What is an FTB audit?

The FTB can audit both personal and business tax returns to make sure taxpayers and businesses are staying in compliance with California tax laws. The most common FTB audit actually arises due to an IRS audit.

When the IRS conducts an audit, they forward the results of that audit to the FTB. The FTB then “piggybacks” on the IRS information oftentimes causing a state tax audit; Head of Household Filing Status: The FTB selects tax returns where the taxpayer claims head of household status to substantiate that claim.

Does Franchise Tax Board audit?

However, California taxpayers can also be audited by the Franchise Tax Board (FTB), the statewide agency that determines the state income tax for businesses and individuals. Unlike the IRS however, the FTB generally has up to four years to conduct an audit of your tax returns (the IRS generally has three years).

When to notify the FTB of an IRS Notice of determination in California?

But this is not a strategy to avoid paying additional taxes to California if and when the IRS issues a Notice of Determination declaring you owe additional taxes. Californians are required by law to notify the FTB within six months of an IRS Notice of Determination – even if it is passed the 4 year statute established by California law.

How long does it take for a California tax audit?

The Franchise Tax Board or FTB, California’s income tax agency, has four years from the date of filing to complete an audit. This is strategically important as it provides the FTB with an extra year to see if anything happens with the IRS.

Is there Statute of limitations on FTB audits?

Its also interesting to note that you are actually more likely to be audited by the FTB than by the IRS at this point in time. The only good news for California income tax payers is when an FTB audit passes the three year federal statute of limitations, the IRS cannot come back on you.

What is the Statute of limitations for a California tax audit?

The only good news for California income tax payers is when an FTB audit passes the three year federal statute of limitations, the IRS cannot come back on you.