Bizarre California FTB refund advisory

Technical topics regarding tax preparation.
#1
makbo  
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California tax agency says,

"During the period from March 8, 2019 to March 11, 2019, a system error caused us to issue refunds to approximately 23,500 taxpayers without first verifying the claimed wage withholding. This may have led to the taxpayer's withholding being increased or decreased incorrectly. Additionally, the taxpayer may have received a Notice of Tax Return Change with an incorrect explanation of the adjustment."

But, if they did not verify the claimed wage withholding, on what basis did they make an adjustment to the taxpayer's reported amount? If this isn't a serious case of deliberately obfuscated bureaucratese to cover up a serious system error, I don't know what is.

https://www.ftb.ca.gov/professionals/ta ... 2019.shtml
 

#2
irc162  
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The CA FTB has a history of bizarre moves...You have probably been around long enough to remember 2012's bizarre FTB event. The FTB claimed that they had received IRS advice stating that only ad valorem portions of property taxes could be deducted. It turned out to be no such thing. In fact, the IRS sent the FTB a letter on Feb 6 of that year, telling the FTB they were wrong. However, the FTB denied receiving the letter. It tookThe FTB until a few days before the April 15 filing deadline to abandon this postion. I wound up doing a lot of amended returns that year.

https://www.sfgate.com/business/article ... 486711.php
 

#3
makbo  
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irc162 wrote:The CA FTB has a history of bizarre moves...You have probably been around long enough to remember 2012's bizarre FTB event. The FTB claimed that they had received IRS advice stating that only ad valorem portions of property taxes could be deducted. It turned out to be no such thing.

That is a different type of issue, an interpretation of federal tax law (and yes, only ad valorem taxes are deductible, but the problem is with the details, such as property taxes that are actually interest on bonds for things like sidewalks, or something like that, I forget the details -- anyway, most Californians just deduct the entire property tax bill, or the amount reported on Form 1098, that is what FTB was trying to change, unsuccessfully -- but now TCJA has ameliorated the issue at the federal level, but ironically not for CA).

My item was about what, reading between the lines, must have been a computer glitch. When they wrote "without first verifying the claimed wage withholding", my theory is that they are telling a bald-faced lie, and what they really should have written was, "while incorrectly verifying the claimed wage withholding". Again, otherwise how could a computer have made an adjustment to claimed withholding, if it didn't have (bad) 3rd party date to compare it to? It makes no sense if interpreted as written by FTB.
 


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