Withholding Notice Snafu in California

The Franchise Tax Board, California’s income tax agency, apparently issued a boatload of withholding mismatch notices. Some (but not all) of those notices appear to be in error; additionally, the FTB’s phone and chat lines have been swamped.

The FTB is taking two actions. First, they are giving all taxpayers who received these notices two additional weeks to respond. Second, those impacted by the erroneous notices will receive a “notice of this action” that will be mailed on Monday, June 13th.

Here is the text of the FTB’s announcement:

FTB facing high call, chat volumes, many questions about withholding

The number of calls to FTB’s call centers, as well as its LiveChat program, has spiked in recent weeks. We also saw a corresponding increase in district office foot traffic.

During the same time, the department has collected and investigated a number of complaints about withholding adjustment notices. To accommodate taxpayers with questions, FTB is allowing two additional weeks for taxpayers to respond to the notices. No action (including collections) will be taken during that time.

We apologize for any inconvenience this has caused, and we are taking steps to reduce wait times for our customer service channels.

We have identified a population of taxpayers whose returns were affected by late withholding reports from employers. Some wage and retirement withholding data was not provided to the State of California before FTB processed and validated the associated taxpayers’ returns.

To remedy this, FTB is re-validating those returns to allow the original withholding amounts claimed. Impacted taxpayers will receive a notice of this action, which will go in the mail by Monday, June 13.

A sample copy of the letter is available at https://www.ftb.ca.gov/current/sampleA.pdf.

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