FTB fixing erroneous payment posting - Spidell

FTB fixing erroneous payment posting

In August, several tax professionals posted on our Message Board that they had gotten notices from the FTB indicating that their clients’ 2020 overpayments were not credited to 2021, as had been requested on the returns. We were told at that time that the FTB was manually fixing the payments. However, that process was not completed.

After we brought this to their attention again, the FTB has gone back to manually correcting 2020 returns that:

  • Included an extension payment made after April 15, but on or before May 17; or
  • Included a request to transfer an overpayment to the 2021 tax year.

According to the FTB, “The extension payments, and requests to transfer an overpayment that were made after the normal April 15 filing due date but on or before May 17, were not processed by our system as current year payments or requests. We are working diligently to identify and correct these accounts.”

The FTB has stated that no further action is required from the taxpayer, and taxpayers or practitioners may verify that the correction was made through MyFTB.

We have requested that the FTB not assess underpayment of estimated tax penalties for taxpayers who received a refund of the amount they had requested be applied to 2021 liabilities, if they immediately submit the erroneous refund amount as an estimated tax payment.

Attend Spidell’s 2021/2022 Federal and California Tax Update webinar and get the latest information on overpayments and other FTB issues. Click here and register today.