FTB Mailing Audit
The California Franchise Tax Board (FTB, the "IRS" of California) recently
announced that they are mailing 130,000 audit questionnaires beginning in
July (2008). It is very important to respond to this audit if you receive one.
We routinely handle such items for clients where we have prepared their tax return.
Any of our clients should contact us immediaately if you receive one of these
audit letters. We do not anticipate that our clients will receive these.
Taxpayers who fail to respond to the audit will receive a Notice of Proposed
Assessment that effectively disallows the use of the Head of Household filing
status, and will assess the additional taxes accordingly.
Results of these audits are forwarded to the IRS where, if the Head of Household
filing status was disallowed, the IRS may follow suit and assess additional
federal taxes as well.
Generally you can expect interest and sometimes penalties to added as well by
each tax authority.