HOW TO RESPOND TO STATE TAX CONTROVERSY MATTERS DURING COVID-19

On: September 30, 2020

When you have a dispute with your state over an amount of state tax liability that you owe, it is known as a state tax controversy matter.  State tax controversy matters in each state are subject to specific procedures.

In many states, these procedures for state tax controversy matters have been revised because of COVID-19.

One state which has changed its procedures for state tax controversy matters during COVID-19 is California.  The State of California Franchise Tax Board (“CFTB”), on March 30, 2020, in Notice 2020-02, announced various postponements of deadlines concerning California state tax controversy matters.

California Protests of Notices of Proposed Assessment

If the CFTB issues a notice of proposed assessment for additional tax, a California taxpayer typically has 60 days to file a timely written protest against the proposed deficiency assessment.  However, if the period to file a written protest would otherwise expire during the period of March 12, 2020 through July 15, 2020, a California taxpayer generally has an extended deadline of until July 15, 2020 to file a timely protest.

California Appeals Filed with the Office of Tax Appeals

A California taxpayer typically has 30 days to file a timely appeal with the Office of Tax Appeals from a Notice of Action sustaining a proposed assessment of additional tax and 90 days to file a timely appeal with the Office of Tax Appeals when the CFTB issues a Notice of Action denying in full or in part the taxpayer’s claim for refund.  However, if the period to file an appeal with the Office of Tax Appeals would otherwise expire during the period of March 12, 2020 through July 15, 2020, a California taxpayer generally has an extended deadline of until July 15, 2020 to file a timely appeal.

California Petitions for Rehearing Filed with the Office of Tax Appeals

There is typically a 30-day time period after a determination by the Office of Tax Appeals for a California taxpayer or the CFTB to file a timely petition for rehearing with the Office of Tax Appeals whenever there is a disagreement with the Office of Tax Appeals’ determination on appeal.   However, if the period to file a petition for rehearing with the Office of Tax Appeals would otherwise expire during the period of March 12, 2020 through July 15, 2020, a petition for rehearing generally has an extended deadline of until July 15, 2020 to be considered timely.

California Statutes of Limitations for Notices of Proposed Assessment

There is typically a statute of limitations of four years for the CFTB to issue a notice of proposed assessment to a taxpayer assessing additional tax after a return is filed.  However, if the statute of limitations to assess additional tax would otherwise expire during the period of March 12, 2020 through July 15, 2020, the statute of limitations generally is extended to give the CFTB until July 15, 2020 to issue a notice of proposed assessment.

While the above focuses on revised California procedures during COVID-19, you should consult your applicable state tax authority concerning how to respond to state tax controversy matters that arise during COVID-19 in your specific state.

If you need tax help, always make sure to call Leading Tax Group and don’t attempt to do it yourself.