A week ago, a Spidell customer posted that he had gotten notices from the FTB indicating that his 2019 overpayments were not credited to 2020 as had been requested on the returns. He, like many of us, made the extension and the estimated payment with one check, which was timely mailed on July 15, 2020. The resulting notice said that the overpayment was not applied.
According to the FTB, “this situation happens every year for current year payments that are made after the normal 4/15 filing due date. While the 2019 filing due date was postponed to 7/15, our system did not read the 7/15 payments as timely. Therefore, the payment amounts must be manually applied to the current tax year and the excess is transferred to the next year per the taxpayer’s request. Notices may be generated and sent out before the account is manually corrected.”
There were approximately 100,000 accounts affected. If your client received one of these notices, you don’t need to do anything because the accounts are now all correct. In fact, you can verify that the adjustment has been made via your client’s account on MyFTB.
The FTB does not anticipate any notices going out regarding the 2020 tax year. The payment amount transferred from 2019 to 2020 should be the amount requested on the 2019 tax return.
If you have a problem with an FTB notice, please post it to Spidell’s Message Board at www.caltax.com and we will take a look. If the problem is systemic, the FTB will have a fix and it will be resolved.
You can count on Spidell’s 2020/2021 Federal and California Tax Update webinar. The course material has been completely updated to reflect the passage of the Consolidated Appropriations Act and previous attendees will get a video recording and a handout explaining the changes next week.