We have noticed numerous posts to our message board from tax professionals saying that many of their clients are receiving Form 4734D. In one case, a practice with only 200 clients received 16 of these notices.
When we asked the FTB, they stated that they have not altered their process, or sent out more notices than they have in prior years. However, this year the notices were sent out in a more compressed time window because of the slower start to the filing season. So with the more concentrated surge of returns, more notices went out at one time.
If the FTB suspects that potential fraud exists, they will reach out to the taxpayer with a letter seeking information to help validate the taxpayer’s return and refund. The FTB’s goal is to make sure the correct refund is going to the correct taxpayer. The two “letters” are the Forms 4734D and 3904.
Do not mail or fax information in response to these forms. You may call the number on the notice for your client, and if you have copies of the taxpayer’s prior year return you should be able to easily straighten it out for them.
We are certain that the FTB is not trying to delay refunds for the state budget, which some posters have speculated, but we believe they have put tightened checks on returns due to the massive UI fraud this year as well as increased identity theft in general.
We will let you know if we get additional information from the FTB. In the meantime, call the number on the notices as you receive them. The FTB cannot process the return until they hear from you or the taxpayer.