FTB letters can be a source of confusion and anxiety for taxpayers in California, especially if you’re not quite sure what they mean or why you received one. For those who have received an unexpected letter from the Franchise Tax Board (FTB), understanding its content and significance is crucial. The FTB, California’s state tax agency, communicates with taxpayers for various reasons, from verifying information to collecting unpaid taxes. These letters come in different forms, each identified by a unique code that provides a clue as to why you are being contacted. Some letters are routine, while others may indicate more urgent tax issues. In this article, we’ll break down what these FTB letters mean, their purpose, and how to respond if you receive one. Let’s take a closer look at the world of FTB letters to demystify what they mean and provide peace of mind to California taxpayers.
What Are FTB Letters and Why Do You Get Them?
FTB letters are official communications from the Franchise Tax Board of California, the agency responsible for administering state income taxes and other fees. These letters may relate to anything from routine matters, such as information requests or clarification of a tax return, to more serious issues, such as underpayment, penalties, or collections. Typically, receiving an FTB letter doesn’t mean you’re in trouble, but it does mean the FTB has identified something that requires your attention. Whether it’s confirming your reported income or reminding you of a payment due, these letters are meant to help keep California’s taxpayers compliant and informed.
FTB letters often contain a unique reference number, known as a notice number or letter code, which helps the recipient identify the specific purpose of the correspondence. Understanding the meaning behind these letters can help you take the appropriate action—whether that’s making a payment, providing more documentation, or simply understanding what the FTB is trying to communicate.
Common Types of FTB Letters
Below is a list of some of the most common FTB letters, along with a brief explanation of what each one means. These letter codes can help you understand why you received the communication and what action, if any, is required from you.
- FTB 4600B – Request for Information: The FTB sends this letter when they need additional information to verify the accuracy of your tax return. Typically, you might need to provide W-2s, 1099s, or other supporting documents.
- FTB 3726 – Notice of Proposed Assessment: This letter is issued if the FTB believes you owe more taxes than what you reported. It outlines proposed changes to your tax return and explains why you owe additional money.
- FTB 4987 – Final Notice Before Levy: A serious letter that indicates the FTB intends to levy your bank account or garnish wages if you don’t settle an outstanding balance. Immediate action is required to prevent asset seizure. The FTB may also send other enforcement notices, such as a Notice of Intent to File a Lien, before proceeding with levies or garnishments.
- FTB 3904 – Collection Notice: This letter is a reminder of unpaid taxes. It informs you of the overdue amount and encourages you to pay it to avoid additional penalties or further collection actions.
- FTB 4058C – Refund Information Notice: A positive letter that usually means the FTB has processed your return and a refund is on its way. It may also contain adjustments to the refund amount if there were minor discrepancies.
- FTB 3713 – Demand for Tax Return: This letter is issued when the FTB believes you should have filed a tax return but have not done so. It demands that you file a tax return for the year in question.
- FTB 916 – Penalty Adjustment Notice: Sent to notify you about penalties applied to your tax return, typically for late filing or late payments. This letter explains the penalty amounts and how they were calculated.
- FTB 4183 – Payment Plan Offer: This letter is often sent if you owe a large balance and may not be able to pay it all at once. It outlines options for setting up an installment agreement to help you pay over time.
- FTB 4734D – Identity Verification Request: This letter is sent when the FTB suspects potential fraud or requires confirmation of your identity. You may need to verify personal details or provide documents to validate your identity.
- FTB 4624 – Income Discrepancy Notice: This letter informs you of discrepancies between the income you reported on your tax return and the income information provided to the FTB by third parties. You might need to amend your return or provide additional documentation.
What to Do If You Receive an FTB Letter
Receiving an FTB letter can be a bit unsettling, but the key is to remain calm and take action promptly. Here are some steps you can follow:
- Read the Letter Carefully: Understand why you are receiving the letter. Look for the specific notice or letter code to determine what actions the FTB expects you to take.
- Verify the Details: Make sure the information in the letter matches your records. For example, if they request additional documents or income verification, check your tax return and relevant forms.
- Respond by the Deadline: FTB letters often have response deadlines. Missing a deadline can lead to additional penalties or more severe action, such as liens or levies. Be sure to adhere to the timeline provided.
- Consult a Tax Professional: If you’re unsure about how to respond or if the letter is particularly complex, it’s a good idea to consult a CPA or tax professional. They can help clarify the letter’s intent and suggest appropriate responses.