When an
results in additional tax, a Notice of Proposed Assessment (NPA) is issued.
A Notice of Proposed Assessment is issued to business entities on the basis of:
- Additional tax due based on an audit of an original or amended tax return.
- Internal Revenue Service information.
- Missing year tax returns.
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Purpose of the Notice of Proposed Assessment
Key Takeaways
- Purpose of the Notice of Proposed Assessment
- No Provision for Extension
- Verifications
The purpose of the
is to inform the business entity of the adjustment and to allow time to protest the assessment.
- Entities have 60 days to protest the validity of the Notice of Proposed Assessment.
- After 60 days, the Notice of Proposed Assessment becomes final; a Notice of Balance Due is then mailed stating that the tax, penalties, and interest assessed are considered due and payable 15 days from that notice date.
Usually the Franchise Tax Board generates a
Notice of Balance Due
(also known as the NPA final bill) within
30 days
after assessment protest period. The purpose of the
Notice of Balance Due
(Notice of Proposed Assessment final bill) is to inform the entity that the assessment is due and payable 15 days from the notice date.
Franchise Tax Board staff must ensure that this process has occurred
prior to taking collection actions
.
No Provision for Extension
Currently, there is no provision in the Revenue and Taxation Code for extensions of time for payment of tax due for a business entity. However, business entities may be faced with a financial hardship and be unable to pay in full all at once.
The Franchise Tax Board may consider
payment deferral
to allow business entities an opportunity to pay their debt in full.
The business has to request it
,
and after reviewing the account history, Franchise Tax Board (FTB) staff will determine on a
case-by-case basis
if a request for payment deferral will be granted.
If payment of the full balance due will create a financial hardship, the Franchise Tax Board staff
may
allow payments. If a deferral is granted
,
involuntary collection actions should cease
during this period, which may include a case hold.
Verifications
Franchise Tax Board staff will verify the following when reviewing file for deferral option:
- Account information (e.g., address, bank, telephone number, status)
- Whether all tax returns have been filed
- Whether additional balances have been discharged
- Pending Notices of Proposed Assessment (NPA)
- Any recent involuntary collection actions
The Franchise Tax Board may also allow
in cases of financial hardship. Beginning January 1, 2005, a
service fee of $20.00
will be added to the taxpayer’s account.
For installment agreements, the Franchise Tax Board staff will verify the following:
- Business activity and type of business
- Account information (e.g., address, bank, telephone number, status)
- Whether all tax returns have been filed
- Whether additional balances have been discharged
- Pending Notices of Proposed Assessment (NPA)
- Recent involuntary collection actions
- Financial Statements (e.g., bank, profit/loss, accounts receivable, credit denial letter)
- Liens filed (or document why a lien was not filed)
- Whether the business entity was notified that a lien may be filed
Upon approval of an installment agreement, the collector must inform the taxpayer about $20 fee and issue business entity an
Installment Agreement Acceptance Letter
.
The
Business Entities Installment Agreement Financial Statement
is now online in a “fillable” format.
If taxpayer defaults on agreement then the Franchise Tax Board staff must issue an
Installment Agreement Cancellation Notice
. This notice
must precede
all involuntary collection actions by the Franchise Tax Board.
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