So owing FTB trumps owing CAT&FA? - Spidell

So owing FTB trumps owing CAT&FA?

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Message Board So owing FTB trumps owing CAT&FA?

This topic contains 2 replies, has 2 voices, and was last updated by John H Blaubach 2 months, 2 weeks ago.

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  • #164662
    John H Blaubach
    Participant

    Client is in an IA with FTB for back taxes.  Since he had a non-tax ID theft issue over five years using myFTB is worthless (think about twice about reporting ID theft?), I can not see how much was still owed.

    Because the the current year’s refund must have been < the remaining balance due the applied the entire gross refund, including the $10 Use Tax due.  Per the Notice of Tax Change I received today, he should send a copy of this notice along with a $10 check to the CAT&FA.  Fine, but this will be considered late.  Will the CAT&FA charge my client a penalty for not paying the $10 by January 31?  Or will the copy of the FTB Notice be his “get of tax penalty jail free card”?

  • #165112
    Lynn Freer
    Participant

    In our Analysis & Explanation of CA taxes it says, The FTB must first apply overpayments to any outstanding use tax liability and then apply any remainder to any FTB outstanding taxes, penalties, or interest for the current and prior years. (R&TC §§6452.1, 18510)

    So the use tax is paid first and the t/p owes the $10 to the FTB

  • #165130
    John H Blaubach
    Participant

    They did the opposite.  My clients owed for 2016, and they applied their refund to their prior year debt.  Their Notice of Tax Change requested that they send the CDT&FA a check for the $10 along with a copy of their notice.  Presumably the notice was to absolve my clients from owing the CDT&FA a penalty (isn’t Use tax paid directly to them due by January 31?).   They paid the $10 on Wednesday.   I called the CDT&FA to get an answer about this situation.  Apparently it happens to rarely they were not aware of it happening; an assured me my (nervous) clients would not receive a bill for a $1!  I can send you a copy of the notice if would to track a problem?