Over the last two weeks we’ve heard from numerous tax practitioners that their clients have been receiving erroneous notices from the IRS and the FTB. These agencies have confirmed that some notices were sent in error.
According to the FTB, in late April, they were alerted to an issue impacting entities filing their first-year return receiving erroneous notices related to the $800 minimum franchise tax. The FTB corrected the problem on April 30, 2025. As of May 1, 2025, all first-year corporation returns are being processed correctly. The FTB is identifying those entities impacted and correcting the accounts. If an entity or their representative receives a bill related to this issue, they should call the telephone number listed on the notice or check MyFTB to see if the issue has been resolved.
Additionally, the IRS has confirmed that CP161, Request for Payment or Notice of Unpaid Balance, is being erroneously sent to trust taxpayers for underpayment of estimated taxes. The IRS stated that this is a programmer error that the IRS is working to correct and that adjustments to impacted taxpayers should be resolved within a month. Taxpayers and/or tax practitioners can proactively call the IRS to request penalty abatement.
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