California: Erroneously issued refunds of 2022 PTE tax must be returned by taxpayers ASAP to secure elections
The California Franchise Tax Board (FTB) erroneously issued refunds to 3,000 taxpayers.
Must be returned by taxpayers ASAP to secure elections
The California Franchise Tax Board (FTB) notified taxpayers that approximately 3,000 pass-through entity (PTE) elective tax payments made with 2022 Form FTB 3893, Pass-Through Entity Tax (PTET) Payment Voucher, were incorrectly applied to tax year 2021 rather than 2022. Consequently, the FTB erroneously issued refunds to those taxpayers.
The FTB issued a tax news release advising taxpayers who received an erroneous refund to resubmit the 2022 PTE elective tax payment as soon as possible. Once received, the 2022 election will be secured with same effective date as the original 2022 PTE elective tax payment.
If a taxpayer does not resubmit the 2022 PTE elective tax payment, the FTB implied that the payment will not be considered timely, and the election will not be valid. However, to date, the FTB has not provided a deadline for resubmitting the payment.
Next steps for taxpayers
If a PTE received an erroneous refund and has not cashed the check, then it must mail Form FTB 3893 and the check with the explanation “PTE Elective Tax Erroneous Refund” written on the payment to:
Franchise Tax Board
P.O. Box 2288
Rancho Cordova, CA 95741-2288
If a PTE received an erroneous refund and has cashed the check, then it must resubmit the 2022 PTE elective tax payment as soon as possible. Payments may be made online using Web Pay at ftb.ca.gov/Pay. If the PTE is not subject to the mandatory electronic payment requirement, then it may mail a check along with Form FTB 3893 to the address listed above. Be sure to write the entity ID, tax year 2022, and explanation “PTE Elective Tax Erroneous Refund” on the payment.
KPMG observation
Tax professionals are not certain at this time whether formal notices will be issued to affected taxpayers or whether the FTB will clarify the deadline for resubmitting the 2022 PTE elective tax payment.
For more information, contact a KPMG State and Local Tax professional:
Oksana Jaffe | ojaffe@kpmg.com
Abner Chong | ajchong@kpmg.com
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