An overview of the entire state administrative process. Learn about when you can settle during the process, some great publications to read up on, how the audit wraps up, settlement, and what to do if you don't like the audit result. For more information, please visit us at www.givnerkaye.com

1. 1
California FTB and SBE
Procedure
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com

2. 2
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
2
An Overview Of The Entire
State
Administrative Process

3. 3
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
3
Settlement,
though not
specifically on
the chart, is
theoretically
available at any
time during
Audit, Protest
and Appeal.

4. 4
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
4
The State Produces
Many
Helpful Publications

5. 5
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
5
FTB Publication
985 –
Audit/Protest/
Appeals
(The process)

6. 6
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
6
How The Audit
Wraps Up

7. 7
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
7
You get a
series of
Information
Document
Requests.
Note that the
one on the right
is Number
Eight!!!

8. 8
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
8
The Auditor
presents his or
her proposed
conclusions in
an AIPS.
Depending
upon your
response, there
may be more
than one AIPS.

9. 9
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
9
You can
respond to the
AIPS.
If you don’t
convince the
auditor
otherwise, you
will get an NPA.
Page 1 of NPA.
You have 60
days to file a
Protest or else
it goes final.

10. 10
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
10
Page 2 of NPA

11. 11
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
11
Settlement

12. 12
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
12
Settlement
Revenue & Taxation Code Section 19442(a): “It is the intent of the Legislature…the
Franchise Tax Board…pursue settlements…with respect to civil tax matters in dispute that are the
subject of protests, appeals, or refund claims, consistent with a reasonable evaluation of the costs
and risks associated with litigation….”
In 2005-2008 75% of cases submitted for settlement were accepted, and 70% of those
were, in fact, settled. The FTB has been known to suggest settlements for some cases sent to
Protest and Appeal.
Asking for settlement does not stop the clock, e.g., for filing a Protest or Appeal.
Tolling only starts when the matter is accepted into settlement. After a case is settled, installment
payments are not accepted.
Why request settlement? High income client. Major corporation. Quick resolution.
Hazards of litigation. Availability of skilled FTB staff, e.g., Pat Bittner. Costs. Timing. The
settlement personnel may not start dealing with your case for 3 – 4 months after it has been
accepted into the program. However, when they get to it they will spend full time on it.

13. 13
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
13
Settlement [continued]
The reputation is that settlement will never make a deal better than 50%. The FTB will
tell you that is not true, that there have been cases where the FTB has even conceded 70% or
100%. However, they are rare.
When the matter is finished, it gets sent back to Protest to get processed and closed.
Settlement will not normally address future years.
Process for settling cases: (i) case is assigned to the settlement bureau staff; (ii)
contact letter is sent out to the taxpayer’s representative; (iii) nondisclosure agreement is signed;
(iv) case review, with sometimes a request for additional information; (v) settlement conference;
(vi) settlement approved by the Director and Chief Counsel within 9 months or failure to reach
agreement.
Post-Agreement Process: (i) taxpayer executes settlement agreement; (ii) full payment
of agreed amount; (iii) Attorney General review; (iv) FTB approval; (v) assigned bureau staff
executes settlement agreement; and (vi) public record statement. If there is a request from the
public for information about the settlement, the State only tells the taxpayer’s name, amount in
dispute and the amount agreed.

14. 14
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
14
FTB 2007-2 on
the Settlement
Procedures

15. 15
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
15
Protest:
If You Don’t Like The Audit Result; Don’t
Think Settlement Is A Good Alternative;
and Don’t Want To Pay The Tax (Yet) And
Sue For A Refund.

16. 16
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
16
Page 1 of
Taxpayer’s
Protest – filed
within 60 days
of the NPA.

17. 17
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
17
Page 2 of
Taxpayer’s
Protest

18. 18
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
18
The FTB’s Protest
Personnel can
request information
that it feels is
necessary for the
matter. Taxpayer’s
are surprised
because they thought
information requests
ended with the Audit.
Sample FTB Demand
To Third Party For
Information During A
Protest.

19. 19
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
19
Preliminary
Determination
Letter In A
Protest

20. 20
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
20
Sample Notice
of Action – 30
Days To File
with Board

21. 21
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
21
Acceptance of
Taxpayer’s SBE
Appeal –
Page 1

22. 22
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
22
Acceptance of
Taxpayer’s SBE
Appeal –
Page 2

23. 23
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
23
Sample request
to taxpayer and
FTB from SBE
For Additional
information
before Board
hearing.

24. 24
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
24
Sample Board
Agenda for
Culver City
meeting.

25. 25
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
25
FTB Publication
81 – Franchise
and Personal
Income Tax
Appeals

26. 26
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
26
FTB Publication
143 –Your
Appeal Hearing
Before The
Board

27. 27
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
California FTB and SBE Procedure
27
Dismissal of
Taxpayer’s SBE
Appeal. This
happens
regularly if the
only reason for
the Appeal is to
cause the IRS
statute of
limitations to
run.

28. 28
Questions and Answers
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com 28
California FTB and SBE Procedure