.
For more information about this article, please contact our tax professionals at taxalerts@windes.com or toll free at 844.4WINDES (844.494.6337).